Introduction: Wealth and Wellbeing
Welfare economics is typically described as ‘Pigovian’ and ‘Paretian’ rather than ‘Marshallian’, but its roots can plainly be traced back to Alfred Marshall and Henry Sidgwick (Backhouse 2006; Medema 2006).
It is also common to restrict attention to economic welfare (not welfare in general), to what John Hicks later called ‘economic welfarism’, thus making ‘the Welfarist fence’ (Hicks 1959, viii-ix) as will be seen in the later chapters. This chapter, however, aims to show what ‘welfare’ and ‘wellbeing’ were in fact taken to mean in Marshall’s economic writings including his unpublished notes on ‘Progress’: it argues that Marshall was more concerned with welfare in general, in other words, with ‘general wellbeing’ or ‘human wellbeing’, which is far more commonly used in his economic thought. He wrote, in Principles of Economics, ‘the spirit of the age’ induces a closer attention to ‘the question whether our increasing wealth may not be made to go further... in promoting the general wellbeing’ (Marshall 1961a, 85).Marshall further explained in Industry and Trade that most Western countries ‘can now afford to make increased sacrifices of material wealth for the purpose of raising the quality of life throughout their whole population’ (Marshall 1919, 5). This seems to be a basis of his thought about economic wealth and human wellbeing. Marshall preferred the word ‘wellbeing’ to ‘welfare’ for true human happiness, partly because it fitted with his organic thinking, and because it more includes non-economic welfare.1 The chapter will show how Marshall thought of ‘welfare’ and ‘wellbeing’ in relation to the ‘quality of life’ and ‘standards of life’, which cannot be estimated and measured by only economic and material wealth.[6] [7] As is well known, when Marshall had to decide whether to devote his life to psychology or economics in about 1871-2, ‘economics grew and grew in practical urgency, not so much in relation to the growth of wealth as to the quality of life’ (Whitaker 1996, II, 285, emphasis added). For him, ‘wealth exists only for the benefit of mankind... Rather than limiting general welfare to economic welfare as Pigou did in the opening chapter of The Economics of Welfare, Marshall’s ideas on wealth and welfare in general seem closer to what Hicks tried to do after his ‘Non-welfarist Manifesto’, that is, ‘transition from Utility to the more general good, Welfare itself.[8] Marshall’s ideas about wellbeing are quite different from those of Pigou, who argued that the economist’s concern lies not with welfare in general but with that part of general welfare which he calls economic welfare (utilities). As will be seen in the next section, for him, ‘the term “economic progress” is narrow’; the economic aspect could be separated only temporarily and provisionally.[9] As has been shown elsewhere (Caldari and Nishizawa 2014, 2020b), Marshall’s ideas on wellbeing cannot be reduced to his welfare economic analysis (based on the consumer's surplus), or the welfare arguments on taxes and bounties developed mainly in Book V of Principles of Economics (see also Groenewegen 2010). As Dardi has put it, Marshall’s welfare economic theory constitutes ‘only one chapter, and not even a very important one’ in his evolutionary economics (Dardi 2010, 409). For Marshall ‘the Mecca of the economist lies in economic biology’: his approach was biological and organic, not mechanical. ‘The main concern of economics is with human beings who are impelled... to change and progress’ (1961a, xv). This chapter aims to show a broader perspective of a more comprehensive reasoning of welfare and wellbeing, in other words the raising of quality of life, standards of life, and how ‘the economic, as well as the moral, wellbeing of the masses of the people’ could be attained in Marshall’s ideas on ‘Progress’ and the ‘organic life-growth’ (1961b, 63; 1961a, 48).5 3.2