Economic Science and Political Economy: Selected Articles

447 Pages·1997·45.96 MB·English

by  Lionel Robbins (auth.)

ECONOMIC SCIENCE AND POLITICAL ECONOMY
Also by Susan Howson
BRITISH MONETARY POLICY, 1945-51
DOMESTIC MONETARY MANAGEMENT IN BRITAIN, 1919-38
THE COLLECTED PAPERS OF JAMES MEADE (editor)
THE ECONOMIC ADVISORY COUNCIL 1930-1939 (with Donald Winch)
THE WARTIME DIARIES OF LIONEL ROBBINS AND JAMES MEADE, 1943-45
(co-editor)
EconoDlic Science and
Political EconoDlY
Selected Articles
Lionel Robbins
Edited by Susan Howson
Professor of Economics
University of Toronto
Selection, editorial matter and Introduction © Susan Howson 1997
Text © Lady Robbins 1997
Softcover reprint of the hardcover 18t edition 1997
All rights reserved. No reproduction, copy or transmission of
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as the author of this work in accordance with the
Copyright, Designs and Patents Act 1988.
First published 1997 by
MACMILLAN PRESS LTD
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and London
Companies and representatives
throughoqt the world
ISBN 978-1-349-12763-4 ISBN 978-1-349-12761-0 (eBook)
DOI 10.1007/978-1-349-12761-0
A catalogue record for this book is available
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Contents
Editor's Introduction 1
The Representative Finn (September 1928) 15
2 The Economic Effects of Variations of Hours of Labour
(March 1929) 33
3 The Present Position of Economic Science (March 1930) 49
4 On a Certain Ambiguity in the Conception of Stationary
Equilibrium (June 1930) 59
5 On the Elasticity of Demand for Income in Tenns of Effort
(June 1930) 79
6 The Economic Works of Philip Wicksteed (November 1930) 85
7 Economic Notes on Some Arguments for Protection
(February 1931) 99
8 Consumption and the Trade Cycle (November 1932) 117
9 Remarks Upon Certain Aspects of the Theory of Costs
(March 1934) 133
10 Remarks on the Relationship Between Economics and
Psychology (December 1934) 151
11 The Place of Jevons in the History of Economic Thought
(April 1936) 163
12 How to Mitigate the Next Slump (May 1937) 179
13 Live and Dead Issues in the Methodology of Economics
(August 1938) 189
14 Interpersonal Comparisons of Utility: A Comment
(December 1938) 199
15 Inquest on the Crisis (October 1947) 205
16 The Sterling Problem (October 1949) 229
17 The Balance of Payments (November 1951) 255
18 The International Economic Problem (January 1953) 273
v
vi Contents
19 Robertson on Utility and Scope (May 1953) 295
20 Schumpeter's History of Economic Analysis (February 1955) 309
21 Notes on Public Finance (October 1955) 331
22 Thoughts on the Crisis (April 1958) 347
23 Hayek on Liberty (February 1961) 371
24 The International Monetary Problem (July 1968) 389
25 On Latsis's Method and Appraisal in Economics:
A Review Essay (September 1979) 403
26 Economics and Political Economy (May 1981) 415
Bibliography 429
Index of Names 446
Index of Subjects 450
Editor's Introduction
Lionel Robbins (1898-1984) was the foremost British economist of his gen
eration. He was appointed Professor of Economics at the London School of
Economics in 1929, when he was thirty years of age; from then until his
retirement from his Chair in 1961 he dominated the Economics Department
at LSE and built it up to its pre-eminent position in British economics.
Robbins was not only an academic economist. He was important and
influential in the shaping of economic policy in Britain and the international
economy in and after the Second World War, in the expansion of British
higher education, and in the administration of the arts in Britain. He was
created one of the first four life peers in 1959. In the last two decades of his
life Lord Robbins was most widely known as the author of the Report of the
Committee on Higher Education published in 1963, but this was only the
most conspicuous of his several major contributions to British public life.
Nonetheless, as James Meade has emphasized, 'the richness of his other lives
and of his personality must not be allowed to overshadow the fact that he
was by profession an economist and an economist of the first rank' .1
In 1926 Edwin Cannan, describing the staff of the London School of
Economics to his successor as Professor of Political Economy, Allyn Young,
told him that Robbins was 'the most promising young economist in England'.2
Robbins was then a young assistant lecturer in economics at LSE, about to be
promoted to lecturer. After seeing active service in the First World War as an
artillery officer in France in 1917-18, he had taken a first class honours degree
at the London School of Economics in 1923. The following year he had
worked as research assistant to William Beveridge, then Director of the
School, compiling employment data and studying business cycle theory, and
in 1924-5 he had held a temporary lectureship at New College, Oxford. In
1927 Robbins returned, with Beveridge's encouragement, to New College as
Fellow and Lecturer in Economics, but Beveridge also asked him to continue
to give a course of lectures on economic theory at LSE.3 When Allyn Young
1. The Economist (8 December 1984), p. 19.
2. Cannan to Young (II June 1926), Allyn Young Papers, Nathan Marsh Pusey Library,
Harvard University.
3. Beveridge to H.A.L. Fisher (28 March and 2 May 1927), Robbins Personal File A, London
School of Economics.
1
2 Introduction
died suddenly of pneumonia in March 1929, the reader in economics (and
Labour MP), Hugh Dalton, who regarded Robbins 'as quite certainly the most
brilliant student who has passed through the School since the War', lobbied
hard and successfully to have Robbins appointed as a junior Professor of
Economics. And, as Robbins pointed out in his autobiography, 'The Young
chair was never filled'. 1 Robbins became and remained the senior professor of
economics at LSE until his retirement.
Soon after his appointment as professor Robbins was invited by Keynes to
join a select and distinguished group of economists as the youngest member
of a Committee of Economists, which Keynes had persuaded the Prime
Minister, J. Ramsay MacDonald, to set up under the auspices of the second
Labour government's Economic Advisory Council. With the world slump
gathering momentum and unemployment in Britain rapidly rising Keynes
hoped his committee would demonstrate the unanimity of professional econo
mists on policy questions, by producing 'an agreed diagnosis of our present
problems, and a reasoned list of possible remedies'.2 Keynes was incensed
when the young Robbins objected to his 'perfectly monstrous' draft report,
with its qualified support for protection and for public works. Robbins
refused to sign the final version, even though it incorporated some of his own
ideas on the causes of the slump, and insisted on a minority report of his own.
There he made clear his 'complete disagreement' with his colleagues on the
question of tariffs.3 He made his opposition to protection more public in
talks, articles and newspaper pieces, especially over the next twelve months
until a coalition government introduced a tariff in October 1931 after the fall
of the Labour government. He also encouraged, though with misgivings,
Beveridge to set up another 'Committee of Economists' to produce a book
expounding the free trade case (Tariffs: the Case Examined, 1931).
At the time of his professorial appointment, Robbins had published only a
handful of academic articles, two of which were review articles. He had also
written a small textbook on wages, published in 1926. In the next ten years he
was to publish some 20 articles and five books and edit three others. (For the
details of his publications see the Bibliography p. 429 below.) The first of
these books is his most famous: An Essay on the Nature and Significance of
I. Dalton, 'Statement by Head of Department' (2 November 1926) Robbins Personal File A,
London School of Economics; Ben Pimlott (ed.), The Political Diary of Hugh Dalton 1918-40,
1945-MJ (1986), p. 53; Robbins, Autobiography of an Economist (1971), pp. 121-2.
2. Keynes to MacDonald (10 July 1930), quoted in Susan Howson and Donald Winch, The
Economic Advisory Council 1930-1939 (Cambridge, 1977), p. 47.
3. Robbins to Cannan (17 October and 5 November 1930), Cannan Papers 1030, British
Library of Political and Economic Science; 'Report by Professor L. Robbins', reprinted in
Howson and Winch, The Economic Advisory Council 1930-1939, pp. 227-31.
Susan Howson 3
Economic Science, first published in 1932, which is still in print and widely
read in the 1990s. It introduced the 'scarcity' definition of economics -
'Economics is the science which studies human behaviour as a relationship
between ends and scarce means which have alternative uses'l - now so well
established as to be cited usually without attribution. In adopting this
definition Robbins explicitly rejected the 'materialist' definitions of Cannan,
whose lectures he had attended as an undergraduate, and of Marshall and his
pupils at Cambridge, and took over some of the ideas of the Austrian econ
omists Menger and von Mises. He acknowledged his 'especial indebtedness'
to the works of Ludwig von Mises - whose Die Gemeinwirtschaft (1922) he
read in his first years of lecturing at LSE - and to The Common Sense of
Political Economy of the English economist Philip Wicksteed.2
In January 1931 Friedrich Hayek came to LSE to give a series oflectures.
This led to Hayek's appointment as Tooke Professor of Economic Science
and Statistics at the School later the same year. By 1939 Robbins had
expanded the small LSE economics department to rival that of Cambridge,
effectively encouraging the research and careers of younger economists
such as J.R. Hicks, Nicholas Kaldor, Abba Lerner, Evan Durbin and
A.K. Dasgupta, as well as developing and organizing the teaching of econom
ics, especially at the postgraduate level. He was involved in all the major con
troversies in economics, theoretical and practical, microeconomic and
macroeconomic, both through the famous LSE seminar which he chaired and
in his own professional and public writings.
His interest in the work of Viennese economists, especially in capital
theory, which had led him to invite Hayek to lecture at the School in 1931,
influenced his second major book, The Great Depression (1934). This
expanded on the views of the causes of the worldwide slump which he had
propounded in the Committee of Economists in 1930, using a monetary
theory of the trade cycle derived from Wicksell and Hayek. However, he later
repudiated Austrian macroeconomic analysis and this book because of its
negative attitude to countercyclical economic policy in the face of a severe
deflation. When his publisher reported a revival of interest in the book, which
had gone out of print in 1945, he responded that he would prefer it not to be
reissued. 'It is very readable, but ... I am sure that it is a pretty good example
of a premature and over-simple synthesis ... It sold very well when it was
first issued and enabled me, as a young married man, to buy an expensive
grand piano. But I would rather that that was the end of it. '3.
l. An Essay on the Nature and Significance of Economic Science, 1st edn, p. 15.
2. Nature and Significance, 1st edn, pp. viii-ix; Autobiography of an Economist, pp. 105-7.
3. Autobiography of an Economist, pp. 154-5; Robbins to Rex Allen (25 March 1963),
Robbins Papers.