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History of Political Economy 36.2 (2004) 401-403

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The Economics of Alfred Marshall: Revisiting Marshall's Legacy. Edited by Richard Arena and Michel Quéré. Basingstoke, U.K.: Palgrave Macmillan, 2003. ix; 281 pp. $72.00.

There are (at least) two sorts of Marshallian: the book-4 Marshallian and the book-5 Marshallian. Most of the contributors to this volume are book-4 Marshallians. Their collective point is that Marshall's true legacy was not the period analysis of book 5 but something much more dynamic, Darwinian, and empirically based. There is something in this view, although the present reviewer's position is that much though Marshall would have liked to have left a different legacy, he did not actually succeed in doing so. Nevertheless, there is much of interest in Richard Arena and Michel Quéré's volume.

Several contributors comment favorably upon Marshall's notion of the "district." Giacomo Becattini regrets that Marshall in effect dropped it from his later work and concedes "that a new season of neo-Marshallian studies is not just around the corner" (26). Marco Bellandi and Tiziano Raffaelli also think highly of the district. Bellandi finds it useful at both the micro and macro levels, as external economies are always internal to "some appropriate institutional complex" (249). Raffaelli sees it as a natural way for Marshall, with his evolutionary turn of mind, to have approached the analysis of structures, institutions, innovation, and specialization. In a related chapter, although not specifically about the district, David Reisman makes a good case for Marshall's understanding of the concept of social capital—trust and cooperation at the micro level and citizenship and education at the macro level. I like Reisman's remark that "externalities are not the exception but another name for economics" (58).

Roberto Marchionatti links Marshall and Keynes as having an attractively "old-fashioned" view of complexity, refusing to force the economy into a mathematical system. He hints, although he does not elaborate the point, that Marshall's view is consistent with the new mathematics of complexity. Marco Dardi presents a set-theoretic view of the dynamics of Marshall's book 5. Strictly, he is doing comparative [End Page 401] statics, as he starts with a stationary state and explores how it settles to successively "higher levels" of equilibrium following a shock. The reader could have done with more help than is given on page 93 about how the notation applies to book 5 itself and about how his process relates to Walrasian tâtonnement.

That Marshall failed to achieve what Laurence Moss calls his "third goal"—communicating with the new generation of businessmen—was in some measure due to his failure to solve the "reconciliation" or the Cournot problem: that is, how to reconcile the competitive process with increasing returns? The problem runs all the way from Cournot through Marshall, to the Increasing Returns Symposium of 1930 and way beyond. It has always seemed to me to have been rather churlish of Marshall to complain that Cournot had not solved it! Neil Hart admits that Marshall's incorporation of Darwinism (then at its Victorian height) into his system was disappointing. Nevertheless, it led him to the representative firm, which was to play an "indispensable" role (167), not to be confused with the "equilibrium" firm. Richard Arena argues that Marshall provides inspiration for theorists who wish to bring organization, innovation, and knowledge into the mainstream, although he concedes that he failed to provide a theoretical framework (238). Michel Quéré, again, is concerned with Marshall's failure to solve the reconciliation problem and favors his emphasis on evolution and the competitive process: he insists that Marshall's approach, via Young and G. B. Richardson, is still relevant. The Marshall-Penrose-Richardson line of descent also features in Brian Loasby's chapter. He emphasizes sufficiency rather than optimality but concedes that "how an appropriate theory may be developed is beyond the scope of this chapter" (217). Indeed, it is beyond the scope of this book.

Peter Groenewegen and John Whitaker...


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