------------ EH.NET BOOK REVIEW -------------- Published by EH.NET (September 2004) Richard Arena and Michel Qu=E9r=E9, editors, _The Economics of AlfredMarshall: Revisiting Marshall's Legacy_. New York: PalgraveMacMillan, 2003. ix + 281 pp. =A355/$75 (cloth), ISBN: 1-4039-0168-6. Reviewed for EH.NET by Katia Caldari, Department of Economics,University of Padua. This volume's aim is to "revisit" Alfred Marshall's legacy throughthe insights of the most renowned scholars currently studyingMarshall's thought. The book has two parts. The first is properly on"The Legacy of Marshall's Economics." It includes works by Becattini,Marchionatti, Reisman, Moss, Dardi and Groenewegen. The second partof the book is on "Economic Evolution and the Organization ofIndustry: Marshallian Insights" and includes papers by Whitaker,Hart, Qu=E9r=E9, Loasby, Arena, Bellandi and Raffaelli. The papers of the first part are all intended to underline thoseaspects of Marshall's thought that have been often neglected but arethe necessary key for fully appreciating the contribution toeconomics of this Cambridge economist. The opening paper is "The Return of the White Elephant" by GiacomoBecattini. Through what Becattini calls "a turning point inMarshallian studies" (p. 13), new and unexpected "potentialcapacities in Marshall's thought" (p. 13) have been underlined moreand more so that Marshall "is now increasingly mentioned and moreoften in a favourable light" (p. 14). According to Becattini,Marshall cannot be considered a "neoclassical economist," as mostinterpretations of the past did, because of the presence of important"anomalies" that make him clearly a "sui generis" economist, asWalras once put it, calling his English "colleague" a "whiteelephant." The second paper is "Dealing with the Complexity: Marshall and Keyneson the Nature of Economic Thinking" by Roberto Marchionatti. Aninteresting comparison between Marshall and Keynes is suggested:despite the fact that most studies of Keynes "largely neglected therole of Marshall in the development of Keynes' methodologicalreflection" (p. 39), Marchionatti proves that "both Marshall andKeynes developed a conception of economics as a science that attemptsto deal with the complexity using several tools. Both saw a limitedscope for the fruitful use of mathematics in economics" (p. 48). The third paper by David Reisman is on Alfred Marshall and socialcapital. Considering a number of themes dear to Marshall (industrialdistricts, trade unions, socialism, health, quality of life), Reismansuggests that Marshall was an important forerunner of the modernconcept of social capital. With the fourth paper, "Marshall's Objective: Making OrthodoxEconomics Intelligible to Business Leaders," Laurent S. Moss intendsto contribute to the understanding of why Marshall's scientificpapers "did not live up to several of his stated goals, bothscientific and personal" (p. 67). Moss considers mainly three ofthese goals: 1) to write texts "accessible to non-academics,especially business leaders," 2) "to construct an analyticalstructure that would draw on the pioneering work of his manypredecessor economists," and 3) to conciliate the two precedinggoals, since on the one hand "he wanted to communicate with businesspeople ... about things they knew well and experienced personally"(pp. 76-77), but on the other hand "the conversation Marshall wantedto create had to be structured within an economic framework that wasdeeply rooted in the older orthodox tradition" (p. 77). The"reconciliation problem" is given as an example. Coming to the following paper "Alfred Marshall's Partial Equilibrium:Dynamics in Disguise" by Marco Dardi, the reader is pushed into amore technical and analytical context -- an inquiry into the conceptof equilibrium, especially in its attempts to cope with the"fundamental problem of economic change" (p. 89). Dardi suggests thateven though Marshall "chose not to follow a formalized approach" (p.89) he did have "a unitary frame of analysis" (p. 89). In order toprove this thesis, Dardi works out "an abstract logical frameworkwhich links all the Marshallian narrations to a few structuralhypotheses that account for the most basic aspects of his theory" (p.89). The experiment is interesting since it highlights therelationship between equilibrium and economic change in Marshall'swritings and moreover the important nexus between ceteris paribusmethod and human mind structure. Focusing on Marshall's studies ofthe human mind recently edited and analyzed by Raffaelli (2003),Dardi underlines how the static method and partial equilibria can beseen in a new light "... less contingent, less tainted with pragmaticcompromise, than has been suggested by many interpreters" (p. 100). The last paper of this part is by Peter Groenewegen and deals with"Competition and Evolution: The Marshallian Conciliation Enterprise."Through a deep exploration of the concept of competition andevolution, Groenewegen underlines the dilemma between Marshall therealistic economist" and Marshall "the theorist." This dilemma wasthe cause of Marshall's methodological choice often criticized andconsidered "unacceptable to the economics profession at large, bothpast and present" (p. 131). As the second part of the book suggests, Marshall's major insightswere about economic evolution and industrial organization. The firstpaper is by John K. Whitaker and the title is "Alfred Marshall's_Principles_ and _Industry and Trade_: Two Books or One? Marshall andthe Joint Stock Company." Here the author analyzes the relationshipbetween Marshall's two most important works through the special lensof the role he attributed to joint stock companies. _The Principles_,which is primarily theoretical, fails to "anticipate the rapidity"(p. 153) of the rise of large stock companies and use a tool, therepresentative firm, that would have become more and more outdated.In _Industry and Trade_, more of an applied work, Marshall paysgreater attention to joint stock company in order to focus on the"struggle between small private businesses and large public ones" (p.139). Neil Hart's article on the representative firm aims to explain "whyMarshall was not a Marshallian." According to Hart, "Marshallintended the representative firm to play a pivotal role in theattempt to construct an equilibrium framework in a world acknowledgedto be characterized by disequilibrium and organic processes" (p.176). That attempt was unsuccessful, as Marshall himself admitted. Onthe contrary, Marshallians "evaded Marshall's impasse by constrictingthe industrial organization process so as to render the analysisamenable to static equilibrium conditions" (p. 176). Therepresentative firm should have solved the so-called "reconciliationproblem," centered on the "difficulties associated with representing,within an equilibrium framework, outcomes of evolutionary processesidentified directly with the increasing returns and thus thelong-period industry supply schedule" (p. 168). The problem wasneglected by the Marshallians who reasoned in terms of the"equilibrium firm." "Increasing Returns and Competition: Learning from a MarshallianPerspective," by Michel Qu=E9r=E9, starts from the "reconciliationproblem." Here the focus is on some methodological difficultiesMarshall tried to overcome and the meaning he gave to competition inorder to reconcile it with increasing returns. Once again, the readeris told to refer to _Industry and Trade_ more than _Principles_ that,as aiming to provide "a single unified framework" (p. 199), is saidto be "unsatisfactory." The following paper is on "Efficiency and Time" by Brian Loasby. Thestarting point of the paper is a quotation from Groenewegen'sbiography according to which "For Marshall, economists do not onlyhave to explain their world. They have an unambiguous duty to assistin changing it for the better" (1995, p. 761). Marshall the economistalways tried to understand the real world and find possible ways topromote the progress of society. Loasby focuses on the pivotal roleof knowledge in Marshall's economics and explains it as "a selectivenetwork of connections between elements, built up, modified andsometimes abandoned over time" (p. 210). This concept of knowledge,very far from the perfect information of the neoclassical world,explains why Marshall could never have reasoned in terms of "Paretoefficiency" but at most in terms of "sufficiency," that is more aptto explain a world where uncertainty is widespread. Knowledge is also the central issue of the paper by Richard Arena,"Organization and Knowledge in Alfred Marshall's Economics."According to Arena, Marshall's concept of knowledge was "among themost advanced" (p. 221). Knowledge is strictly connected withorganization, in its turn centered on differentiation andintegration. Arena proves how "organization and knowledge appear tobe the main engine of economic evolution in Marshall" (p. 238), eventhough, he underlines, "Marshall's contribution does not provide uswith a ready-made theoretical framework" (p. 238). "Some Remarks on Marshallian External Economics and IndustrialTendencies" by Marco Bellandi explains the meaning of externaleconomies and the role played by industrial districts in Marshall'seconomics. The reader is again invited to take into consideration_Industry and Trade_ more than _Principles_ since "In _Industry andTrade_, 'place' is explicitly considered at different inter-linkedterritorial levels, such as time whose different scales receive greatattention in the _Principles_" (p. 242). The "places" considered inthe book are nations, regions, cities and industrial districts. Whilethe nation-level, "where great financial, ideological, political, andmilitary resources are coordinated, has an importance that Marshallconsiders seriously" (p. 243), "the local level seems to functionhere as the basic unit" (p. 245). The last paper is "Requirements and Patterns of MarshallianEvolution: Their Impact on the Notion of Industrial District" byTiziano Raffaelli. As the author maintains, the aim of the paper "isto show that Marshall's wider evolutionary framework helps us tounderstand better the theoretical relevance of district organization"(p. 254). Raffaelli suggests that industrial district "was not anappendix to his [Marshall's] social thought but was directlyconnected to its core and constituted a specific way of dealing withthe growth of capital that was inherent in economic progress" (p.254). Co-evolution -- considered as the essence of all social systemsand the characteristic aspect of interrelation between animal speciesand their environment -- is the mechanism that explains "change."Raffaelli uses the functioning of evolutionary mechanisms, "whosefirst instance Marshall found in the human mind" (p. 255), as meansto explain the dynamics of the industrial district, considered as "anideal evolutionary environment" (p. 263). According to the editors the book has two main messages: "the firstis that economists are far from having fully exploited thepotentialities of the originality of Marshall's approach, and thesecond is that Marshallian economics is not mainly a topic forhistorians of economic thought; its modernity reveals how useful itis to re-read Marshall's contributions from the standpoint of therenovation of contemporary economics" (p. 1). Coming to the end of the book, the reader cannot neglect these twomessages: a new and less known Marshall emerges from the book and theunusual and interesting aspects of his thought which are discussedreveal a very modern economist. In the introduction, the editors anticipate most of the issuesdeveloped in the volume: "methodological perspectives," "thereconciliation problem," "internal and external economies,""competition, production and evolution," "knowledge, organization andinstitutions." Other general aspects of the volume are also worthunderlining: the necessity of reading _Industry and Trade_ tounderstand Marshall's economic thought and the usefulness of applyingthe model of the mind, to better clarify the structure of Marshall'sreasoning. As we have seen, the reader will find a number of interesting andstimulating suggestions on how to reconsider and reread AlfredMarshall. But since each chapter is in the form of an independentpaper, I would have found it useful (and interesting) to put asummary scheme or conclusive remarks at the end of the volume. Another comment is on the structure of the book. I found the twoparts slightly off balance. While each paper of the first partunderlines a different aspect, in the second part too much emphasisis perhaps given to the "Representative Firm" and the "ReconciliationProblem," the aspects of Marshall's thought more debated in the past.Other issues could be given more attention as expression of the greatoriginality and richness of Marshall's thought: the modern idea ofprogress; the attention given to the quality of life; and theanalysis of firms (marketing, scientific management, the contrastbetween large and small firms). But, of course, a book cannot beexhaustive, especially with an author such as Alfred Marshall. It is a well known motto "it's all in Marshall." Reisman in theintroduction of his paper writes "Marshall here as usual, knew itall" (p. 53). This book suggests a number of aspects in Marshall'sthought that deserve attention and probably further discussions. Itseems to give evidence to the motto cited above. No doubt it provesthat in Marshall there is much but not because he _knew_ it all, Ithink, but because he _saw_ it all, the real world, being aneconomist in the round, theoretical but also applied, and moreoverconsidering economics not a science as an end in itself but a meansfor bettering human life. This aspect is too often forgotten bymodern economists but I think it is the strongest message of thegreat Marshall's legacy. References: Groenewegen P. (1995) _A Soaring Eagle: Alfred Marshall, 1842-1924_,Aldershot, Edward Elgar. Raffaelli T. (2003), _Marshall's Evolutionary Economics_, London, Routled= ge. Katia Caldari's works include "Alfred Marshall's Idea of Progress andSustainable Development," forthcoming in the _Journal of the Historyof Economic Thought_. Copyright (c) 2004 by EH.Net. All rights reserved. This work may becopied for non-profit educational uses if proper credit is given tothe author and the list. For other permission, please contact theEH.Net Administrator ([log in to unmask]; Telephone: 513-529-2229).Published by EH.Net (September 2004). All EH.Net reviews are archivedat http://www.eh.net/BookReview. -------------- FOOTER TO EH.NET BOOK REVIEW -------------- EH.Net-Review mailing list [log in to unmask] http://eh.net/mailman/listinfo/eh.net-review