Alfred Marshall Flashcards
How does Marshall formalise the discipline of economics?
Marshall formalises economics and identifies it as a field pertaining to unlimited wants and limited means (scarcity).
What does Marshall identify as the key element of economic theory?
Quantifiable Facts and Figures
Frames economics as an empirical science and represents a departure from economics as a philosophical, historical or political field.
Marshall expresses the necessity of assumptions and “guess” work, to do as best as he can. He primes the field for the jump to models and the abandonment of bigger picture factors.
What does Marshall think of competition?
Established producers often resist competition not because it is truly harmful to society but because it threatens their privileged position.
By framing new competitors as “anti-social,” they seek to suppress competition that could benefit consumers and bring about social progress.
Marshall thus calls for recognizing the broader social value of competition, especially when it provides opportunities for innovation and serves the needs of consumers over the interests of a select few.
Also, a commentary on inequality and wealth dynamics in industrialised economies.
What is Marshall’s critique of socialism?
Practical limitations exist in human nature when it comes to cooperative or socialist endeavours. While altruistic goals are admirable, they are difficult to sustain.
Unless all individuals involved possess an extraordinary and often religiously motivated commitment, the pressures of everyday material needs often lead people to return to self-interested behaviour
Thus, Marshall suggests that successful socialistic ventures may require not only an ideal but a consistently strong unifying force, such as religious or ideological fervour, to sustain them
How does Marshall reproduce imperialist logic and justifications?
The usage of “backward people” implies a hierarchy of civilisations and non-industrialised nations are seen as less advanced, reinforcing views of Western Civilisation being the forefront of human development.
The assumption that backward societies are incapable of sustaining modern businesses due to a lack of trustworthiness implies a blanket cultural incapacity for complex economic arrangements.
This suggests a belief that Western capitalist structures, and the cultural attributes assumed to come with them, are universally ideal, supporting the idea that other societies should adopt them, a common justification in imperialist thought.
What is the importance of partial equilibrium?
Because you can’t hold all variables constant, and you need to establish causality, you make simplifying assumptions. For example, you hold like you know everything else is the same and then alter one variable to see its effect on the other.
E.g. Ceteris paribus, a change in X leads to a change in Y or no change in Y.
The idea is that you limit a problem narrowly and investigate each of these component relationships and then examine them together.
Partial equilibrium is a stable equilibrium in that any displacement, if you shift from the equilibrium, will ultimately produce forces that return the market to an equilibrium point.
