The Marshall Era
Marshall was the first to believe in the possibility of making economics an independent discipline, and indeed a major one in the academic system of Cambridge, hitherto dominated by classical and mathematical studies (see Coats 1993: 106-13; Groenewegen 1995: ch.
15). It was Marshall who set the process moving by instituting the Economics Tripos, supporting the birth of a faculty of economics, selecting the teaching staff and courses, and guiding and coordinating the academic life and assignments of the various members. A few years later it was his pupil, Pigou, who took over this role, making a decisive contribution to the consolidation of the academic status of Cambridge economics. The operation proved an unqualified success, seeing that just a few years later - from the 1920s - Cambridge drew the attention of the rest of the world as a paragon for the study of economics, while those engaged there in research and teaching had a distinct sense of belonging to a concentrated microcosm with a clear identity of its own.Much of this imprinting was forged by Marshall’s vision of where the ultimate purpose of economics lay and consequently how economists should be trained. Both “visions” can be traced back to his inaugural lecture in Cambridge (Marshall 1885 [1925]). There we find sketched out his conception of modern economics as an organon, as a means of reasoning; it was the approach with which “Cambridge economists up to and beyond the 1930s positively associated themselves” (Tribe 2000: 223). He also made eloquently clear his vision of what the purpose of training economists in Cambridge was:
It will be my most cherished ambition, my highest endeavour, to do what with my poor ability and my limited strength I may, to increase the numbers of those, whom Cambridge, the great mother of strong men, sends out into the world with cool heads but warm hearts, willing to give some at least of their best powers to grappling with the social suffering around them; resolved not to rest content till they have done what in them lies to discover how far it is possible to open up to all the material means of a refined and noble life.
(Marshall 1885 [1925]: 177)The type of economics Marshall favoured was application of the tools of economic analysis to reality, be it districts, trades or markets, “always with acute awareness of its embeddedness in historically determined totalities” (Becattini 2006: 614).
In the curriculum of students great weight was given to modern economic and political history and applied economics, which were to provide the framework for an economic interpretation of social reality. Recourse to mathematical formalism was discouraged because “excessive reliance on this instrument... might distort our sense of proportion by causing us to neglect factors that could not easily be worked up in the mathematical machine” (Pigou 1925: 84). Equally distrusted was the appeal of the raw statistical material, pre-eminence being attributed to theoretical analysis over simple data collection or manipulation. Moreover, biological metaphors served the purpose of stressing the evolutionary nature of most economic institutions, which should be studied like living organisms, of which they follow similar life-cycle patterns.
While Keynes, the most outstanding of Marshall’s pupils, went on to pursue a research path of his own, which eventually led his economics to differ in many and fundamental respects from that of Marshall, there remained in Cambridge well after Marshall’s death a Marshallian “old guard” of faithful pupils - Pigou, Robertson and Shove - who resisted the “Keynesian revolution” and, as far as language and substance of the theory were concerned, stuck to unadulterated Marshall. A small group of Marshall’s pupils, Sydney Chapman, David Macgregor, Walter Layton, Frederick Lavington and Philip Sargant Florence, constituting what has been labelled the Marshallian school of industrial economics (see Raffaelli 2004), should also be considered as a distinctive thread in the warp of the Cambridge School in its early stage.
Developments in economics along the lines identified by Marshall did not end with his death.
Important new fields were explored and approaches were created that dominated economic thinking well into the 1960s. This was the case of Pigou’s welfare economics, built on Marshall’s marginal benefit-marginal cost framework and based on identification and analysis of the divergences between marginal private net product and marginal social net product. The market failures that arise when pursuit of self-interest does not lead to the best results for the society as a whole was for decades the justification for the corrective action of the state.Other efforts were less successful. The book that Shove had meant to write on the theory of costs, which should have taken into account the heterogeneity of factors of production and all the different types of relation between firm and industry, never came to light. Shove had assumed, like Marshall, that each firm had a private market, but his idea of “imperfect competition” was too vague and intractable in formal representation, and eventually it was Joan Robinson’s geometrical approach that prevailed.