Macgregor and Embryonic Industrial Economics
This section considers the life and work of Macgregor who published a substantial amount on the theory of the firm and contributed to the development of Oxford industrial economics.
Macgregor studied economics at Cambridge where he obtained a BA in 1901. There, he became ‘one of Marshall’s favourite students and became quite attached to his method, i.e. to the use of theory tempered by empirical investigation’ (Lee 1989: 23). In particular, it was argued that if Macgregor ‘used Marshallian methods that was because, testing them as far as he could against the facts of ordinary life they seemed to him the best available’ (Andrews 1953: 348). During his stay at Cambridge, Macgregor prepared his Industrial Combination, which was published in 1906 and resulted in him being elected a Fellow of Trinity College, Cambridge, in 1904. According to Lee’s biography of Macgregor, at this time he was ‘employed as a university lecturer in general economics and was paid, unofficially, by Marshall for the work’ (Lee 2008: 3). In 1908, Macgregor left Cambridge to become Professor of Political Economy at the University of Leeds.Macgregor’s Report ofTravels (1913) expressed his interest in studying forms of industrial organisation in different countries, such as China, Japan, India, Russia and the United States. In particular, Macgregor ‘had in view specially the relation of foreign nations to the great industrial changes which occurred in England nearly a century and a half ago—changes to which we owe the nature and the problems of our present industrial life’ (ibid.: 8). In 1919, Macgregor moved to Manchester where he became Stanley Professor of Political Economy He stayed there for only two years, as in 1921, Edgeworth vacated the chair at Oxford, and according to Young and Lee (1993: 12), although Macgregor ‘did not formally apply for the Drummond’, the ‘electors offered it to him’.
Immediately after his appointment, Macgregor engaged in extensive research concerned with a wide range of economics topics, such as: unemployment (Macgregor 1923); consumption (Macgregor 1924); agriculture (Macgregor 1925); and family allowances (Macgregor 1926). He also pursued his research interests in industrial economics and prepared the final revision of his 1906 book. In addition, towards the end of the 1920s, Macgregor published his research on cartels and other industrial combinations (Macgregor 1927a, 1929, 1930) and became interested in proposals for the rationalisation of industry (Macgregor 1927b). From 1925 until 1937, he was joint editor of the Economic Journal, with John Maynard Keynes.[11]Macgregor's concern with an empirical approach to economics was reflected by the statistical investigations conducted in his various articles. Although his intellectual orientation and personality made him, to some extent, an isolated figure, he still contributed to the development of the theory of the firm and industrial economics at Oxford, both at the teaching and research level. Macgregor's analysis did not follow the usual methods of pure maximisation and equilibrium concepts. Rather, he was more interested in the growth of firms and the way that they were able to reproduce themselves. His main idea was that new competition came about from skilled businessmen who had learnt the trade, who promoted existing relations with customers and suppliers and who used their savings (and personal connections) to start their own businesses.
By the mid-1930s, Macgregor had published Enterprise Purpose & Profit (1934)—concerned with the behaviour of firms over the trade cycle under risk and uncertainty—where he ‘used the formations of new joint stock companies to represent the course of enterprise' to discover that ‘variations of this index precede variations of both prices and employment' (Todd 1935: 544). To him, variations in financial and stock market conditions reflected variations in company formations.
Hence, the concept of strategic behaviour is implicitly used at the heart of Macgregor's contribution: once a firm has entered into competition and is established in the market, it then follows long-term policies, such as stable prices, balanced with more short-term ones, such as decisions to expand.Despite his research, Macgregor's message did not take hold at Oxford at the time, his contribution eclipsed by the then evolving mainstream of microeconomics. This situation made him, as recently argued by Warren Samuels, ‘an “applied” economist in a new world dominated by “pure” economics' (Samuels 2008: 150).[12] Yet, he could not be completely ignored by mainstream economists due to his steady flow of books and journal articles principally published in the Economic Journal and more occasionally in Economica until the mid-1930s. Furthermore, Industrial Combination still constituted an early significant account of industrial economics, which was reprinted on several occasions and was used as an economics textbook by subsequent generations of students inside and outside Oxford.[13]
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