No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Four: Supply 98 GREAT ECONOMISTS IN HISTORY ALFRED MARSHALL 1842-1924 If considered from the perspective of mainstream economics, Alfred Marshall is perhaps the greatest of all economists. Marshall followed the neoclassical revolution of W.S. Jevons, Leon Walras and Carl Menger; and while he didn’t originate the marginal revolution (using the concept of marginal utility to solve the question of value), he was the first to truly systematize economics as a science. His focus on professionalizing economics was deliberate, as was his choice of titling his magnum opus, Principles of Economics , completed in 1890. Previous economic texts were principles of political economy, but Marshall was determined to make economics a science. Marshall’s Principles of Economics became the standard textbook in economics after its publication, and featured mathematical techniques to demonstrate many economic concepts including marginal analysis, elasticity, and consumer surplus. While integrating marginal analysis, Marshall’s principles did not fully embrace the subjective valuation revolution laid out by Menger. Rather, Marshall tried to integrate subjective consumer valuations along with objective cost data to marry demand and supply. Marshall suggested that asking whether supply or demand determines prices is as futile as trying to say which blade of a pair of scissors does the cutting—both are necessary. Marshall’s efforts, in effect, merged the main ideas of the classical school with its focus on objective value with the neoclassical schools focus on subjective valuation and marginal utility. He was able to take the incomplete but revolutionary contribution of Jevons and create a fully fleshed out theoretical masterpiece. Yet he was never able to fully credit Jevons, Walras and Menger, believing that he invented marginal utility on his own (Skousen, 207). Marshall was the leading English economist at the turn of the century, teaching at Cambridge and starting the “Cambridge School.” He was a teacher of John Maynard Keynes, as well as Keynes’ father. So his legacy was much more profound (and problematic!) than simply his marvelous textbook. The macroeconomic focus of his student, J.M. Keynes, would take economics far from the firm scientific foundation that Marshall intended. Nevertheless, his systematic treatment of economics was the standard for all future economists to match. Photograph of Alfred Marshall (public domain) 1