Aims of the lecture

• 1. To explain what happened to ideas about markets, the firm and welfare after Marshall.

• 2. To distinguish between British and American approaches to problems of markets and industrial structure, relating that discussion to the different histories of the two countries.

• 3. To provide the context for discussions of Lionel Robbins and the rise of mathematical economics that come in later lectures.

Bibliography

The following books are the key texts discussed in this lecture, in varying levels of detail. The first four deal with the theory of the firm, while the last three deal with welfare economics: F. H. Knight, Risk, Uncertainty and Profit (Boston, MA: Houghton Mifflin, 1921); J. M. Clark, The Economics of Overhead Costs (Chicago, IL: University of Chicago Press, 1923); E. H. Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA: Harvard University Press, 1933); J. Robinson, Economics of Imperfect Competition (London: Macmillan, 1933); A. C. Pigou, Wealth and Welfare (London: Macmillan, 1912); A. C. Pigou, The Economics of Welfare, four editions (London: Macmillan, 1920–32); and J. A. Hobson, Work and Wealth (London: Macmillan, 1914).

M. Morgan’s “Competing Notions of ‘Competition’ in Late Nineteenth-Century American Economics”, History of Political Economy 25 (1993), 563–604, discusses the variety of approaches to competition found in late-nineteenth-century American economics, making clear the contrast with British approaches to the subject.

N. Aslanbeigui and G. Oakes’s Arthur Cecil Pigou (London: Macmillan, 2015) is an account of Pigou’s economics that goes into far greater depth on both his theory of economic policy and his position in the cost controversy than is possible here.

I. Kumekawa’s The First Serious Optimist: A. C. Pigou and the Birth of Welfare Economics (Princeton, NJ: Princeton University Press, 2017) is a very new biography of Pigou (published too late to be taken into account in writing this lecture) that nicely complements the previous account of Pigou’s work.

E. H. Chamberlin’s “The Origin and Early Development of Monopolistic Competition Theory”, Quarterly Journal of Economics 75 (1961), 515–43, is a retrospective account of the origins of Chamberlin’s own theory, making clear the differences between himself on the one hand, and Robinson and participants in the British cost controversy on the other.