Development and Underdevelopment in the History of Economic Thought

Alfred Marshall’s revival of classical political economy: the problem of nature

Andrews David, State University of New York at Oswego

This paper explores Alfred Marshall’s revival of classical political economy at the turn of the twentieth century. In 1885, when political economy stood low in public esteem, attacked by humanists, socialists, historicists, etc., Marshall set out his goal of reviving the status of political economy, which meant for him, the revival of classical political economy. He pursued this goal in various ways, including the elimination of controversy over central issues among experts that undermined their credibility. Marshall defended the classical theory by showing that the controversy and polemics these criticisms had raised were unnecessary. He addressed various attacks individually, but his response generally had the same form: He praised the insight of the attacker, while conceding inessential limitations and deficiencies in the classical writers, but insisting that the attack did not apply to the classical theory properly stated. Nature is an important exception, in that Marshall could not treat it as an unnecessary controversy. The idea of nature is pervasive in Adam Smith’s theory and was adopted in toto by David Ricardo. By the time Marshall wrote his Principles, however, the idea of nature was under attack. T.E. Cliffe Leslie (1870) criticized Smith’s theory for its reliance on an archaic idea of nature from the Dark Ages involving a Stoic commitment to a code of nature. John Stuart Mill (1874) argued that the dubious connotations of moral obligation of nature make its use highly problematic. Marshall responded by substituting his own concept of “normal price” for Smith’s “natural price.” In this way he could remove the problematic moral connotations without changing the positive content of Smith’s theory, at least, that is, if normal means the same thing as natural without the moral baggage. There are reasons to question Marshall’s substitution.

Area:

Keywords: Alfred Marshall, Adam Smith, Nature, classical political economy,

Paper file