The Economic Situation and Covid-19 Assignment | Essay Help Services

Prompt: The economic situation in the world now is very different from what it was when the semester started in January and COVID-19 was still, as far as we knew, confined to a localized outbreak in Wuhan. The global public health crisis is intimately intertwined with economics. Economic activity is entwined with the transmission of the coronavirus that causes COVID-19. Distribution of economic resources and patterns of employment shape who is most at risk of contracting the disease and most at risk of suffering a severe or fatal form of the disease. Treating the infected and containing the disease requires a rapid reallocation of resources from the patterns of use common just two months ago – and also requires idling resources that cannot be safely used. None of those whose work we read this semester wrote specifically about the economics of pandemics – even though a number of them lived through serious infectious disease outbreaks. (Marshall, Keynes, Commons, Alexander, Perkins, DuBois and several others all lived through the 1918 flu pandemic, for example.) But we can search their collective body of work for ideas about how to understand our current economic situation. Other people’s perspectives, Sen notes, can “[broaden] our own investigation of relevant principles, for the sake of avoiding an underscrutinized parochialism of values and presumptions in the local community” (p.62). Turning back through the history of economic thought, we meet thinkers who wrote their analyses at times of far lower material standards of living – when Ricardo, in agreement with Malthus, assumed that material deprivation would keep the population in check, for example. Maybe they can help us understand something about lowering our consumption expectations, as we will likely have to do. We meet policymakers like Frances Perkins who worked to enact workplace safety regulations at a time when workers died on the job with grim frequency. Maybe they can help us understand something about how to protect the safety of those whose work we cannot even temporarily do without. We meet a range of thinkers –Beecher, Marx, DuBois, the Women’s Cooperative Guild, the theorists and activists Folbre wrote about in her chapter on the Nanny State, for example – who asked in a wide and wild variety of ways what economic practices could prioritize basic human needs, including the need for care. In your essay, choose one main work from any part of the class to respond to. (You may use others to amplify or critique your main chosen work.) Connect this work to the COVID-19 pandemic. (You should also draw on current news sources and government-issued public health and economic statistics to document the relevant dimensions of the current crisis.) How does the selection you’ve made from the economic literature help us understand something about the way the pandemic is playing out so far? What ideas does it give us about economic policies that would help us meet our needs during the outbreak and stabilize the economic system (or change the economic system!) once the threat of infection subsides? Are there aspects of this work can’t be applied in this situation?

The Black Worker, Economic Justice and the Speeches of Sadie T.M. Alexander Nina Banks Bucknell University, USA Abstract This paper examines Sadie Tanner Mossell Alexander’s challenge to racial oppression within the US. In 1921, Alexander became the first African American woman to earn a PhD in economics. The author links Alexander’s arguments for black political rights to the provision of economic justice for working class Americans. Keywords: economic justice, black workers, full employment, redistributive policies INTRODUCTION Beginning in the 1930s, Sadie Tanner Mossell Alexander, an economist and lawyer, developed arguments to overcome black oppression by calling for policies that would lead to economic justice. Alexander challenged unfair laws and practices directed against African Americans. This paper introduces Sadie Alexander’s recommendations to improve the status of black Americans through the formation of interracial labor alliances, public sector job creation, and policies to redistribute national income. These policies, she believed, would benefit white workers as well as black workers, and Alexander argued that, by doing so, white Americans would be less likely to infringe upon the political and economic rights of racial minorities. This paper suggests that Sadie Alexander’s analysis of racial conflict and the need for full employment and income redistribution continues to be relevant to the US political economy. Economic insecurity over the availability of jobs, livable wages, and adequate benefits are persistent Review of Social Economy ISSN 0034-6764 print/ISSN 1470-1162 online ? 2008 The Association for Social Economics http://www.informaworld.com DOI: 10.1080/00346760701335707This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
REVIEW OF SOCIAL ECONOMY concerns for US workers, particularly with the decline in unionization and the increase in globalization. Deindustrialization has been especially burdensome for African Americans because of their concentration in urban communities experiencing massive job loss. A broader aim of the paper is to recover Sadie Alexander’s economic arguments and to incorporate them into economic analysis. As the only woman among a handful of African American economists in the early-to mid twentieth century, Sadie Alexander offered a unique perspective on black working conditions. Her strategies for improving the welfare of black Americans, however, have been missing from economic analysis because she was not employed as an economist.1 Sadie Tanner Mossell Alexander, the first African American woman to obtain a doctorate degree in economics, was never given the opportunity to work as a professional economist because of discrimination. After earning a law degree in 1927, Alexander spent the duration of her life challenging structural impediments that prevented African Americans from exercising their rights as citizens. From the 1920s through the 1960s, she made speeches across the country that advanced the interests and concerns of black workers. Her speeches?principally economic in content?were addressed to black audiences, racially mixed audiences, religious groups, clubwomen, sororities, members of political parties, and civil rights organizations. Alexander served in elected positions at the national level in the National Urban League, National Association for the Advancement of Colored People (NAACP), Delta Sigma Theta sorority, National Bar Association, and the American Civil Liberties Union (ACLU). Sadie Alexander was pro-labor and argued for the necessity of black and white workers organizing around their common interests as workers, yet her primary struggle was against the oppression of black Americans. Her work was part of a strand in political discourse that linked arguments for political freedoms and equality to the provision of jobs and other necessities of life. By promoting economic justice, Alexander’s ideas were in line with a black radical tradition. Sadie Tanner Mossell was born in 1898 in Philadelphia Pennsylvania. MosselFs maternal grandfather was A.M.E. Bishop Tanner. Mossell’s father, Aaron Mossell, Jr, was the first black to graduate from the law school at the University of Pennsylvania Mossell lived in Washington, DC for much of her 1 Sadie Alexander worked as a practicing attorney rather than as an economist. Kenneth Mack (2005) maintains that after World War II, Sadie Alexander and other leaders in the African American “civil rights bar” attempted to secure the economic citizenship guarantees of the New Deal for black Americans by focusing their attention on the formation of cross-racial, class-based alliances with whites rather than through laying the foundation to court remedies to racial discrimination. 140This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
THE BLACK WORKER childhood and attended the M Street School. She received a BSc degree in education in 1918 and a Master’s degree in economics from the University of Pennsylvania in 1919. In 1921, for the first time in US history, three African American women, including Mossell, were awarded doctorate degrees. Mossell said that no company or university world hire her, despite having recommendations from her professors, so she relocated to Durham after she was hired by North Carolina Mutual Life, the largest black insurance company in the US (Alexander 1964). Mossell worked there for two years until she married Raymond Pace Alexander after he graduated from Harvard law school. Sadie Alexander achieved another milestone in 1927, when she graduated from Penn’s law school and was admitted to the Pennsylvania Bar. Holding both Juris Doctorate and Doctor of Philosophy degrees, she was one of the most highly educated individuals in the country. Raymond Alexander hired Sadie Alexander to work for his law firm. According to Mack (2001-2002), the Alexander law firm was responsible for most of the desegregation litigation in Pennsylvania. In 1928, she became the first black women appointed Assistant City Solicitor for Philadelphia. President Truman appointed Alexander to The Committee on Human Rights in 1946. The committee monitored civil rights in the US and developed a report, “To Secure These Rights,” which was one of the most important civil rights documents issued prior to the signing of the 1964 Civil Rights Act (Mack 2001-2002: 1406). BLACK POLITICAL THOUGHT According to Wintz (1996), two main political ideologies dominated African American thought following Reconstruction. The first tradition, associated with Frederick Douglas, T. Thomas Fortune, and later with W.E.B. DuBois, challenged racial separation and disenfranchisement of African American citizens and stressed the importance of agitation for racial justice. The second tradition, associated with Alexander Crummell, rector of St Luke’s Episcopal Church in Washington, DC and later with Booker T. Washington, emphasized the need for African American self-help, community building and economic development, and race pride until justice was extended to the black community. The lines of demarcation between the traditions were blurred as black intellectuals and leaders often advocated aspects of both traditions. Black radicals were a part of the African American intellectual tradition that advocated agitation for overcoming black oppression. According to 141This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
REVIEW OF SOCIAL ECONOMY Fletcher (1999), black radicalism in the US has included faith-based activists, socialists, communists, radical democrats, feminists, and revolutionary nationalists. He argues that, for black radicals, the source of black liberation is the black masses acting either alone or in alliance with other groups to challenge dominant racial and class interests. A key aspect of black radicalism is that it calls for struggles against capitalist exploitation of workers. A. Philip Randolph, in his early years as a socialist, embraced the idea that class conflict was at the core of racial conflict and that a united working class could solve racial problems (Wintz 1996). Fletcher says that at the height of twentieth century labor activism (1934-1950), the struggle for black liberation was perceived to be tied to but not defined by the goals of organized labor (1999: 6). Alexander’s opposition to racial oppression was within a black radical tradition. Her ideas evolved to reflect the changing political economy from the 1920s through the 1960s. Her political and economic thinking embraced the dominant racial ideas of the times and become progressively more radical by the end of World War II and continued in this manner through the Civil Rights era. This is in contrast to Abram Harris, who was then a radical as well as the leading African American economist. In the post-World War II period, Harris turned his attention away from racial matters and did not return to them until the early 1960s (Darity 1989). Alexander did not embrace socialism but her ideas were consistent with radical ideas for economic justice. Class and the need for interracial working class alliances was a central part of her analysis of black oppression. In accordance with black radicalism, Alexander interpreted black liberation on the basis of policies beneficial to black workers. Unlike Abram Harris, Alexander examined both black men and women’s working conditions and made policy recommendations to benefit black women workers specifically. According to Darity (1997), Harris and the other Howard University radicals, Ralph Bunche and E. Franklin Franzier, viewed capitalist exploitation of labor as the fundamental problem facing blacks and they believed that this could be overcome through multiracial labor organizing. As such, they rejected agitation for civil rights until blacks had achieved economic power (1997: 234). Alexander, however, agitated against white dominance in the political and social realms as well as in the economic arena. In her speeches, she encouraged grassroots political mobilization and community organizing to redress unfair legislation and practices and to hold public officials accountable to the black community. This paper analyzes her efforts to combat black poverty, unemployment, and economic marginalization through redistributive and full employment policies. For Alexander, the 142This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
THE BLACK WORKER struggle for black Americans to fully exercise their democratic rights was contingent upon their ability to secure these fundamental economic rights. Racial and economic justice are intricately linked. Historically, racial antagonisms in the US have been correlated with the state of the economy. When jobs have been scarce, competition over them has typically been accompanied by heightened racial antagonism (Roediger 1991; Rubin 1995). According to Dreier (1998), racial justice therefore rests on the provision of economic justice for all working class Americans. Economic justice entails redistributive policies directed to combat low wages, poverty, and unemployment. Scaperlanda defines economic justice as “fundamentally questions about the ethics of income distribution” and distinguishes between mainstream and heterodox understandings of economic justice (1999: 419). In mainstream approaches, market forces provide labor market participants with a just distribution of national income. Heterodox economists, however, believe that labor market outcomes can and should be improved since market forces are not perfect. Redistributing goods and services, raising wages, and generating jobs for all who want to work would improve living standards for poor and low-income workers and diminish capital’s ability to threaten workers with job loss. Racial tensions that accompany competition over limited jobs would decrease. ALEXANDER’S POLITICAL AND ECONOMIC THOUGHT Alexander’s speeches and writings reveal a sustained commitment to challenging racial oppression in the US. Many of her speeches from the 1930s and 1940s, alluded to in records of her correspondence and speaking engagements, are not in her archival records stored at the University of Pennsylvania. Some of the early speeches from the 1920s were handwritten on paper that has deteriorated. Nonetheless, it is possible to piece together and develop a sense of her ideas for improving the welfare of African Americans, particularly black workers, from the great many documents that have been preserved in the Archives. Alexander was an integrationist who sought to incorporate blacks into the mainstream of American life through legislative reforms and through collective action by blacks. Over time, her political and economic thinking about the means to incorporate black workers into the industrial economy came to embrace ideas associated with economic justice?full employment, the provision of basic needs, and redistribution of national income in favor of poor people. Ultimately, she called for a fundamental restructuring of our economic system through the guarantee of jobs to all who wanted to work. Alexander believed that 143This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
REVIEW OF SOCIAL ECONOMY government, industry, labor, schools, and community members would have to coordinate their efforts to help ensure that all Americans would have an equal chance to develop to their full potential (1963: 6). Black Workers in the Expanding US Economy In the 1920s, young Alexander embraced ideas that encouraged blacks to obtain business training in order to become a more central part of the expanding world economy. During this period, black workers were gaining access to industrial jobs in the north because of the increased demand for black labor there during World War I. Black migration from the rural south to northward destinations accelerated as a consequence of this demand and 1.5 million African Americans relocated to the north from 1916- 1930. The majority of black industrial workers, however, were concentrated in unskilled and cleaning jobs. The jobs had limited mobility and often exposed workers to substantial health hazards (Gottlieb 1987; Jones 1985). The first speech on file in the Archives is listed as “Fragment” and in it Alexander discussed the success of the US in producing goods at a “market price which makes them saleable in the world. The man who produces goods for the world market contributes to the happiness of all mankind and to the wealth of his own nation. You do not purchase goods unless they satisfy your tastes” (Alexander cl920s: 1-2). She added that the US was able to gain dominance in the world market of goods and become powerful as a result of its productive capabilities. Alexander worried that black workers would not play a part in the success of US industry since they were marginal workers? loading goods onto ships for export rather than producing them. She urged blacks to obtain training in business, saying: More physicians, lawyers, dentists, school teachers can not place us in a position of importance in a nation of producers. Go into the Schools of Business, young men and women and then do not come out and moan because some white firm will not hire you as a salesman. Do you aspire to sell the goods another man has manufactured or to manufacture goods for him to buy and sell for you_Go into business young men … Go into business young women… Make yourselves a part of the economic system which has placed America as a formidable economic competitor of England?the greatest exporting nation the world has known. Write your names, the name of your race in American Industry, in the export columns and … [no one] can deny your contributions to America for you and your race will be a part of the very life which American greatness is measured. (Alexander c 1920s: 5-6). 144This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
THE BLACK WORKER This speech embraces a Washingtonian ideology that encourages the development of business skills. Washington had put forth the idea that black progress was tied to skills demanded by the market (Boxill 1984: 21). Alexander’s speech discouraged professional and graduate level training and, instead, advocated that blacks learn how to produce something useful to the nation. Mack (2005) maintains that black lawyers of the 1920s embraced this “voluntarist” approach to achieving equal status with whites by emphasizing intraracial work that they believed African Americans needed to do in order to more fully participate in civil society. Sadie Alexander also expressed race pride and self-help in the speech by calling on blacks to counter the perception that they had not contributed to the nation. Unlike Washington, however, Alexander believed in the efficacy of agitation to bring about social change. As later speeches illustrate, Alexander advocated agitation through the political process as well as by organized labor. Over the decade of the 1930s, Alexander focused particular interest on black women workers. In “Negro Women in Our Economic Life,” Alexander discussed historical changes in women’s status due to the Industrial Revolution. The article appeared in the Urban League’s Opportunity magazine in 1930 and is Alexander’s only published economics article. The article anticipates many of the arguments about women’s work made by feminist economists in the late twentieth century. According to Alexander, when the family was the unit of production, women’s contribution to household production was recognized as valuable. However, as industrialization increased and household production of goods and services were increasingly produced by the industrial sector, women’s home responsibilities came to be regarded as lacking value because they were not exchanged for a wage. Alexander observed this transition without being critical of it. She recommended that women become a part of the expanding industrial economy so that they would once again be regarded as productive laborers (1930: 97). The article then analyzes black women’s participation in paid labor, their occupational distribution, and their wages. Alexander maintained that black women’s employment in industrial jobs benefited their families because it increased women’s earnings and shortened their work hours compared to domestic service, thus enabling women to take night courses for additional training. The Opportunity publication is one of the only articles or speeches in which class analysis is an explicit part of Alexander’s arguments for racial equality. She wrote: The association between the various racial groups employed in a factory will prove an important factor in solving the laborer’s problems. The real seat of racial friction 145This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
REVIEW OF SOCIAL ECONOMY is between the working groups, whose resistance to change in the economic status of a competing group invariably expresses itself in what we commonly define as race, or class prejudice. Could the great mass of white workers learn from industrial experience with Negro workers that they have a common purpose in life, the protection of their bargaining power, and that the sooner the untouched wealth of Negro labor is harnessed into this common purpose, the better can they bargain with capital; then and only then would industrial racial friction subside. (1930: 99) Her reasoning?that a unified working class would be in a better position to bargain with capital?did not address the dilemma that white workers might benefit more from putting their racial interests above their class interests. By aligning themselves with white owners of capital to exclude or limit black workers, white workers would still benefit from a wage premium that they might lose otherwise (Schulman 1996; Boxill 1984). Nonetheless, the article suggested that interracial cooperation between black and white workers against capital was necessary for racial animosity to decrease. Great Depression, New Deal, and the Black Community The Great Depression (1929-1933) was especially devastating to African Americans because they disproportionately lost jobs as tenant farmers in the south and as industrial workers in the north. In rural areas, where the majority of African Americans was still concentrated, the economic depression began in the early 1920s with the boll weevil infestation and with international competition in cotton, tobacco, and sugar cane produc? tion. Farmers responded to the decreased demand for their crops by producing more, and the oversupply had the effect of eroding crop prices. Cotton prices fell from 18 cents a pound in 1929 to just six cents a pound in 1933, pushing farm laborers to the brink of starvation (Hine et al. 2000). Those blacks who had migrated to northern and midwestern cities lost jobs in which they had been marginally employed. In a 1930s speech, most likely given to an Urban League gathering, entitled, “The Economic Status of Negro Women, An Index to the Negro’s Economic Status,” Alexander discussed the status of black women workers based on the 1930 census and maintained that their position indicated the economic status of the black community. According to Alexander’s research, 40 percent of Negro women over the age of ten were employed, a figure about two times greater than foreign and native-born white women. She attributed black women’s higher employment rate to economic necessity, 146This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
THE BLACK WORKER stating that this is a “sad commentary on the economic status of our race,” because black women’s employment in low-wage work was tied to black men’s high rates of unemployment and irregular earnings (Alexander c 1930s: 1). Alexander, however, was concerned not that black women were employed but that they were employed at jobs outside of the industrial sector. Over 60 percent of employed black women worked as domestic servants and 27 percent worked in agriculture, two sectors of the economy most adversely affected by the Great Depression, (c 1930s: 2). Black workers, therefore, experienced higher rates of unemployment during the Depression and, consequently, were more likely than whites to be represented among relief rolls. In 1933, some 25 to 40 percent of African Americans were on relief?a figure that was three to four times greater than the percentage of white Americans on relief (Franklin and Moss 2000). Alexander recommended that blacks, through the Urban League, press for legislation that would provide adequate relief for black workers. In the speech, she urged the audience to press for change now rather than focus on otherworldly concerns. Alexander reminded the middle-class gathering that their economic status and ability to earn livelihoods in professions that served a black clientele were dependent upon the black masses (c 1930s: 6). Black business owners were more adversely affected by the collapse of the economy than their white counterparts because black businesses relied on the patronage of the deeply impoverished black community. Alexander stated: Not only must we place on the statute books legislation that is of special benefit to the Negro worker but we must with equal force and zeal see that the Negro worker receives his or her full share of all relief legislation. Never since Reconstruction has there existed such a favorable chance for the federal government to influence the condition of the Negro masses. By scrupulously fair administration of all types of direct and indirect federal aid?in farm relief, public works program and subsidized relief, the principle of equitable distribution can for the first time be enforced for Negro labor in America. But unless the Negro’s claims are definitely, persistently and forcibly brought before the governmental bodies there is real danger that not only will he be overlooked or neglected but that the reorganization of industry will have him in a worse position than prior to the depression, (c 1930s: 5) Alexander ended the speech by stating that black professionals had a duty to work for the benefit of black workers since middle class savings were based on the labor of the masses. However dependent middle class blacks were on black workers, Alexander’s use of inclusive language “[so] that we may not be subjected to greater poverty after the depression” indicates that she did 147This content downloaded from 209.23.242.17 on Thu, 02 Apr 2020 00:14:13 UTCAll use subject to https://about.jstor.org/terms
REVIEW OF SOCIAL ECONOMY not posit much of a separation between different classes of blacks in their economic and political interests.2 For Alexander, the duty to serve the black masses also extended to religious organizations. She believed that the black church had an obligation and a special role to play in the struggle to improve life for poor blacks. Her views on the role of the church in promoting black welfare were stated in a speech on “Negro Achievement” in 1936. According to Alexander: … any program proposed for racial achievement one must first consider the influence of the Negro church … The success of any plan to improve the status of our group must be dependent upon the cooperation of the Negro clergyman and the Negro church, because they come nearer than any other group to controlling the thought of the masses. We must develop some plan by which this group of leaders will realize the social implications of Christian salvation … Jesus … knew that if the lives of the poor were to be made happier, if their souls were to be made purer, there must be an improvement in their general social conditions. His sympathy for the poor did not stop with charity but flowed out into a concept of social justice. (Alexander 1936: 7-8) Alexander was very active in church organizations and her religious convictions were also a source of her radicalism. Wilmore (1984) maintains that, although the black church has been reactionary in its acceptance of white American mythology, it has also been profoundly radical in its doctrine for black liberation. As the Great Depression wore on, Alexander became less optimistic about federal efforts to provide relief, reform, and recovery policies that were beneficial to blacks. As a loyal Republican during the period when most African Americans still belonged to the party of Lincoln, Alexander was understandably critical of Democratic policies, including the New Deal, which she characterized as a “raw deal for the average citizen” (Alexander 1935a: 1). In a speech that she gave for the Republican Party in Lackawanna County elections in 1935, she addressed the issue of blacks voting for Democrats but urged the audience to vote Republican and return liberal judges to office. Soon thereafter, however, in a speech before the Eastern Federation of Negro Republicans, Alexander talked about her dissatisfaction with the Republican Party which, unlike the Democratic Party, had ignored its black voters and not appointed them to positions. And yet, Alexander continued to express concern over blacks switching to the Democratic Party 2 For an interesting discussion of different perceptions about the poor by black and white middle class professionals, see Linda Gordon (1991). 148This content

Alfred Marshall was educated in mathematics
at St. John’s College Cambridge,
and was elected to a mathematics fellowship
there upon receiving his degree. He
resigned this position in 1877 and took a
position as Professor of Political Economy
at Bristol. He moved on to Balliol
College, Oxford, and, in 1885, returned
to Cambridge, where he remained as
Professor of Political Economy until his
retirement in 1908.
Unlike Jevons, who painted his economics
as representing a strong break from the
classical analysis, Marshall emphasized
the strong degree of continuity between
the Classicals and his own theory. Yet,
through his Principles of Economics
(1890), as well as through the force of
his personality in developing economics
education at Cambridge, Marshall helped
shape many of the principal elements of
what became the microeconomic core of
neoclassical economics: its static partial
equilibrium analysis; the demand and
supply model; the concern with the household
and the firm as the basis of demand
and supply, respectively; and a vast array
ALFRED MARSHALL (1842–1924)
Alfred Marshall, Photographer: Walter Stoneman,
by courtesy of the National Portrait Gallery, London.
The History of Economic Thought : A Reader; Second Edition, edited by Warren J. Samuels, and Steven G. Medema, Taylor & Francis Group,
2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/merrimack/detail.action?docID=1207547.
Created from merrimack on 2020-04-14 10:29:18.
Copyright © 2013. Taylor & Francis Group. All rights reserved.
Alfred Marshall 527
Marshall was one of those who used utility analysis, but not as a theory of value; for him
it was part of the theory with which one could explain demand curves, another part being
the principle of substitution. Indeed, Marshall’s scissors analysis—which combined demand
and supply, i.e., utility and cost of production, as if two blades of a pair of scissors—not only
transcended the conflict between Classical and Austrian theories of value but, equally if not
more important, effectively removed the theory of value from center stage and replaced it
with the theory of price; though the term “value” continued to be used, for most people
it was a synonym for “price.” Prices no longer were thought to gravitate toward some ultimate
and absolute basis of price; prices were purely existential, a matter of a dance, as it
were, between demand and supply, or, rather, between and among the factors and forces
operating through demand and supply (only some of which, however, were thought to be
within the purview of economists).
Marshall’s approach to methodological issues was largely low key, or middlebrow. He
emphasized deliberateness over selfishness and, sensitive to criticisms of economics as
extolling selfishness, proposed to study man as he is rather than an abstract “economic”
man; proposed a catholic definition of economics as the study of mankind in the ordinary
business of life, earning a living; affirmed the limited use of mathematics in economic theory
(for example, in spite of his strong mathematical background, Marshall largely relegated
mathematical analysis to footnotes and appendices in the Principles); combined habit with
deliberateness in explaining economic behavior; identified economic laws as statements of
tendency under certain, stipulated conditions, not absolute natural laws; emphasized objectivity
through measurement, though he himself engaged in little quantitative study; combined
quantitative empirical study with both pure theory and study of institutions and behavior;
was dubious about the practical and theoretical relevance of such grandiose notions as maximum
satisfaction, the invisible hand, and laissez-faire; and so on.
The core of Marshall’s theory is the determination of price. Price, he argued, was a function
of demand and supply, but could be analyzed differently on the basis of different conceptual
time periods—especially the market period, short run and long run—understood as the different
lengths of time it took for certain variables to work themselves out. In the short run, for
example, price was heavily influenced by demand; in the long run, by cost of production. In
all such periods, however, price was also influenced by whether the market was competitive
or monopolistic.
Marshall’s distribution theory was, like that of most other economists, eclectic. It included
(1) a general theory of factor pricing, (2) different specific theories of wages, rent, interest
and profit, and (3) attention to the different conditions of supply of the several factors of
production—conditions which reflected class, custom, legal status, and power structure. He
thought that labor markets, especially on their supply side, were not like other markets; such
markets had certain “peculiarities” which worked to labor’s cumulatively disadvantageous
position. While he urged caution in seeking major institutional reforms to improve the position
of labor, he nonetheless argued that failure to attend to labor’s problems was worse than
making mistakes in doing so.
The excerpts from Marshall’s Principles reprinted here are taken from his eighth edition,
published in 1920. We are given a glimpse of his view of the nature and goals of economic
analysis, the theory of increasing and diminishing returns in production, his elegant formulation
of the apparatus of demand and supply, including his famous “scissors” analogy, and his
introduction of period analysis into economic theory, where the reader might take note of the
degree of correspondence between Marshall’s long-period equilibrium and the concept of
market equilibrium in the classical analysis.
The History of Economic Thought : A Reader; Second Edition, edited by Warren J. Samuels, and Steven G. Medema, Taylor & Francis Group,
2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/merrimack/detail.action?docID=1207547.
Created from merrimack on 2020-04-14 10:29:18.
Copyright © 2013. Taylor & Francis Group. All rights reserved.
528 The Marginal Revolution
References and Further Reading
Aldrich, John (1996) “The Course of Marshall’s Theorizing about Demand,” History of Political
Economy 28 (Summer): 171–217.
Blaug, Mark, ed. (1992) Alfred Marshall (1842–1924) and Francis Edgeworth (1845–1926), Aldershot:
Edward Elgar Publishing.
Coase, R.H. (1975) “Marshall on Method,” Journal of Law and Economics 18 (April): 25–31.
Cook, Simon J. (2009) The Intellectual Foundations of Alfred Marshall’s Economic Science: A Rounded
Globe of Knowledge, Cambridge: Cambridge University Press.
Friedman, Milton (1949) “The Marshallian Demand Curve,” Journal of Political Economy 57
(December): 463–95.
Gordon, H. Scott (1973) “Alfred Marshall and the Development of Economics as a Science,” in
R.N. Glere and R.S. Westfall (eds.), Foundations of Scientific Method in the Nineteenth Century,
Bloomington: Indiana University Press.
Groenewegen, Peter (1995) A Soaring Eagle: Alfred Marshall, 1842–1924, Aldershot: Edward Elgar
Publishing.
—— (2007) Alfred Marshall: Economist, 1842–1924, London: Palgrave Macmillan.
Keynes, J.M. (1951) “Alfred Marshall, 1842–1924,” in J.M. Keynes, Essays in Biography, London:
Rupert Hart-Davis, 125–217.
Maloney, John (1985) Marshall, Orthodoxy and the Professionalisation of Economics, Cambridge:
Cambridge University Press.
Marshall, Alfred (1879) The Pure Theory of Foreign Trade. The Pure Theory of Domestic Values,
London: London School of Economics, 1930.
—— (1919) Industry and Trade, London: Macmillan.
—— (1923) Money, Credit and Commerce, London: Macmillan.
—— (1961) Principles of Economics, 9th (Variorum) edn., edited by C.W. Guillebaud, 2 vols., London:
Macmillan.
Marshall, Alfred and Marshall, Mary Paley (1979) The Economics of Industry, London: Macmillan.
Pigou, A.C. (1925) Memorials of Alfred Marshall, London: Macmillan.
Raffaelli, Tiziano, Becattini, Giacomo, and Dardi, Marco, eds. (2007) The Elgar Companion to Alfred
Marshall, Cheltenham: Edward Elgar Publishing.
Raffaelli, Tiziano, Becattini, Giacomo, Caldari, Katia, and Dardi, Marco, eds. (2011) The Impact of
Alfred Marshall’s Ideas: The Global Diffusion of His Work, Cheltenham: Edward Elgar Publishing.
Robbins, Lionel (1928) “The Representative Firm,” Economic Journal 38: 387–404.
Robertson, D.H. (1952) Utility and All That, London: George Allen & Unwin.
Shove, Gerald (1942) “The Place of Marshall’s Principles in the Development of Economic Theory,”
Economic Journal 52 (December): 294–329.
Sraffa, Piero (1926) “The Laws of Returns Under Competitive Conditions,” Economic Journal 36
(December): 535–50.
Whitaker, J.K. (1975) The Early Economic Writings of Alfred Marshall, 1867–1890, 2 vols., London:
Macmillan.
—— (1987) “Marshall, Alfred,” in John Eatwell, Murray Milgate, and Peter Newman (eds.), The New
Palgrave: A Dictionary of Economics, Vol. 3, London: Macmillan, 350–63.
Wood, John C. (1982) Alfred Marshall: Critical Assessments, London: Croom Helm.
—— (1993) Alfred Marshall: Critical Assessments, second series, London: Routledge.
The History of Economic Thought : A Reader; Second Edition, edited by Warren J. Samuels, and Steven G. Medema, Taylor & Francis Group,
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Principles of Economics (1890)*
Book I: Preliminary Survey
Chapter I: Introduction
§ 1. POLITICAL ECONOMY or ECONOMICS is a study of mankind in the ordinary business of
life; it examines that part of individual and social action which is most closely connected
with the attainment and with the use of the material requisites of wellbeing.
Thus it is on the one side a study of wealth; and on the other, and more important side,
a part of the study of man. For man’s character has been moulded by his every-day work,
and the material resources which he thereby procures, more than by any other influence
unless it be that of his religious ideals; and the two great forming agencies of the world’s
history have been the religious and the economic. Here and there the ardour of the military
or the artistic spirit has been for a while predominant: but religious and economic influences
have nowhere been displaced from the front rank even for a time; and they have
nearly always been more important than all others put together. Religious motives are
more intense than economic, but their direct action seldom extends over so large a part of
life. For the business by which a person earns his livelihood generally fills his thoughts
during by far the greater part of those hours in which his mind is at its best; during them
his character is being formed by the way in which he uses his faculties in his work, by the
thoughts and the feelings which it suggests, and by his relations to his associates in work,
his employers or his employees.
And very often the influence exerted on a person’s character by the amount of his income
is hardly less, if it is less, than that exerted by the way in which it is earned. It may make little
difference to the fulness of life of a family whether its yearly income is £1000 or £5000; but
it makes a very great difference whether the income is £30 or £150: for with £150 the family
has, with £30 it has not, the material conditions of a complete life. It is true that in religion,
in the family affections and in friendship, even the poor may find scope for many of those
faculties which are the source of the highest happiness. But the conditions which surround
extreme poverty, especially in densely crowded places, tend to deaden the higher faculties.
Those who have been called the Residuum of our large towns have little opportunity for
friendship; they know nothing of the decencies and the quiet, and very little even of the unity
of family life; and religion often fails to reach them. No doubt their physical, mental, and
moral ill-health is partly due to other causes than poverty: but this is the chief cause.
* Principles of Economics, Eighth Edition, London: Macmillan, 1920.
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530 The Marginal Revolution
And, in addition to the Residuum, there are vast numbers of people both in town and
country who are brought up with insufficient food, clothing, and house-room; whose education
is broken off early in order that they may go to work for wages; who thenceforth are
engaged during long hours in exhausting toil with imperfectly nourished bodies, and have
therefore no chance of developing their higher mental faculties. Their life is not necessarily
unhealthy or unhappy. Rejoicing in their affections towards God and man, and perhaps even
possessing some natural refinement of feeling, they may lead lives that are far less incomplete
than those of many, who have more material wealth. But, for all that, their poverty is a great
and almost unmixed evil to them. Even when they are well, their weariness often amounts to
pain, while their pleasures are few; and when sickness comes, the suffering caused by poverty
increases tenfold. And, though a contented spirit may go far towards reconciling them to these
evils, there are others to which it ought not to reconcile them. Overworked and undertaught,
weary and careworn, without quiet and without leisure, they have no chance of making the
best of their mental faculties.
Although then some of the evils which commonly go with poverty are not its necessary
consequences; yet, broadly speaking, “the destruction of the poor is their poverty,” and the
study of the causes of poverty is the study of the causes of the degradation of a large part of
mankind.
. . .
Book IV: The Agents of Production: Land, Labour, Capital
and Organization
Chapter XIII: Conclusion. Correlation of the Tendencies to Increasing
and to Diminishing Return
§ 1. AT the beginning of the Book we saw how the extra return of raw produce which nature
affords to an increased application of capital and labour, other things being equal, tends in
the long run to diminish. In the remainder of the Book and especially in the last four chapters
we have looked at the other side of the shield, and seen how man’s power of productive work
increases with the volume of the work that he does. Considering first the causes that govern
the supply of labour, we saw how every increase in the physical, mental and moral vigour of a
people makes them more likely, other things being equal, to rear to adult age a large number of
vigorous children. Turning next to the growth of wealth, we observed how every increase
of wealth tends in many ways to make a greater increase more easy than before. And lastly
we saw how every increase of wealth and every increase in the numbers and intelligence of
the people increased the facilities for a highly developed industrial organization, which in its
turn adds much to the collective efficiency of capital and labour.
Looking more closely at the economies arising from an increase in the scale of production
of any kind of goods, we found that they fell into two classes—those dependent on the
general development of the industry, and those dependent on the resources of the individual
houses of business engaged in it and the efficiency of their management; that is, into external
and internal economies.
We saw how these latter economies are liable to constant fluctuations so far as any particular
house is concerned. An able man, assisted perhaps by some strokes of good fortune,
gets a firm footing in the trade, he works hard and lives sparely, his own capital grows fast,
and the credit that enables him to borrow more capital grows still faster; he collects around
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Marshall: Principles of Economics 531
him subordinates of more than ordinary zeal and ability; as his business increases they rise
with him, they trust him and he trusts them, each of them devotes himself with energy to just
that work for which he is specially fitted, so that no high ability is wasted on easy work, and
no difficult work is entrusted to unskilful hands. Corresponding to this steadily increasing
economy of skill, the growth of his business brings with it similar economies of specialized
machines and plant of all kinds; every improved process is quickly adopted and made the
basis of further improvements; success brings credit and credit brings success; credit and
success help to retain old customers and to bring new ones; the increase of his trade gives
him great advantages in buying; his goods advertise one another, and thus diminish his difficulty
in finding a vent for them. The increase in the scale of his business increases rapidly
the advantages which he has over his competitors, and lowers the price at which he can
afford to sell. This process may go on as long as his energy and enterprise, his inventive and
organizing power retain their full strength and freshness, and so long as the risks which are
inseparable from business do not cause him exceptional losses; and if it could endure for a
hundred years, he and one or two others like him would divide between them the whole of
that branch of industry in which he is engaged. The large scale of their production would
put great economies within their reach; and provided they competed to their utmost with one
another, the public would derive the chief benefit of these economies, and the price of the
commodity would fall very low.
But here we may read a lesson from the young trees of the forest as they struggle upwards
through the benumbing shade of their older rivals. Many succumb on the way, and a few only
survive; those few become stronger with every year, they get a larger share of light and air
with every increase of their height, and at last in their turn they tower above their neighbours,
and seem as though they would grow on for ever, and for ever become stronger as they grow.
But they do not. One tree will last longer in full vigour and attain a greater size than another;
but sooner or later age tells on them all. Though the taller ones have a better access to light
and air than their rivals, they gradually lose vitality; and one after another they give place to
others, which, though of less material strength, have on their side the vigour of youth.
And as with the growth of trees, so was it with the growth of businesses as a general rule
before the great recent development of vast joint-stock companies, which often stagnate,
but do not readily die. Now that rule is far from universal, but it still holds in many industries
and trades. Nature still presses on the private business by limiting the length of the life
of its original founders, and by limiting even more narrowly that part of their lives in which
their faculties retain full vigour. And so, after a while, the guidance of the business falls into
the hands of people with less energy and less creative genius, if not with less active interest
in its prosperity. If it is turned into a joint-stock company, it may retain the advantages
of division of labour, of specialized skill and machinery: it may even increase them by a
further increase of its capital; and under favourable conditions it may secure a permanent
and prominent place in the work of production. But it is likely to have lost so much of its
elasticity and progressive force, that the advantages are no longer exclusively on its side in
its competition with younger and smaller rivals.
When therefore we are considering the broad results which the growth of wealth and
population exert on the economies of production, the general character of our conclusions is
not very much affected by the facts that many of these economies depend directly on the size
of the individual establishments engaged in the production, and that in almost every trade
there is a constant rise and fall of large businesses, at any one moment some firms being in
the ascending phase and others in the descending. For in times of average prosperity decay
in one direction is sure to be more than balanced by growth in another.
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