Abstract
Alfred Marshall explored a scientific method for theorising complex economic phenomena using mechanical and biological analogies. Moreover from his very first book The Economics of Industry Marshall paid attention to the efficacy of a science of tendencies to understand real economic movements. To clarify this, this paper begins by reviewing a methodological problem suggested by Thorstein Veblen, concerning which of Marshall’s economics should be regarded as ‘quasi-evolutionary’. Critically Veblen considered Marshall’s approach to economic progress could not avoid assumptions of a natural law and normality, even though Marshall analyzed the tendency of economic change produced over the ultra-long-term. However, we focus on the approaches Marshall found most convincing, which were based on eighteenth and nineteenth century scientific methods proposed by Cournot, John Herschel, and William Whewell. We examine the methodological significance derived from the analogies of astronomy and tidology over the secular term. Specifically, Marshall investigated the analysis of wages as a science of tendencies to realise fair wages through conciliation, where the influence of time, region, and custom were considered. Therefore, this article demonstrates how Marshall applied a non-Newtonian method based on tidology to the study of secular movements in economic society to develop his understanding of the organic growth of economy scientifically.
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Notes
In 2020, Caldari and Nishizawa published Alfred Marshall’s Last Challenge, reproduced Marshall’s unpublished manuscripts with their annotations and comments. This book shows that Marshall began with his argument on economic progress using the analogy of tide. In the main discussion, Marshall focused on improving mental and moral faculty in human beings with reference to the conditions of workers and industries in the United States of America. Furthermore, Marshall mentioned that economic progress could be recognise as a qualitative change of ‘the character of the forces at work, which is of a different order’ (Caldari and Nishizawa 2020, 338). As previous studies indicated, Marshall’s understanding of the organic growth of economy could be considered as the mutual development of human nature and economic society. Therefore, further research is needed to confirm a theoretical relationship between Marshall’s ideals on economic progress and his organic growth theory.
Marshall thought that ‘as civilization advances, further progress becomes more and more dependent upon the diffusion of education among the working classes’ (Marshall and Marshall [1879] 1994, 11). Therefore, in Marshall’s economics, the rise in the standard of life was required the improvement of production efficiency, increase in leisure time, rise of wages and future expenditure. Marshall further said that ‘those effects which are cumulative are generally far more important in the long run than those which are not, however prominent the latter may appear’ (Marshall [1920] 1961, 559).
Kiichiro Yagi also indicated that, with reference to the Veblen’s critique mentioned above, Marshall’s organic growth theory contains a theoretical antilogy: ‘[t]he concept of ‘rent’ is not a thing intended to create economic growth but an outcome brought by economic growth. In theory, ‘a quasi-rent’ is naturally eliminated in a short period. However, Marshall did not fully explain that ‘a quasi-rent’ becomes composite. In his approach must lurk something very different from the idea of ‘a quasi-rent’ brought about by market conditions as a consequence. This is the point that we should study.’ (Yagi 1998, 95).
Marshall was telling his undergraduate students to read Cournot’s Recherches for their economics study. It is well known that Marshall’s vision of economic progress was based on the principles of continuity, which Cournot developed. As a background, he presented his economic research related to analytical method at the meeting of the Cambridge Philosophical Society in 1873.
In Cambridge, William Whewell also mentioned the significance of the principle of continuity in his book entitled The Philosophy of the Inductive Sciences in 1840. Whewell clearly stated that ‘the proof of the First Law of Motion depends upon the Law of Continuity: for since, by diminishing the resistance to a body moving on a horizontal plane, we diminish the retardation, and this without limit, the law of continuity will bring us at the same time to the case of no resistance and to the case of no retardation’ (Whewell [1840] 2014, vol. 2, 560). Also, Whewell mentioned that an approach near to the principle of continuity was the method of gradation, especially Laplace’s one (Whewell [1840] 2014, vol. 2, 564). In addition, the method of gradation could be adopted to an investigation of geological causes, according to Whewell ([1840] 2014, vol. 2, 567). It can be said that these discussions influenced the development of economic analysis indirectly. And thus, it should be mentioned that, in Cambridge, the significance of the principle of continuity related to the method of gradation had been argued as the effective method of inductive analysis since the 1840s.
Indeed, Cournot said that ‘[w]e consider as given and invariable the prices of other commodities and the incomes of other producers, but in reality, the economic system is a whole of which all the parts are connected and react on each other… It seems, therefore, as if, for a complete and rigorous solution of the problems relative to some parts of the economic system, it were indispensable to take the entire system into consideration. But this would surpass the powers of mathematical analysis and of our practical methods of calculation, even if the values of all the constants could be assigned to them numerically’ (Cournot [1838] 1980, 99/108). In this regard, Robert Solow claims that ‘[t]his remarkable statement points ahead to Walras and the theory of general equilibrium’ (Solow 2007, 107).
John Sutton, a British economist of industrial organization, noted Marshall’s analogy of the tides in his book entitled Marshall’s Tendencies (2000). In the book, Sutton critically examined Marshall’s tidal approach as a ‘standard approach’, which could be composed of equilibrium analysis for the main factors (observable market characteristics) and probability analysis for the secondary causes (noise) in the analysis of market mechanism. Sutton indicated that ‘the world is approximate by a well-behaved model with a unique equilibrium, and the analogy of the tides holds good; the outcomes we observe are no more than the “true equilibrium” outcome plus some “random noise”’ (Sutton 2000, 8–9). However, Sutton was not aware of Marshall’s intention that the tidal approach should be adopted to the analysis of the labour maket as a more appropriate analogy or method than either mechanical analogy or biological analogy. Thus, Marshall’s analysis of the labour market by means of the tidal approach remains a matter to be discussed further.
Kepler and Newton developed the mathematical representation of the elliptic motion of planets of the solar system, but they had been troubled by the effects of oscillations occurred by satellies for calculating the stability of the solar system accurately (Haskins 1985, 41).
In Cournot’s translation, Herschel’s indication could be expressed as ‘Nous tombons ici sur la distinction qui doit être faite entre les variations qu’on appelle séculairesy et les variations rapidement périodiques, ou qui se compensent dans de courts intervalles de temps’ (Herschel [1834] 1835, 402).
Possibly Marshall directly learned the argument of such distinction from his supervisor Isaac Todhunter when Marshall was an undergraduate at St John’s College, Cambridge in 1861–1865. In fact, on the 108th page of his lecture notes entitled ‘Distinction between periodic and secular inequalities’, Todhunter wrote about the astronomical definition of 'periodic variation’ and ‘secular variation’ (Papers of Isaac Todhunter, Box A, A3 Manuscripts).
In the Michaelmas term in 1861, Marshall matriculated to the University of Cambridge. The following year, the first edition of The Student Guide to the University of Cambridge was published, in which examination schedules and preparations for all category of both Tripos (honours degrees) and Poll-exam (pass degrees) were introduced.
Whewell developed a research field of Tidology in his Philosophy of Inductive Science (1840): ‘The subject of the Tides is, in like manner, destitute of any name which designates the science concerned about it. I have ventured to imply the term Tidology, have been much engaged in tidological researches’ (Whewell [1840] 2014, vol. 2, p. 509). Furthermore, J.S. Mill already pointed out the effectiveness of the method of Tidology for making his peculiar subject Ethology in volume VI of System of Logic (Mill [1843] 1974, pp. 844–845). In this regard, Marshall may have learned the method of Tidology from both Whewell and Mill through their books.
The wage problem is closely related to the poverty problem of the working class. As we discuss, Marshall developed his theory of wages from the standpoint of the secular perspective. For this analysis of wages, Marshall reviewed the doctrine of the wage-fund. In particular, he was critical that J.S. Mill developed his doctrine of the wage-fund under short-term analysis. Marshall stated that J.S.Mill explained ‘[w]ages depend mainly upon’ that ‘the number of the labouring class … who work for hire’ and ‘the aggregate of what may be called the Wage-fund which consists of that part of circulating capital … which is expended in the direct hire of labour’ (Marshall [1920] 1961, 824). According to Marshall, the doctrine of the wage-fund argued that the proportion of the total amount of capital to the population of the working class assessed the wage level as an average since the total amount of capital was limited, and the number of labour’s population could change. In this regard, there is no place to consider the fair wage which can improve the standard of life in the working class, and is a core of the organic growth of economy.
In this regard, ‘A fair rate of wages’ (1887) has a theoretical consistency with the other article entitled ‘Social possibilities of economic chivalry’ published in 1907 (See Marshall [1887] 1925; Marshall [1907] 1925; Matsuyama 2014). Practically, Marshall required to cultivate the sympathetic attitude for the students who are going to promote society as a chivalrous entrepreneur through Economics Tripos (see Marshall 1903, 39; Marshall [1919] 1923, 822–823).
Marshall continued to say that ‘[i]f no such agreement can be arrived at, the question should be referred to the arbitration of a referee who is a member of the board, but who is summoned to its meetings only when a satisfactory conclusion cannot be obtained without his aid’ (Marshall and Marshall [1879] 1994, 214).
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Acknowledgements
This paper’s original ideas came from the discussion with Tiziano Raffaelli in 2007 when he visited Osaka to supervise young Japanese Marshallian scholars. At that time, he advised me to pay attention to Sir John Herschel’s work to understand the formation of Mashall’s economics. I truly appreciate the late Raffaelli’s comments. I also appreciate having had the opportunity to present my first draft to the Research Seminar of Economic History and the History of Economic Thought at the University of Hyogo in February 2019. Ryo Hongo and Yasuhiro Okazawa made helpful comments to help me rethink my arguments. To accomplish this research project, I consulted manuscripts at libraries in Cambridge. I am grateful to Marshall Library of Economics at the University of Cambridge and the Master and Fellows of St John’s College, Cambridge. Finally, I wish to thank the associate editor and the anonymous reviewers for their useful comments. This project was supported by JSPS KAKENHI (Grant nos. 15H03330, 16K17097, 19K01575).
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Matsuyama, N. The influence of Tidology and Astronomy in Alfred Marshall’s economics: a reassessment of his economic method for the analysis of periodic and secular variations. Evolut Inst Econ Rev 18, 549–567 (2021). https://doi.org/10.1007/s40844-021-00214-4
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DOI: https://doi.org/10.1007/s40844-021-00214-4