Alfred Marshall

Alfred Marshall, FBA (26 July 1842 – 13 July 1924) was one of the most influential economists of his time. His book, Principles of Economics (1890), was the dominant economic textbook in England for many years. It brings the ideas of supply and demand, marginal utility, and costs of production into a coherent whole. He is known as one of the founders of neoclassical economics.[1] Although Marshall took economics to a more mathematically rigorous level, he did not want mathematics to overshadow economics and thus make economics irrelevant to the layman.

Alfred Marshall
Alfred Marshall
Born26 July 1842
London, England
Died13 July 1924 (aged 81)
Cambridge, England
NationalityBritish
InstitutionSt John's College, Cambridge
University College, Bristol
Balliol College, Oxford
School or
tradition
Neoclassical economics
Alma materSt John's College, Cambridge
InfluencesLéon Walras, Vilfredo Pareto, Jules Dupuit, Stanley Jevons, Henry Sidgwick
ContributionsFounder of neoclassical economics
Principles of Economics (1890)

Life and career

Marshall was born in London. His father was a bank cashier and devout Evangelical. Marshall grew up in Clapham and was educated at the Merchant Taylors' School and St John's College, Cambridge, where he demonstrated an aptitude in mathematics, achieving the rank of Second Wrangler in the 1865 Cambridge Mathematical Tripos.[2][3] Marshall experienced a mental crisis that led him to abandon physics and switch to philosophy. He began with metaphysics, specifically "the philosophical foundation of knowledge, especially in relation to theology.".[4] Metaphysics led Marshall to ethics, specifically a Sidgwickian version of utilitarianism; ethics, in turn, led him to economics, because economics played an essential role in providing the preconditions for the improvement of the working class.

He saw that the duty of economics was to improve material conditions, but such improvement would occur, Marshall believed, only in connection with social and political forces. His interest in Georgism, liberalism, socialism, trade unions, women's education, poverty and progress reflect the influence of his early social philosophy on his later activities and writings.

Marshall was elected in 1865 to a fellowship at St John's College at Cambridge, and became lecturer in the moral sciences in 1868. In 1885 he became professor of political economy at Cambridge, where he remained until his retirement in 1908. Over the years he interacted with many British thinkers including Henry Sidgwick, W.K. Clifford, Benjamin Jowett, William Stanley Jevons, Francis Ysidro Edgeworth, John Neville Keynes and John Maynard Keynes. Marshall founded the "Cambridge School" which paid special attention to increasing returns, the theory of the firm, and welfare economics; after his retirement leaderships passed to Arthur Cecil Pigou and John Maynard Keynes.

Contributions to economics

Marshall - Elements of economics of industry, 1892 - 5745225
Elements of economics of industry, 1892

Marshall desired to improve the mathematical rigour of economics and transform it into a more scientific profession. In the 1870s he wrote a small number of tracts on international trade and the problems of protectionism. In 1879, many of these works were compiled into a work entitled The Theory of Foreign Trade: The Pure Theory of Domestic Values. In the same year (1879) he published The Economics of Industry with his wife Mary Paley.

Although Marshall took economics to a more mathematically rigorous level, he did not want mathematics to overshadow economics and thus make economics irrelevant to the layman. Accordingly, Marshall tailored the text of his books to laymen and put the mathematical content in the footnotes and appendices for the professionals. In a letter to A. L. Bowley, he laid out the following system:

(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life (5) Burn the mathematics. (6) If you can't succeed in 4, burn 3. This I do often."[5]

Marshall had been Mary Paley's professor of political economy at Cambridge and the two were married in 1877, forcing Marshall to leave his position as a Fellow of St John's College, Cambridge to comply with celibacy rules at the university. He became the first principal at University College, Bristol, which was the institution that later became the University of Bristol, again lecturing on political economy and economics. He perfected his Economics of Industry while at Bristol, and published it more widely in England as an economic curriculum; its simple form stood upon sophisticated theoretical foundations. Marshall achieved a measure of fame from this work, and upon the death of William Jevons in 1882, Marshall became the leading British economist of the scientific school of his time.

Marshall returned to Cambridge, via a brief period at Balliol College, Oxford during 1883–4, to take the seat as Professor of Political Economy in 1884 on the death of Henry Fawcett. At Cambridge he endeavoured to create a new tripos for economics, a goal which he would only achieve in 1903. Until that time, economics was taught under the Historical and Moral Sciences Triposes which failed to provide Marshall the kind of energetic and specialised students he desired.

Principles of Economics (1890)

Marshall began his economic work, the Principles of Economics, in 1881, and spent much of the next decade at work on the treatise. His plan for the work gradually extended to a two-volume compilation on the whole of economic thought. The first volume was published in 1890 to worldwide acclaim, establishing him as one of the leading economists of his time. The second volume, which was to address foreign trade, money, trade fluctuations, taxation, and collectivism, was never published.

Principles of Economics established his worldwide reputation. It appeared in 8 editions, starting at 750 pages and growing to 870 pages. It decisively shaped the teaching of economics in English-speaking countries. Its main technical contribution was a masterful analysis of the issues of elasticity, consumer surplus, increasing and diminishing returns, short and long terms, and marginal utility. Many of the ideas were original with Marshall; others were improved versions of the ideas by W. S. Jevons and others.

In a broader sense Marshall hoped to reconcile the classical and modern theories of value. John Stuart Mill had examined the relationship between the value of commodities and their production costs, on the theory that value depends on the effort expended in manufacture. Jevons and the Marginal Utility theorists had elaborated a theory of value based on the idea of maximising utility, holding that value depends on demand. Marshall's work used both these approaches, but he focused more on costs. He noted that, in the short run, supply cannot be changed and market value depends mainly on demand. In an intermediate time period, production can be expanded by existing facilities, such as buildings and machinery, but, since these do not require renewal within this intermediate period, their costs (called fixed, overhead, or supplementary costs) have little influence on the sale price of the product. Marshall pointed out that it is the prime or variable costs, which constantly recur, that influence the sale price most in this period. In a still longer period, machines and buildings wear out and have to be replaced, so that the sale price of the product must be high enough to cover such replacement costs. This classification of costs into fixed and variable and the emphasis given to the element of time probably represent one of Marshall's chief contributions to economic theory. He was committed to partial equilibrium models over general equilibrium on the grounds that the inherently dynamical nature of economics made the former more practically useful.

Marshall's Supply and Demand Graph
Alfred Marshall's supply and demand graph.

Much of the success of Marshall's teaching and Principles book derived from his effective use of diagrams, which were soon emulated by other teachers worldwide.[6]

Alfred Marshall was the first to develop the standard supply and demand graph demonstrating a number of fundamentals regarding supply and demand including the supply and demand curves, market equilibrium, the relationship between quantity and price in regards to supply and demand, the law of marginal utility, the law of diminishing returns, and the ideas of consumer and producer surpluses. This model is now used by economists in various forms using different variables to demonstrate several other economic principles. Marshall's model allowed a visual representation of complex economic fundamentals where before all the ideas and theories were only capable of being explained through words. These models are now critical throughout the study of economics because they allow a clear and concise representation of the fundamentals or theories being explained.

Theoretical contributions

Marshall is considered to be one of the most influential economists of his time, largely shaping mainstream economic thought for the next fifty years, and being one of the founders of the school of neoclassical economics. Although his economics was advertised as extensions and refinements of the work of Adam Smith, David Ricardo, Thomas Robert Malthus and John Stuart Mill, he extended economics away from its classical focus on the market economy and instead popularised it as a study of human behaviour. He downplayed the contributions of certain other economists to his work, such as Léon Walras, Vilfredo Pareto and Jules Dupuit, and only grudgingly acknowledged the influence of Stanley Jevons himself.

Marshall was one of those who used utility analysis, but not as a theory of value. He used it as a part of the theory to explain demand curves and the principle of substitution. Marshall's scissors analysis – which combined demand and supply, that is, utility and cost of production, as if in the two blades of a pair of scissors – effectively removed the theory of value from the center of analysis and replaced it with the theory of price. While 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 existential, between the relationship of demand and supply.

Marshall's influence on codifying economic thought is difficult to deny. He popularised the use of supply and demand functions as tools of price determination (previously discovered independently by Cournot); modern economists owe the linkage between price shifts and curve shifts to Marshall. Marshall was an important part of the "marginalist revolution;" the idea that consumers attempt to adjust consumption until marginal utility equals the price was another of his contributions. The price elasticity of demand was presented by Marshall as an extension of these ideas. Economic welfare, divided into producer surplus and consumer surplus, was contributed by Marshall, and indeed, the two are sometimes described eponymously as 'Marshallian surplus.' He used this idea of surplus to rigorously analyse the effect of taxes and price shifts on market welfare. Marshall also identified quasi-rents.

Marshall's brief references to the social and cultural relations in the "industrial districts" of England were used as a starting point for late twentieth-century work in economic geography and institutional economics on clustering and learning organisations.

Gary Becker (1930-2014), the 1992 Nobel prize winner in economics, has mentioned that Milton Friedman and Alfred Marshall were the two greatest influences on his work.

Another contribution that Marshall made was differentiating concepts of internal and external economies of scale. That is that when costs of input factors of production go down, it is a positive externality for all the firms in the market place, outside the control of any of the firms.[7]

The Marshallian industrial district

A concept based on a pattern of organisation that was common in late nineteenth century Britain in which firms concentrating on the manufacture of certain products were geographically clustered. Comments made by Marshall in Book 4, Chapter 10 of Principles of Economics[8] have been used by economists and economic geographers to discuss this phenomenon.

The two dominant characteristics of a Marshallian industrial district[9] are high degrees of vertical and horizontal specialisation and a very heavy reliance on market mechanism for exchange. Firms tend to be small and to focus on a single function in the production chain. Firms located in industrial districts are highly competitive in the neoclassical sense, and in many cases there is little product differentiation. The major advantages of Marshallian industrial districts arise from simple propinquity of firms, which allows easier recruitment of skilled labour and rapid exchanges of commercial and technical information through informal channels. They illustrate competitive capitalism at its most efficient, with transaction costs reduced to a practical minimum, but they are feasible only when economies of scale are limited.

Later career

Marshall served as President of the first day of the 1889 Co-operative Congress.[10]

Over the next two decades he worked to complete the second volume of his Principles, but his unyielding attention to detail and ambition for completeness prevented him from mastering the work's breadth. The work was never finished and many other, lesser works he had begun work on – a memorandum on trade policy for the Chancellor of the Exchequer in the 1890s, for instance – were left incomplete for the same reasons.

His health problems had gradually grown worse since the 1880s, and in 1908 he retired from the university. He hoped to continue work on his Principles but his health continued to deteriorate and the project had continued to grow with each further investigation. The outbreak of the First World War in 1914 prompted him to revise his examinations of the international economy and in 1919 he published Industry and Trade at the age of 77. This work was a more empirical treatise than the largely theoretical Principles, and for that reason it failed to attract as much acclaim from theoretical economists. In 1923, he published Money, Credit, and Commerce, a broad amalgam of previous economic ideas, published and unpublished, stretching back a half-century.

Final years, death and legacy

From 1890 to 1924 he was the respected father of the economic profession and to most economists for the half-century after his death, the venerable grandfather. He had shied away from controversy during his life in a way that previous leaders of the profession had not, although his even-handedness drew great respect and even reverence from fellow economists, and his home at Balliol Croft in Cambridge had no shortage of distinguished guests. His students at Cambridge became leading figures in economics, including John Maynard Keynes and Arthur Cecil Pigou. His most important legacy was creating a respected, academic, scientifically founded profession for economists in the future that set the tone of the field for the remainder of the 20th century.

Marshall died aged 81 at his home in Cambridge and is buried in the Ascension Parish Burial Ground.[11] The library of the Department of Economics at Cambridge University (The Marshall Library of Economics), the Economics society at Cambridge (The Marshall Society)[12] as well as the University of Bristol Economics department are named after him. His archive is available for consultation by appointment at the Marshall Library of Economics.[13]

His home, Balliol Croft, was renamed Marshall House in 1991 in his honour when it was bought by Lucy Cavendish College, Cambridge.[14]

Alfred Marshall's wife was Mary Paley, co-founder of Newnham College; she continued to live in Balliol Croft until her death in 1944; her ashes were scattered in the garden.

Works

  • 1879 – The Economics of Industry (with Mary Paley Marshall)
  • 1879 – The Pure Theory of Foreign Trade: The Pure Theory of Domestic Values
  • 1890 – Principles of Economics
  • 1919 – Industry and Trade
  • 1923 - Money, Credit and Commerce.

See also

References

  1. ^ "Alfred Marshall". economics.illinoisstate.edu. Archived from the original on 7 November 2016. Retrieved 1 June 2017.
  2. ^ "Marshall, Alfred (MRSL861A)". A Cambridge Alumni Database. University of Cambridge.
  3. ^ McWilliams Tullberg, Rita (May 2008). "Alfred Marshall (1842–1924)". Oxford Dictionary of National Biography, OUP. doi:10.1093/ref:odnb/34893. Retrieved 25 April 2008.
  4. ^ Keynes, 1924
  5. ^ Dimand, Robert W. (2007). "Keynes, IS-LM, and the Marshallian Tradition". History of Political Economy. Duke University Press. 39 (1): 81–95. doi:10.1215/00182702-2006-024.
  6. ^ Cook (2005)
  7. ^ "External Economies of Scale". Investopedia.
  8. ^ Fiorenza Belussi, "Industrial Districts/Local Production Systems as hypernetworks: a neo-Marshallian interpretive frame", in Marco Enrico Luigi Guidi, The changing firm, contributions from the history of economic thought
  9. ^ Alfred Marshall y la teoría económica del empresario, Jesus M. Zaratiegui Archived 12 September 2010 at the Wayback Machine .
  10. ^ "Congress Presidents 1869–2002" (PDF). February 2002. Archived from the original (PDF) on 28 May 2008. Retrieved 10 May 2008.
  11. ^ A Guide to Churchill College, Cambridge: text by Dr. Mark Goldie, pages 62 and 63 (2009)
  12. ^ marshallsociety.com
  13. ^ A finding aid to his materials is available at "Marshall Library Archives - Overview".
  14. ^ "Lucy Cavendish College Site and Buildings" (PDF). Archived from the original (PDF) on 27 September 2011.

Further reading

  • Backhouse, Roger E. "Sidgwick, Marshall, and the Cambridge School of Economics." History of Political Economy 2006 38(1): 15–44. ISSN 0018-2702 Fulltext: Ebsco
  • Cook, Simon J. "Late Victorian Visual Reasoning and Alfred Marshall's Economic Science." British Journal for the History of Science 2005 38(2): 179–195. ISSN 0007-0874
  • Cook, Simon J. "Race and Nation in Marshall's Histories." European Journal of the History of Economic Thought 2013 20(6): 940–956.
  • Cook, Simon J. The Intellectual Foundations of Alfred Marshall's Economic Science: A Rounded Globe of Knowledge (2009)
  • Groenewegen, Peter. A Soaring Eagle: Alfred Marshall: 1842–1924 (1995) 880pp, the major scholarly biography
    • Groenewegen, Peter. Alfred Marshall: Economist 1842–1924 (2007, short version)
  • Keynes, John Maynard. "Alfred Marshall, 1842–1924," The Economic Journal 34#135 September 1924 pp. 311–372, included in his Essays in Biography (1933, 1951) at 125–217, in JSTOR
  • Parsons, Talcott. "The Structure of Social Action." (1937), Chapter IV.
  • Narmadeshwar Jha, The Age of Marshall: Aspects of British Economic Thought – 1890–1915. London: F. Cass, 1973.
  • Raffaelli, Tiziano et al. The Elgar Companion to Alfred Marshall 2006. 752 ISBN 1-84376-072-X.
  • Tullberg, Rita McWilliams. "Marshall, Alfred (1842–1924)" Oxford Dictionary of National Biography 2004;
  • Tullberg, Rita McWilliams, ed. Alfred Marshall in Retrospect (1990) ·

External links

Alfred Marshall (businessman)

Alfred Marshall (February 28, 1919 – December 28, 2013) was an American businessman who founded Marshalls, a chain of department stores which specializes in overstocked, irregular and out-of-season name brand clothing sold at deeply discounted prices. He opened the original Marshalls in 1956 in Beverly, Massachusetts.

Alfred Marshall (politician)

Alfred Marshall (c. 1797 – October 2, 1868) was a United States Representative from Maine. He was born in New Hampshire about 1797. Marshall married Lydia Brackett on December 21, 1824, and they had three children Isabelle Isaphene Marshall, Jacob Smith Marshall, and John Brackett Marshall.He was elected a member of the Maine House of Representatives in 1827, 1828, 1834, and 1835 and served as a general in the Maine State militia.

He was elected as a Democrat to the Twenty-seventh Congress (March 4, 1841 – March 4, 1843). After his return to Maine, he became a collector at Belfast from 1846-1849. He engaged in mercantile pursuits and the hotel business. He died in China, Kennebec County on October 2, 1868. He is interred in Village Cemetery.

Alfred Marshall Bailey

Alfred Marshall Bailey (February 18, 1894 – February 25, 1978) was an American ornithologist who was associated with the Denver Museum of Natural History (now the Denver Museum of Nature and Science)

in Colorado for most of his working life.

Bailey's shrew

The Bailey's shrew (Crocidura baileyi) is a species of mammal in the family Soricidae. The name honours American naturalist and museum director Alfred Marshall Bailey.

Ceteris paribus

Ceteris paribus or caeteris paribus is a Latin phrase meaning "other things equal". English translations of the phrase include "all other things being equal" or "other things held constant" or "all else unchanged". A prediction or a statement about a causal, empirical, or logical relation between two states of affairs is ceteris paribus if it is acknowledged that the prediction, although usually accurate in expected conditions, can fail or the relation can be abolished by intervening factors.A ceteris paribus assumption is often key to scientific inquiry, as scientists seek to screen out factors that perturb a relation of interest. Thus, epidemiologists for example may seek to control independent variables as factors that may influence dependent variables—the outcomes or effects of interest. Likewise, in scientific modeling, simplifying assumptions permit illustration or elucidation of concepts thought relevant within the sphere of inquiry.

There is ongoing debate in the philosophy of science concerning ceteris paribus statements. On the logical empiricist view, fundamental physics tends to state universal laws, whereas other sciences, such as biology, psychology, and economics, tend to state laws that hold true in normal conditions but have exceptions, ceteris paribus laws (cp laws). The focus on universal laws is a criterion distinguishing fundamental physics as fundamental science, whereas cp laws are predominant in most other sciences as special sciences, whose laws hold in special cases. This distinction assumes a logical empiricist view of science. It does not readily apply in a mechanistic understanding of scientific discovery. There is reasonable disagreement as to whether mechanisms or laws are the appropriate model, though mechanisms are the favored method.

Economic surplus

In mainstream economics, economic surplus, also known as total welfare or Marshallian surplus (after Alfred Marshall), refers to two related quantities. Consumer surplus or consumers' surplus is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay. Producer surplus or producers' surplus is the amount that producers benefit by selling at a market price that is higher than the least that they would be willing to sell for; this is roughly equal to profit (since producers are not normally willing to sell at a loss, and are normally indifferent to selling at a breakeven price).

English historical school of economics

The English historical school of economics, although not nearly as famous as its German counterpart, sought a return of inductive methods in economics, following the triumph of the deductive approach of David Ricardo in the early 19th century. The school considered itself the intellectual heirs of past figures who had emphasized empiricism and induction, such as Francis Bacon and Adam Smith. Included in this school are William Whewell, Richard Jones, Thomas Edward Cliffe Leslie, Walter Bagehot, Thorold Rogers, Arnold Toynbee, William Cunningham, and William Ashley.

Frank Fetter

Frank Albert Fetter (; March 8, 1863 – March 21, 1949) was an American economist of the Austrian School. Fetter's treatise, The Principles of Economics, contributed to an increased American interest in the Austrian School, including the theories of Eugen von Böhm-Bawerk, Friedrich von Wieser, Ludwig von Mises and Friedrich Hayek.

Fetter notably debated Alfred Marshall, presenting a theoretical reassessment of land as capital. Fetter's arguments have been credited with prompting mainstream economists to abandon the Georgist idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent...." A proponent of the subjective theory of value, Fetter emphasized the importance of time preference and rebuffed Irving Fisher for abandoning the pure time preference theory of interest that Fisher had earlier espoused in his 1907 book, The Rate of Interest.

Gibson's paradox

Gibson's Paradox is the observation that the rate of interest and the general level of prices are positively correlated. It is named for British economist Alfred Herbert Gibson who noted the correlation in a 1923 article for Banker's Magazine. The correlation had been noted earlier by Thomas Tooke.The term was first used by John Maynard Keynes, in his 1930 work, A Treatise on Money. It was believed to be a paradox because most economic theorists predicted that the correlation would be negative. Keynes commented that the observed correlation was "one of the most completely established empirical facts in the whole field of quantitative economics."

The Quantity Theory of Money predicts that a slower money-growth creates slower price-rise. In addition, slower money-growth means slower growth of loanable funds and thus raises interest rates. If both these premises are true, slower money-growth should mean lower prices and higher interest rates. However, Gibson observed that lower prices were accompanied by a drop—rather than a rise—in interest rates. This is the paradox that needs to be explained. For instance, in the 1873-96 depression, prices fell considerably while interest rates remained low. Economist S.B. Saul says that Alfred Marshall explained the paradox by saying that other factors might have been at play: a peace dividend and improving international system of banking and finance.

Economists generally thought that interest rates were correlated to the rate of inflation, whereas Keynes' findings contradicted this view. During the period of gold standard, he concluded that interest rates were correlated to the general price level, and not the rate of change in the prices. In fact, he thought that interest rates were highly correlated to the wholesale price index rather than the rate of inflation.

Giffen good

In economics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa—violating the basic law of demand in microeconomics. For any other sort of good, as the price of the good rises, the substitution effect makes consumers purchase less of it, and more of substitute goods; for most goods, the income effect (due to the effective decline in available income due to more being spent on existing units of this good) reinforces this decline in demand for the good. But a Giffen good is so strongly an inferior good in the minds of consumers (being more in demand at lower incomes) that this contrary income effect more than offsets the substitution effect, and the net effect of the good's price rise is to increase demand for it.

Industrial district

Industrial district concept was initially used by Alfred Marshall to describe some aspects of the industrial organisation of nations. Industrial district (ID) is a place where workers and firms, specialised in a main industry and auxiliary industries, live and work. At the end of the 1990s the industrial districts in developed or developing countries had gained a recognised attention in international debates on industrialisation and policies of regional development.

Marshalls

Marshalls is a chain of American off-price department stores owned by TJX Companies. Marshalls has over 1,000 American stores, including larger stores named Marshalls Mega Store, covering 42 states and Puerto Rico, and 61 stores in Canada. Marshalls first expanded into Canada in March 2011. Marshalls is the U.S.'s second largest off-price family apparel and home fashion retailer, behind its sister company, TJ Maxx. Its slogans are Your Surprise Is Waiting and Never Boring, Always Surprising.

Partial equilibrium

Partial equilibrium is a condition of economic equilibrium which takes into consideration only a part of the market, ceteris paribus, to attain equilibrium.

As defined by Leroy lopes, "A partial equilibrium is one which is based on only a restricted range of data, a standard example is price of a single product, the prices of all other products being held fixed during the analysis."The supply and demand model is a partial equilibrium model where the clearance on the market of some specific goods is obtained independently from prices and quantities in other markets. In other words, the prices of all substitutes and complements, as well as income levels of consumers, are taken as given. This makes analysis much simpler than in a general equilibrium model which includes an entire economy.

Here the dynamic process is that prices adjust until supply equals demand. It is a powerfully simple technique that allows one to study equilibrium, efficiency and comparative statics. The stringency of the simplifying assumptions inherent in this approach makes the model considerably more tractable, but may produce results which, while seemingly precise, do not effectively model real-world economic phenomena.

Partial equilibrium analysis examines the effects of policy action in creating equilibrium only in that particular sector or market which is directly affected, ignoring its effect in any other market or industry assuming that they being small will have little impact if any.

Hence this analysis is considered to be useful in constricted markets.

Léon Walras first formalized the idea of a one-period economic equilibrium of the general economic system, but it was French economist Antoine Augustin Cournot and English political economist Alfred Marshall who developed tractable models to analyze an economic system.

Political economy

Political economy is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth. As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie" (household management). The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781).In the late 19th century, the term "economics" gradually began to replace the term "political economy" with the rise of mathematical modelling coinciding with the publication of an influential textbook by Alfred Marshall in 1890. Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science". Citation measurement metrics from Google Ngram Viewer indicate that use of the term "economics" began to overshadow "political economy" around roughly 1910, becoming the preferred term for the discipline by 1920. Today, the term "economics" usually refers to the narrow study of the economy absent other political and social considerations while the term "political economy" represents a distinct and competing approach.

Political economy, where it is not used as a synonym for economics, may refer to very different things. From an academic standpoint, the term may reference Marxian economics, applied public choice approaches emanating from the Chicago school and the Virginia school. In common parlance, "political economy" may simply refer to the advice given by economists to the government or public on general economic policy or on specific economic proposals developed by political scientists. A rapidly growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies, especially as to distributional conflicts and political institutions. It is available as a stand-alone area of study in certain colleges and universities.

Principles of Economics (Marshall)

Principles of Economics is a leading political economy or economics textbook of Alfred Marshall (1842–1924), first published in 1890. It ran into many editions and was the standard text for generations of economics students.

Quasi-rent

Quasirent is a term in economics that describes temporary rent like returns to a supplier/owner.

Quasi-rent differs from pure economic rent in that it is a temporary phenomenon. It can arise from the barriers to entry that potential competitors face in the short run, such as the granting of patents or other legal protections for intellectual property by governments. It can also arise due to entrepreneurial address of market fluctuation, or it can arise due to the lack of real capital to meet near term demand increases. In the longer term the opportunity to profit will bring new capital into existence and the quasi rent will be competed away.In Industrial Organizations field, Williamson points "The joining of opportunism with transaction-specific investments (or what Klein, Crawford, and Alchian refer to as "appropriable quasi rents") is a leading factor in explaining decisions to vertically integrate."Alfred Marshall (1842-1924) was the first to observe quasi-rents.

Note on quasi-rent -

this concept was put forward by Alfred Marshall. Quasi-rent refers to that additional income which is similar to rent. According to Ricardo, rent arises on account of fixed supply of land. But there are other factors which are found in fixed supply in the short term. The additional income earned by these factors in the short-period is similar to rent.

Supply and demand

In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.

Welfare definition of economics

The welfare definition of economics is an attempt by Alfred Marshall, a pioneer neoclassical economist, to redefine his field of study. This definition expands the field of economic science to a larger study of humanity. Specifically, Marshall's view is that economics studies all the actions that people take in order to achieve economic welfare. In the words of Marshall, "man earns money to get material welfare." This is why economists since Marshall have described his definition as the welfare definition of economics. This definition enlarged the scope of economic science by emphasizing the study of wealth and humanity together, rather than wealth alone.

In his widely read textbook, Principles of Economics, published in 1890, Marshall defines economics as follows:

"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 material requisites of well-being".

William Moore Ede

William Moore Ede (31 August 1849 – 2 June 1935) was an Anglican priest in the 20th century.Moore Ede was educated at Marlborough College and St John's College, Cambridge and ordained in 1873. After an early appointment as superintendent lecturer for the Midland Counties he held incumbencies at Gateshead and, from September 1901, Whitburn. He became Dean of Worcester Cathedral in 1908, a post he held for 26 years. He died on 2 June 1935.Moore Ede wrote The attitude of The Church to some of the social problems of town life in 1896, which he dedicated to Professor Alfred Marshall, professor of economics at the University of Cambridge and the husband of the economist, Cambridge social reformer and Newnham College academic Mary Paley Marshall.

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