Alfred Marshall’s Principles of Economics: Book Review

Alfred Marshall: author of Principles of Economics

What is the first thing that comes to your mind when you think of history? The past? The old? Probably the past! History is interesting to study but as good as it is, it however fails to show the correlation of events and that is where economics paves in! Economics is a broad fact based subject involved with the analysis of the economic aspects and conditions of man’s political, social and private life.

Social, religious, political and economic studies are interrelated. Socialists lay emphasis on the significance of history and virtues of the past, political economists on the other hand studies the lifestyle of mankind in the ordinary business of life and examines the part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. But one might argue, people live in the present and what affects us is either in the present or in the future! With all the hefty demands facing man at present and eagerly anticipating for the future, why bother with the past? Well, by studying history and more specifically economic history, one is equipped with the relevant skills essential in gathering evidence! But where does economic history stand to the facts of ancient times?

Economic history is the source of all thoughts and ideas. It entails studying the institutional framework of society, the composition of various social classes as well as their interrelationship with one another. Economic history is the warehouse of valuable information such as the origin, trends and behaviors of a given society! In joint article, Scholars Fishlow and Fogel explained the means by which economic history has been transformative in the world economic stage! In consideration of the massive and remarkable transformations including in the field of economic history, historians have integrated the discipline with other subjects such as mathematics. Exclusive reliance on current data may potentially cripple the research efforts! Thus, past data has to be incorporated when evaluating an analyzing data. To understand the social economic systems in the country, economic history is the subject to study. In the same way that that social scientists utilized economic history in formulating laws and theories on human behavior, it goes without saying that studying economic history is indispensable in understanding how political, social and cultural systems dynamically change, operate and evolve!

More often than not, questions such as what has been the material basis of social existence, how have the necessities and convenience in life been produced and by what organization has labor been provided and directed, how are the commodities produced are distributed arise. The rise of the new social history in the 1960s and 1970s gave birth to the new economic history. Apart from holding lots of debates, socialists applied highly original research strategies as well as quantitative techniques and at the end, they developed the new economic history. At the dawn of the new economic life, economic history became the new robust and promisingly interdisciplinary field in the middle years of the 20th century. Some of the parallel topics covered in the new economic history included agricultural productivity, investment in human capital, industrial supply and demand responses, and government promotion of social overhead investment. Nevertheless, the contribution of the new economic history has been shaped by two factors.

The first is the unabashedly developmental interest. This was a move from economic history as the study of forms of economic life to economic history as the historical study of the determinants of national economic growth. While transiting to the new economic history, the gains were indeed voluminous! Emergence of economic history as a distinct field of study was spearheaded by the publication of specialized journals such as the Economic History Review in Britain in 1927, the Annales of d’histoire ‘economique et sociale in France in 1929 and the Journal of Economic History in the US in 1941.

In the 1970s and 1980s, economists had flooded and dominated the area partly because of the mathematically inclined economic historians who were determined to formulate new and intellectually powerful methods better known as the ‘the new economic history. Formulation of new method was however detrimental and intimidating to the history-based economic historians who essentially lacked the mathematical training either to use or to criticize them effectively. What followed next was the massive movement of the social historians to the new cultural history. In the process, interest in studying history was lost! There was intense reaction against economic determinism and quantification and against positivist epistemological outlook which had previously united social and economic history.

Additionally, a development of an economic history almost entirely dominated by the concerns of professional economists and a shrinking-back of work on the history of economic life carried out by historians emerged. This left the history profession in an increasingly untenable position. Instead of increasing the necessity for a deeper historical understanding of modern capitalism’s and making effort to avert globalization deindustrialization, repeated financial crises and soaring economic inequality dynamism and perversity, historians abandoned the historical study of economic life while economists turned economic history into a branch of mathematical development economics. In the work of the new economic historians, economic growth rather than forms of economic life became the prime issue worthy of historical research.

Alfred Marshall: author of Principles of Economics
Alfred Marshall: author of Principles of Economics

All history is full of the record of inefficiency caused in varying degrees of slavery, serfdom and other forms of civil and political oppression and repression. In the entire human history, man is seen to pursue and chase after wants which tend to expand correspondingly with the growth of his wealth, knowledge and investment capital. Evidently enough, humans devote all their efforts towards working for the betterment of the future! However, the history of economic life in the history of human participation in production, exchange and consumption of goods has since the World War II, had an unfortunate career in the United States. Edgeworth’s simplification was this assumption: every man is a pleasure machine. For while all individuals were pleasure machines, some were better pleasure machines than others. Men, for example, were better equipped to run up their psychic bank accounts than women and the delicate sensibilities of the aristocracy of skill and talent were more responsive to the pleasures of good living than the clod like pleasure machines of the laboring classes.

According to Edgeworth, nature has a way dictating things but as it takes its course, all actions by human are biased towards improving life standards. In the field of employment where production is facilitated by factors of production including land, labor and capital, labor and capital depends, firstly, on its natural resources, secondly on the power of turning them to good account derived from its progress of knowledge and of social and industrial organization and thirdly on the access that it has to markets in which it can sell those things of which it has a superfluity. Moreover, economic history has also been poorly been poorly analyzed! The absence of any objective standard to which estimates of relative proportion can be referred has greatly hindered the scientific study of history. That is the reason why history cannot prove the causal effect relationship with other variables.

The fact that time must be allowed for causes to produce their effects is the great source of difficulty in economics. The concept of diminishing returns in this case may appear simple but in actual sense is the chief source of difficulty and confusion. The unavailability of national statistics on national income for example are not readily available in printed sources and as such, cliometricians have had to mathematically manipulate equations while preparing contemporary national income statistics. The attempt to numerically measure variables with limited information and historical data limits the reliance and need for use of historical information. Moreover, the thought that early history is quite limited in scope and tells little of the future, justifies the reason that it has meagre influence on particular propositions.

As a principal driver of the U.S. economy, the consumption topic is one which has been adequately studied by historians over the past few decades. This is probably because consumption has long been a flagrantly obvious feature of modern life, at least in America. Gary Becker argues that consumption was a central component of what he calls an industrious revolution in the long eighteenth century. The book uses tools of modern professional economic history with its equations, diagrams, and statistical tables in a way to illuminate changing forms of economic life. Ideally, the rising awareness of contemporary globalization is surely responsible for the prominence of historical research on Asian and Indian Ocean economic history. The pioneering work of historical sociologists on the history of global economic dynamics should also be taken into account. However, much is still to be done on the history of economic globalization, this is an area in which some high-quality exemplars are already in place.