Marshall, Alfred (1842–1924)

ONE OF THE FOUNDERS of neoclassical economics, Marshall was the most influential economist of the early 20th century and was the teacher of the most influential economist of the mid-20th century, John Maynard Keynes.

Marshall invented the familiar supply-and-demand curves. Though his father wanted him to enter the clergy, Marshall developed an early love of mathematics in general, and of geometry in particular. As a boy, he hid volumes of Euclid's Elements under his coat and studied them in every spare moment with the kind of zeal that a modern youth might apply to comic books. In 1862, he entered St. John's College at Cambridge University. He achieved the second-highest score on Cambridge's math competition, which gave him the title of “second wrangler” in mathematics.

In spite of his passion for mathematics, Marshall retained an ethical outlook that would have suited him well for the clergy. After graduating in 1865, he went to Germany to study philosophy. When he returned to Cambridge as a teacher (a fellow), he became a close friend of Henry Sidgwick, the eminent moral philosopher. After reading books by the classical economists David Ricardo and John Stuart Mill, Marshall chose economics as a career because he saw it as a way to help the poor.

His concern with poverty is reflected in his writings. He argued that poverty, especially extreme poverty, prevents people from leading a complete life. He stated that the poor suffered from low self-esteem and lack of aspiration, and that only improvements in their economic condition can improve the quality of their lives. He emphasized the importance of economic growth and education, along with the formation of appropriate institutions, in poverty alleviation.

As he wrote in his magnum opus, Principles of Economics (1890): “Now at last we are setting ourselves seriously to inquire whether it is necessary that there should be any so-called ‘lower classes’ at all: that is, whether there need to be large numbers of people doomed from their birth to hard work in order to provide for others the requisites of a refined and cultured life; while they themselves are prevented by their poverty and toil from having any share or part in that life.”

In 1877 he married Mary Paley, who was one of the first female students at Cambridge and would have been a mathematics wrangler herself if women had been given the opportunity. Because Cambridge fellows were [Page 685]forbidden to marry, he took a position teaching economics at University College, Bristol, which he held until 1881. After a brief stint at Oxford, Marshall returned to Cambridge as professor of political economy, a position not in conflict with his married status. He remained at Cambridge until his death in 1924.

Marshall emphasized the continuity of his own work with that of classical economists such as Ricardo and Mill. His most important contributions to economics were: to develop the notion of elasticity of demand using the supply and demand curves; period analysis; and marginalism.

Period analysis recognizes that different market forces are dominant in the short and long term. In the short term, supplies of goods and disposable incomes are more or less fixed. In the long term, on the other hand, anything can change: productive facilities, consumer tastes, disposable incomes, and even technology. Marshall agreed with other economists that market forces such as supply and demand determined prices in the short run.

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