Keynes’ Essays in Biography

John Maynard Keynes Essays in Biography Macmillan, 1933

II. Lives of Economists

2. Alfred Marshall

Keynes opines:

[p 170] The study of economics does not seem to require any specialised gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science.? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood-, as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. Much, but not all, of this ideal many-sidedness Marshall possessed. But chiefly his mixed training and divided nature furnished him with the most essential and fundamental of the economist’s necessary gifts — he was conspicuously historian and mathematician, a dealer in the particular and the general, the temporal and the eternal, at the same time.

[181] The notion of applying mathematical methods was in the air. But it had not yet yielded anything substantial.

[183] While still giving private lessons in mathematics, he translated as many as possible of Ricardo’s reasonings into mathematics; and he endeavoured to make them more general. Meanwhile he was attracted towards the new views of economics taken by Roscher and other German economists; and by Marx, Lassalle and other Socialists. But it seemed to him that the analytical methods of the historical economists were not always sufficiently thorough to justify their confidence that the causes which they assigned to economic events were the true causes. He thought indeed that the interpretation of the economic past was almost as difficult as the prediction of the future. The Socialists also seemed to him to underrate the difficulty of their problems, and to be too quick to assume that the abolition of private property would purge away the faults and deficiencies of human nature. . . . He set himself to get into closer contact with practical business and with the life of the working classes. On the one side he aimed at learning the broad features of the technique of every chief industry; and on the other he sought the society of trade unionists, cooperators and other working-class leaders.

[190] Marshall’s mathematical and diagrammatic exercises in Economic Theory were of such a character in their grasp, comprehensiveness, and scientific accuracy, and went so far beyond the “bright ideas” of his predecessors, that we may justly claim him as the founder of modern diagrammatic economics — that elegant apparatus which generally exercises a powerful attraction on clever beginners, which all of us use as an inspirer of, and a check on, our intuitions and as a shorthand record of our results, but which generally falls into the background as we penetrate further into the recesses of the subject. The fact that Marshall’s results percolated to the outer world a drop at a time, and reached in their complete form only a limited circle, lost him much international fame which would otherwise have been his, and even, perhaps, retarded the progress of the subject. Nevertheless, we can, I think, on reflection understand Marshall’s reluctance to open his career with publishing his diagrammatic apparatus by itself.

For, whilst it was a necessary appurtenance of his intellectual approach to the subject, an appearance of emphasising or exalting such methods pointed right away from what he regarded, quite early in his life, as the proper attitude to economic inquiry. Moreover, Marshall, as one who had been Second Wrangler and had nourished ambitions to explore molecular physics, always felt a slight contempt from the intellectual or aesthetic point of view for the rather “potty” scraps of elementary algebra, geometry, and difiFerential calculus which make up mathematical economics.^1 Unlike physics, for example, such parts of the bare bones of economic theory as are expressible in mathematical form are extremely easy compared withthe economic interpretation of the complex and incompletely known facts of experience,^2 and lead one but a very little way towards establishing useful results.

(^1 Mathematical economics often exercise an excessive fascination and influence over students who approach the subject without much previous training in technical mathematics. They are so easy as to be within the grasp of almost anyone, yet do introduce the student, on a small scale, to the delights of perceiving constructions of pure form, and place toy bricks in his hands that he can manipulate for himself, which gives a new thrill to those who have had no glimpse of the sky-scraping architecture and minutely embellished monuments of modern mathematics.)

^2 Professor Planck, of Berlin, the famous originator of the Quantum Theory, once remarked to me that in early Hfe he had thought of studying economics, but had found it too difficult! Professor Planck could easily master the whole corpus of mathematical economics in a few days. He did not mean that! But the amalgam of logic and intuition and the wide knowledge of facts, most of which are not precise, which is required for economic interpretation in its highest form is, quite truly, overwhelmingly difficult for those whose gifts mainly consists in the power to imagine and pursue to their furthest points the implications and prior conditions of comparatively simple facts which are known with a high decree of precision. )

Marshall felt all this with a vehemence which not all his pupils have shared. The preliminary mathematics was for him child’s play. He wanted to enter the vast laboratory of the world, to hear its roar and distinguish the several notes, to speak with the tongues of business men, and yet to observe all with the eyes of a highly intelligent angel. So “he set himself,” as is recorded in his own words above (p. 329), “to get into closer contact with practical business and with the life of the working classes.”

Thus Marshall, having begun by founding modern diagrammatic methods, ended by using much self-obliteration to keep them in their proper place. When the Principles appeared, the diagrams were imprisoned in footnotes, or, at their freest, could but exercise, themselves as in a yard within the confines of a brief Appendix.

[205] Marshall had a characteristic habit in all his writings of reserving for footnotes what was most novel or important in what he had to say,^(It would almost be better to read the footnotes and appendices of Marshall’s big volumes and omit the text, rather than vice-versa.)

[207] The change that has been made in the point of view of Economics by the present generation is due to the discovery that man himself is in a great measure a creature of circumstances and changes with them. The chief fault in English economists at the beginning of the century was not that they ignored history and statistics, but that they regarded man as so to speak a constant quantity, and gave themselves little trouble to study his variations. They therefore attributed to the forces of supply and demand a much more mechanical and regular action than they actually have. Their most vital fault was that they did not see how liable to change are the habits and institutions of industry. But the Socialists were men who had felt intensely, and who knew something about the hidden springs of human action of which the economists took no account. Buried among their wild rhapsodies there were shrewd observations and pregnant suggestions from which philosophers and economists had much to learn. Among the bad results of the narrowness of the work of English economists early in the century, perhaps the most unfortunate was the opportunity which it gave to sciolists to quote and misapply economic dogmas. Ricardo and his chief followers did not make clear to others, it was not even quite clear to themselves, that what they were building up was not universal truth, but machinery of universal application in the discovery of a certain class of truths. While attributing high and transcendent universality to the central scheme of economic reasoning, I do not assign any universality to economic dogmas. It is not a body of concrete truth, but an engine for the discovery of concrete truth. ^

[220] By 1890 Marshall’s fame stood high/ and the Principles of Economics^ Vol. 1 ./ was delivered into an expectant world. Its success was immediate and complete. The book was the subject of leading articles and full-dress reviews throughout the Press. The journalists could not distinguish the precise contributions and innovations which it contributed to science; but they discerned with remarkable quickness that it ushered in a new age of economic thought.

“It is a great thing,” said the Pall Mall Gazette, “to have a Professor at one of our old Universities devoting the work of his life to recasting the science of Political Economy as the Science of Social Perfectibility.” The New Political Economy had arrived, and the Old Political Economy, the dismal science, “which treated the individual man as a purely selfish and acquisitive animal, and the State as a mere conglomeration of such animals,” had passed away.^1 “It will serve,” said the Daily Chronicle, “to restore the shaken credit of political economy, and will probably become for the present generation what Mill’s Principles was for the last.” “It has made almost all other accounts of the science antiquated or obsolete,” said the Manchester Guardian. “It is not premature to predict that Professor Marshall’s treatise will form a landmark in the development of political economy, and that its influence on the direction and temper of economic inquiries will be wholly good.” These are samples from a general chorus.

(^1 1 Not that Old P. E. was really thus, but this was the journalists’ way of expressing the effect which Marshall’s outlook made on them.)

[223] (^1 Already in 1872, in his review of Jevons, Marshall was in possession of the idea of the mutually dependent positions of the ‘economic factors. “Jnst as the motion of every body in the solar system,” he there wrote, “affects and is affected by the motion of every other, so it is with the elements of the problem of political economy.”)

[224] (3) The explicit introduction of the element of Time as a factor in economic analysis is mainly due to Marshall. The conceptions the “long” and “short” period are his, and one of his objects was to trace “a continuous thread running through and connecting the applications of the general theory of equilibrium of demand and supply to different periods of time.” ^ Connected with these there are further distinctions, which we now reckon essential to clear thinking, which are first explicit in Marshall — particularly those between “external” and “internal” economies and between “prime” and “supplementary” cost. Of these pairs the first was, I think, a complete novelty when the Principles appeared; the latter, however, already existed in the vocabulary of manufacture if not in that of economic analysis.

ll these are path-breaking ideas which no one who wants to think clearly can do without. Nevertheless, this is the quarter in which, in my opinion, the Marshall analysis is least complete and satisfactory, and where there remains most to do. As he says himself in the Preface to the first edition of the Principles the element of time “is the centre of the chief difficulty of almost every economic problem.”

(4) The special conception of Consumers’ Rent or Surplus, which was a natural development of Jevonian ideas, has perhaps proved less fruitful of practical results than seemed likely at first.i But one could not do without it as part of the apparatus of thought, and it is particularly important in the Principles because of the use of it (in Professor Edgeworth’s words) “to show that laissez-faire^ the maximum of advantage attained by unrestricted competition, is not necessarily the greatest possible advantage attainable.” Marshall’s proof that laissez-faire breaks down in certain conditions theoretically and not merely practically, regarded as a principle of maximum social advantage, was of great philosophical importance. But Marshall does not carry this particular argument very far … .

[248] When Marshall came back to Cambridge in 1885 … His Inaugural Lecture constituted, in effect, a demand that

Economics should have a new status; and it was so interpreted by Sidgwick. The following declaration from that Lecture is of some historical importance as almost the first blow in the struggle for the independent status which Economics has now won almost everywhere :

“There is wanted wider and more scientific knowledge of facts; an organon stronger and more complete, more able to analyse and help in the solution of the economic problems of the age. To develop and apply the organon rightly is our most urgent need; and this requires all the faculties of a trained scientific mind. Eloquence and erudition have been lavishly spent in the service of Economics. They are good in their way; but what is most wanted now is the power of keeping the head cool and clear in tracing and analysing the combined action of many combined causes. Exceptional genius being left out of account, this power is rarely found save amongst those who have gone through a severe course of work in the more advanced sciences. Cambridge has more such men than any other University in the world. But, alas ! few of them turn to the task. …”

This claim of Marshall’s corresponded to the conception of the subject which dominated his own work. Marshall was the first great economist sang that there ever was ; the first who devoted his life to building up the subject as a separate science, standing on its own foundations, with as high standards of scientific accuracy as the physical or the biological sciences. It was Marshall who finally saw to it that “never again will a Mrs. Trimmer, a Mrs. Marcet, or a Miss Martineau earn a goodly reputation by throwing economic principles into the form of a catechism or of simple tales, by aid of which any intelligent governess might make clear to the children nestling around her where lies economic truth.” ^ But — much more than this — after his time Economics could never be again one of a number of subjects which a Moral Philosopher would take in his stride, one Moral Science out of several, as Mill, Jevons, and Sidgwick took it. He was the first to take up this professional scientific attitude to the subject, as something above and outside current controversy, as far from politics as physiology from the general practitioner.


There’s a lot here. Maybe I could prune it, organise it better. Meanwhile see my blog for Keynes and others on economics and mathematics.

Dave Marsay

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