‘Progress in Relation to Standards of Life’
‘Progress’ is at the core of Marshall’s economics and economic thought, for he believed that economic problems are not mechanical, but concerned with ‘organic life and growth’ (‘organic life-growth’) (1961b, 63), from which human welfare and ‘economic and moral wellbeing’ cannot be separated.
While Principles of Economics remains as ‘a general introduction to the study of economic science’, similar to Roscher’s Foundations (Grundlagen)(1961a, xii), the volume concluded with a chapter titled ‘General Influences of Economic Progress (on Value)’. In the fifth edition he further added a chapter on ‘Progress in Relation to Standards of Life’. These give the Principles a historical and ethical colouration (economic ethology, economic sociology), increasing the emphasis on ‘organic life and growth’, which cannot be estimated only by economic or material wealth.[10] [11]Marshall conceived that ‘the progress of man’s nature’ (character) was ‘the centre of the ultimate aim of economic studies’ (1961b, 75).[12] Central to this was the interaction between ‘organic life-growth’, involving circumstances (economic wellbeing) and character formation (moral wellbeing). These two sides of organic growth cannot be separated.
Partly through the suggestions of biological study, the influence of circumstances in fashioning character is generally recognized as the dominant fact in social science. Economists have now learnt to take a larger and more hopeful view of the possibilities of human progress. The human will, guided by careful thought, can so modify circumstances as largely to modify character; and thus to bring about new conditions of life still more favourable to character; and therefore to the economic, as well as the moral, wellbeing of the masses of the people. (1961a, 48, emphasis added)
These ideas lie at the heart of the economic system Marshall tried to establish, for ‘Progress’ would eliminate poverty and provide material means for all the people to develop their faculties and activities.
His message was repeated when he wrote of ‘the distant goal where the opportunities of a noble life maybe accessible to all’ (e.g. 1897, 311).[13]Elected as Professor of Political Economy in the University of Cambridge in December 1884, Marshall was asked to address the Industrial Remuneration Conference towards the end of January 1885; the Conference discussed the best means for a more equal distribution in the poverty midst plenty of the 1880s. He concluded his speech as follows, referring to ‘the first aim of every social endeavour’:
However great may be our distrust of forcible socialism,... no one can lay his head on his pillow at peace with himself, who is not giving of his time and his substance to diminish the number of the outcasts of society, and to increase the number of those who can earn a reasonable income and have the opportunity of living, if they will it, a noble life. (1885a, 66)
Marshall devoted his life to the problems of poverty, that is, practical affairs. This long message (of a few pages) in the Remuneration Conference is repeated in the same words, used for the last concluding paragraphs of his final published book, Money, Credit and Commerce. It means that his basic ideas for the aims of social endeavour stayed throughout his life, to be further developed in his final volume on ‘Progress'.[14]
As stated in the beginning of the Principles, the hope that poverty may gradually be extinguished derives much support from ‘the steady progress of the working classes' during the nineteenth century. Wages had risen and education had been improved and, more generally, many artisans had ceased to belong to the ‘lower classes'. This progress caused the question ‘whether it is really impossible that all should start in the world with a fair chance of leading a cultured life, free from the pains of poverty' (1961a, 3-4); which was being pressed to the front by the growing earnestness of the age, and it was called ‘the spirit of the age' by Edgeworth in his review of the Principles (in Groenewegen 1998, 12).
This was a background of the welfare economics in the making, as exemplified in the Preface of Pigou's Economics of Welfare.Marshall expressed his opinions on the progress of man's economic conditions in chapter xii, ‘General Influences of Economic Progress' (Book VI): progress was fast improving the condition of the great body of the working classes. The statistics and records all indicated that middleclass incomes were increasing faster than those of the rich; the earnings of artisans were increasing faster than those of the professional classes, and the wages of healthy and vigorous unskilled labourers were increasing faster even than those of the average artisan (1961a, 687). From the time of Political Arithmetic in the seventeenth century onwards ‘a constant and nearly steady increase' was found in the amount of accumulated wealth per head of the population: ‘Man... has acquired a greater “telescopic” faculty' (1961a, 680).
In Marshall's view, though the inequalities of wealth were often exaggerated, this did not imply acquiescence to the present inequalities of wealth, which were a serious flaw in economic organization. While it was impossible to raise all earnings beyond the level of well-to-do artisan families, it was certainly desirable that those whose earnings were below that level should have their earnings raised, even if this meant reducing the earnings of those who were above it (1961a, 713-14).
Another thing is that prompt action was needed in regard to the large ‘Residuum' of persons who were physically, mentally, or morally incapable of doing a good day's work with which to earn a good day's wage. The system of economic freedom is the best for those in good health of mind and body, but the Residuum cannot turn it to good account (1961a, 714). Thus Marshall insisted that the most urgent steps in relation to the Residuum were regular school attendance in decent clothing, and with clean and fairly well-fed bodies. In case of failure ‘the parents should be warned and advised: as a last resource the homes might be closed or regulated with some limitation of the freedom of the parents’.
The expense would be great but there was ‘no other so urgent need for bold expenditure. It would remove the great canker that infects the whole body of the nation’ (1961a, 714-15).[15] [16]Then, discussing unskilled labour, he argued that machinery and mechanical progress, through the growth of national dividend, brought wages of unskilled labour that had risen faster than those of any other (1961a, 716). The poorer classes had derived a greater real benefit from economic progress on its mechanical and other sides.
In this context Marshall argues that the happiness of life, so far as it depends on material conditions, may be said to begin when income is sufficient to yield the barest necessaries of life; and then, an increase by a given percentage of the income will increase that happiness by about the same amount. This hypothesis leads to the conclusion that an increase by (say) a quarter of the wages of the poorer class of bona fide workers adds more to ‘the sum total happiness’ - which corresponds to what Pigou later called economic welfare - than an increase by a quarter of incomes of an equal number of any other class. It arrests positive suffering, and active causes of degradation, and it opens the way to hope. It is ‘the duty of society to endeavor to carry yet further an increase of wellbeing which is to be obtained at so low a cost’ (1961a, 717).11
Striving for mechanical progress would diminish the supply of unskilled work in order that the average income and the share of unskilled labourer might rise faster. So as to fit more of the children of the unskilled for higher work, ‘education must be more thorough’. It is to educate ‘character, faculties and activities’; so that the children even of those parents who are not thoughtful themselves, may have a better chance of being trained up to become thoughtful parents of the next generation. ‘To this end public money must flow freely. And it must flow freely to provide fresh air and space for wholesome play for the children in all working-class quarters.’ Thus ‘the State seems to be required to contribute generously and even lavishly to that side of the wellbeing of the poorer working class which they cannot easily provide for themselves’ (1961a, 717-18).
The main reason why Marshall, as an economist, wanted to eliminate poverty was because it caused degradation: ‘the destruction of the poor is their poverty’ (1961a, 3). In the world’s history, he remarked, there has been ‘one waste product, so much more important than all others’, that is called ‘THE WASTE PRODUCT’. It was the higher abilities of many of the working classes: ‘the latent, the undeveloped, the choked-up and wasted faculties for higher work, that for lack of opportunity have come to nothing’ (1889, 229). In the early ‘Lectures to Women’ (1873b), he wrote that man is ‘the finest instrument of production in the world’, ‘the most important productive machine’; therefore, ‘promote education at the expense of capital. Educate first; attend to its effects on capital afterwards.’ ‘We must regard a man as intelligent capital’ and ‘mental and moral capital’ (Raffaelli et al. 1995, 98, 117-19). In the Principles Marshall also stressed the importance of education, using a subheading of ‘Education National Investment’ (1961a, 216).[17]
Economic conditions affect human life and its influence on character improves the people’s qualities and elicits ‘latent faculties’ (i.e. it raises efficiency and wellbeing). In the Principles, studying the agents of production, Marshall says: ‘If the character and powers of nature and of man be given, the growth of wealth and knowledge and organization follow from them.’ From every point of view ‘man is the centre’ of the problem of production, consumption as well as distribution and exchange. ‘The growth of mankind in numbers, in health and strength, in knowledge, ability, and in richness of character is the end of all our studies’ (1961a, 139). As mentioned above, ‘the progress of man’s nature’ or character was ‘the centre of the ultimate aim of economic studies’. The ‘study of man’ was more important than a ‘study of wealth’ (1961a, 1).
Marshall’s passage to economics from psychology (ethics, philosophy) is well known.
In a letter to James Ward (23 September 1900), explaining how he left his home of mental science for economics, he wrote: ‘the increasing urgency of economic studies as a means toward human wellbeing grew upon me' (Whitaker 1996, II, 285). The new vocation as reluctant economist answered Marshall’s pressing need to know ‘how far... the conditions of life of the British (and other) working classes generally suffice for fullness of life’, for the realization of ‘the possibilities of the higher and more rapid development of human faculties’ disclosed by the ‘fascinating inquiries’ of psychology. Near the end of his life, he said again: ‘If I had to live my life over again I should have devoted it to psychology. Economics has too little to do with ideals’ (Keynes 1924, 171, 200).1312
In his enthusiasm for moral progress, Marshall believed that the progress of man and society would eventually obliterate the distinction between the working man and the gentleman, matching with his views on the prospectiveness and ‘telescopic’ faculty of the working classes. The decisive factor was the influence of occupation on character: since ‘work, in its best sense, the healthy energetic exercise of faculties, is the aim of life, is life itself’; ideally no man ‘should have any occupation which tends to make him anything else than gentleman’ (1873a, 114-15). Man’s character is moulded by his everyday work. Man’s ‘character is being formed by the way in which he uses his faculties in his work’, by the thoughts and feelings which it suggests. Work gave ‘backbone’ to the character of man. Marshall underlined ‘the effect that his work produces on him rather than of the effect that he produces on his work’ (1961a, 1 -2; Caldari and Nishizawa 2020a, 346-7). In ‘Progress’, Marshall wrote of ‘Life, Work and Art’; emphasizing a crucial sentence, ‘Our true aim is the elevation of human life, the making it full & strong (Life all round, individual and social, moral and religious, physical and intellectual, emotional and artistic)’ (Caldari and Nishizawa 2020a, 344).[18] [19] Towards the end of the chapter on ‘Value and Utility’ (referring to ‘broader aspects of the utility of wealth’), just after writing of the value of leisure and rest, Marshall introduced the notion of ‘true happiness’ - which he contrasted with ‘sum total happiness’. It encompassed what Pigou called ‘non-economic welfare'.[20] ‘Fullness of life' lies in the ‘development and activity of as many and high faculties as possible'. For ordinary people, ‘a moderate income earned by moderate and fairly steady work offers the best opportunity for the growth of those habits of body, mind, and spirit in which alone there is true happiness' (1961a, 136). Marshall questioned Edgeworth, asking ‘whether the Utilitarians are right in assuming that the end of action is the sum of the happiness of individuals rather than the vigorous life of the whole' (28 March 1880; Whitaker 1996, I, 125). He thought of happiness as ‘a process rather than a statical condition' (Whitaker 1996, I, 124). ‘Social good lies mainly in that healthful exercise and development of faculties which yield happiness without pall' (Marshall 1897, 310). Ethical values involving virtue and moral character were more significant than utility. Human wellbeing was served by a matrix of such values and not by a scalar value of utility.[21] Marshall would not separate economic welfare (material wellbeing) from general welfare (moral and human wellbeing) in this context, as Utilitarians such as Jevons and Edgeworth did. The solution of economic problems was for Marshall ‘not an application of the hedonistic calculus, but a prior condition of the exercise of man's higher faculties' (Keynes 1924, 170). The chapter on ‘Progress in Relation to Standards of Life' and his ideas on ‘work and life' are in the line of thought on ‘Wants in Relation to Activities'. ‘Standards of life', distinct from ‘standards of comfort', meant the standard of activities adjusted to wants. Thus a rise in the standard of life implies an increase of intelligence and energy and selfrespect; leading to more care and judgement in expenditure, and to an avoidance of food and drink that gratify the appetite but afford no strength, and of ways of living that are unwholesome physically and morally.... A rise in the standard of life for the whole population will much increase the national dividend, and the share of it which accrues to each grade and to each trade. (1961a, 689)[22] Marshall stated in the revision of the second edition, ‘A general increase in the efficiency of all workers would increase the National Dividend, and raise earnings nearly in proportion.' He indicated that the cost of production of labour cannot be determined as definitely as can that of a commodity; for the ‘conventional necessaries' of labour, as well as all superfluous comforts and luxuries are not a fixed sum, but depend on the efficiency of labour. The right means to raise wages is to raise, not merely the Standard of Comfort or of wants, but the Standard of Life which includes activities as well as wants (1961b, 40). He distinguished ‘conventional necessaries, i.e. the Standard of Comfort' from ‘the influence of modes and amounts of consumption over efficiency, and the Standard of Life' (1961b, 73). ‘Standard of Life' was the keynote of progress or organic life-growth. This significance of the chapter ‘Progress in Relation to Standards of Life' (and the previous chapter ‘General Influences of Economic Progress') is emphasized by its being closely related to those parts of the final book on ‘Progress' in which he discusses the complexity of wages, efficiency, and wellbeing.[23] ‘The Health and Strength of the Population' (Principles, Book IV, ch. v) is very crucial because it is one of the fundamental conditions for progress. ‘Health and strength, physical, mental and moral' is ‘the basis of industrial efficiency, on which the production of material wealth depends'; while conversely the importance of material wealth lies in the fact that, when wisely used, it increases the health and strength of the human race. Although the power of sustaining muscular exertion seems to rest on constitutional strength, even it depends on force of will, and strength of character. ‘This strength of the man himself, this resolution, energy and self-masterly, or in short this “vigour” is the source of all progress' (1961a, 193-4). In ‘Progress', working on ‘Economic Ideals', he wrote: ‘The ideal is not comfort but life, vigour. The comfort of the masses is to be thought for: they ought not to [be] robbed of their sugar, or their tobacco. But it is their life, the physical mental & moral vigour for which we ought to care' (Caldari and Nishizawa 2020a, 346). He wrote, ‘Use public money freely in order to increase vigour rather than to diminish suffering' (Caldari and Nishizawa 2020a, 221). Marshall's intentions are more on the science of activities rather than on wants, or the standard of life (activities) rather than the standard of comfort (wants).[24] In the very first part of his final book on ‘Progress’ (see Caldari and Nishizawa 2016), discussing ‘the nature of economic progress’, Marshall says that ‘the term “economic progress” is narrow’. ‘Progress’, the core and aim of his economic studies, ‘has many sides’, because ‘the progressive nature of man is one whole’. It ‘includes developments of mental and moral faculties, even when their exercise yields no material gain’. This is why he concluded that ‘the term “economic progress” is narrow’. It was wrong to see progress as ‘merely an increase in man’s command over the material requisites of physical mental and moral wellbeing; no special reference being made to the extent to which this command is turned to account in developing the higher life of mankind’ (Caldari and Nishizawa 2020a, 30-1). An implication was that ‘great advance in material wellbeing is attainable only by those nations, whose industries are progressive, and whose men are strong in character and in action’. ‘True human progress’ involved ‘an advance in capacity for feeling and for thought’ that ‘cannot be sustained without vigorous enterprise and energy’ (Caldari and Nishizawa 2020a, 31), which implied a view of welfare much broader than Pigou’s economic welfare. As we showed (Caldari and Nishizawa 2016), ‘Progress’ is, for Marshall, a very complex idea. ‘A certain minimum of means is necessary for material wellbeing’, but wellbeing is a far more inclusive concept and involves more than material wellbeing. 3.3