Lionel Charles Robbins (1898-1984)

Lionel Charles Robbins was born in London in 1898. His education at the University College London was interrupted by World War I. He served in the Royal Artillery from 1916 to 1918.

From 1920 to 1923 he studied at the London School of Economics (LSE). There he ran the Economics Department from 1929 to 1962 (with interceptions) after alternately lecturing at New College, Oxford and at the LSE from 1924 to 1929. Even after his retirement he remained associated with the LSE until 1980. He worked as an adviser to the British government in the aftermath of the Great Depression and his scientific career was interrupted only during World War II when he was director of the Economic Section of the British government. His tasks included the development and implementation of activities aiming at post-war recovery, and he also attended the Bretton Woods Conference in 1944 as a member of the British delegation. In the post-war period Robbins influenced the British educational system as chairman of the Committee on Higher Education. He authored the Robbins Report (Committee on Higher Education 1963), where he stated the “Robbins Principle”: “courses of higher education should be available for all those who are qualified by ability and attainment” (ibid.: 8).

As an economist Lionel Robbins was interested in questions of economic theory, economic methodology and the history of economic thought. Within today’s economic community he is best known for his definition of economics in his Essay on the Nature and Significance of Economic Science: “Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” (Robbins 1932: 15). This definition involves a renunciation of the definition of the classical economists, according to which economics studies the production, distribution and disposition of the wealth of a nation, and indicates the rise to dominance of the marginalist school.

Its alleged generality and force of expression helped its entry into many contemporary textbooks (Backhouse and Medema 2009). In Robbins’s view (1932: viii) this definition grasped the contemporary practice of economic research. Whether this depicted accurately an actual practice is a matter for discussion. On the one hand, Robbins puts the focus on rational choice, which obviously narrows the subject matter of economics compared with what economists did at that time and had done in the past. This can be seen as an attempt to oppose Marshallian economics and especially the view that economic theory is concerned with material welfare. On the other hand, the scope of economics is extended by Robbins’s definition to all social phenomena which involve some kind of scarcity (Backhouse and Medema 2009: 805).

Given the scope of economics, Robbins asked which kind of propositions economic theory can provide. Whether tendencies (of imprecise concepts such as aggregate output, for example) or economic laws can be deduced depends on the topics to be discussed:

The Ricardian System which... provides the archetype of all subsequent systems, is essentially a discussion of the tendencies to equilibrium of clear-cut quantities and relationships. It is no accident that wherever its discussions have related to separate types of economic goods and ratios of exchange between economic goods, there the generalisations of Economics have assumed the form of scientific laws. (Robbins 1932: 67)

Robbins was also concerned with the aggregation problem, which was pivotal in his controversy with John Maynard Keynes in the aftermath of the Great Depression. He advocated a disaggregated analysis of the economy in terms of industries. He was looking for explanations of economic depressions, which went beyond an aggregate view. In his book about The Great Depression (1934 [1971]) he argued that an economic crisis develops if in many industries profits vanish, the pivotal questions being: “Why do...

simultaneous changes take place? Why is there over-production in many lines of industry?” (Robbins 1934 [1971]: 16). Robbins also kept up this critical view of aggregate economic concepts when stating that economic laws can only be derived for well-defined concepts. As an example he discussed the problems of economic indices as a means for economic reasoning: “[T]he idea of changes in the total volume of production has no precise content. We may, if we please, attach certain conventional values to certain indices and say that we define a change in production as a change in this index; for certain purposes this may be advisable. But there is no analytical justification for this procedure” (Robbins 1932: 66).

This led to consequences concerning economic policy advice. Robbins deviated from the Keynesian approach based on the concept of effective demand, which he saw as belonging to the tradition of under-consumption theory. Keynes, in his 1936 The General Theory of Employment, Interest and Money, looked at the economic system as a whole, employing concepts such as the propensity to consume and asking for sufficient investment to get full employment. His economic policy advice was governmental deficit spending to increase effective demand. Robbins (1934 [1971]: 160), on the other hand, focused on the restoration of confidence: “The first essential of any recovery from the position in which the world now finds itself is a return of business confidence”, which would increase investment without Keynesian deficit spending. To him it was clear that a fall of prices “is not the cause - it is the effect - of the fundamental fluctuation. In the search for ultimate causes it constitutes the problem, not the solution” (ibid.: 13). As a consequence, any explanation of the Great Depression “must look either to commodity supply or to demand expressed in terms of money” (ibid.). Robbins stressed that overproduction cannot last “[s]o long as there remain anywhere wants which are unsatisfied” (ibid.).

However, over-production exists in times of economic depression in the sense that “in wide groups of important markets, at the price prevailing, the supply cannot be sold at a profit” (ibid.: 13-14).

Besides his explanation of the Great Depression, Robbins also studied class relations and international relations and rejected the under-consumption theory of recessions as the prime mover of social and international struggle (Robbins 1939 [1968]). He outlined his laissez-faire policy and advocated free markets. What he wanted to debunk was the “thought that the institutions of private property and the market, in their present stage of development, tend inevitably to breed international conflict - that war is a necessary by-product of the capitalist system” (Robbins 1939 [1968]: 17). Robbins’s basic premise in terms of policy incentives is the observation that the driving force of international relations is “to conserve (or increase) our power. Such and such an action will affect our power in such and such a way. This action is therefore to be commended (or rejected)” (Robbins 1939 [1968]: 61). This implies that economic factors are at work, since the attainment of any kind of power “involves the control of scarce resources” (Robbins 1939 [1968]: 61). That he dealt with questions of war might be owed to his service in the Royal Field Artillery from 1916 to 1918 in World War I, and it was nurtured by the political situation of the 1930s in Europe. By expounding his laissez-faire attitude Robbins also opposed Keynesian recovery policy advice. At that time Robbins was affiliated with the LSE, whereas Keynes was affiliated with the University of Cambridge. Their differences had consequences on the perception of certain decisions Robbins made, especially on his advocacy of Friedrich August von Hayek to join the LSE in 1931: “It is all too often claimed that Robbins invited Hayek to LSE to ‘fight Keynes’ and to establish a ‘school’ of economists in opposition to the Cambridge economists” (Howson 2011: 1028).

According to Howson this cannot be sustained. However, she provides no compelling evidence to the contrary. Despite their differences of opinion Robbins (1947 [1957]: 68) and Hayek (1994: 80) were on good personal terms with Keynes. In his postwar book Robbins (1947 [1957]: 68) even changed his mind concerning the concept of aggregate demand:

I grew up in a tradition in which, while recognition was indeed given to the problems created by the ups and downs of the trade cycle and the fluctuations of aggregate demand, there was a tendency to ignore certain deep-seated possibilities of disharmony, in a way which, I now think, led sometimes to superficiality and sometimes to positive error. I owe much to Cambridge economists, particularly to Lord Keynes and Professor Robertson, for having awakened me from dogmatic slumbers in this very important respect.

Robbins’s change of attitude towards government interventions was not at odds with his laissez-faire policy and advocacy of free markets. He was against central planning but this did not prevent him from opting for sound institutional design in the tradition of the Ordnungsokonomik. Pivotal for his evaluation of government action was the actual economic and political environment. A broad discussion of his ideas can be found in his Politics and Economics (1963), and his ideas on proper economic policy action can also be found in The Theory of Economic Policy (1965), where he critically reviews English classical political economy. This book is a part of Robbins’s writings about the history of economic ideas, which comprises The Theory of Economic Development in the History of Economic Thought (1968), The Evolution of Modern Economic Theory (1970) and his LSE lectures posthumously published in A History of Economic Thought (2000).

Andreas Rainer

Lionel Charles Robbins (1898-1984)

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