Growth and Betterment

It is frequently asserted that the neo-classical economists were principally concerned with topics in the field of comparative statics (and specifically with microeconomic questions such as those involving rational choice between alternative options, efficient allocation of scarce resources, constrained maximisation of utility and profit) and that it was the classical authors who wrote most fully about macroeconomic dynamics, aggregation, growth and development. If the 1870s did indeed witness such a paradigm-switch, then it is not easy to know precisely in which camp to situate Alfred Marshall, who in the 1880s and 1890s made an unprecedented contribution to the pure theory of partial equilibrium — but also warned that ‘the general conditions of life are not stationary’,1 declared that time ‘is at the centre of the chief difficulty of almost every economic problem’,2 and stressed that we in the West are nowadays ‘moving on at a rapid pace that grows quicker every year; and we cannot guess where it will stop’.3 Of course the neo-classical box of tools is there, but so too is the perception that time is ‘absolutely continuous’,4 reality quintessentially dynamic, the wealth of nations to be assigned pride of place in an approach to the economic system ‘permeated’, as Dennis O’Brien puts it, ‘by a concern over growth. The post-Walrasian view of Marshall is totally misleading because it fails to appreciate that, for Marshall, economic phenomena were observed not at rest but in the course of growth … He was impressed by England’s industrial leadership, and after more than a century of growth, was concerned for the maintenance of both that growth and of England’s premier position; and in this he was wholly classical.’5