Evolutionary Change and Marshall's Abandoned Second Volume

Introduction In 1898, Marshall explained that in the "advanced stages of many economic problems" that is, when institutions are analyzed over long periods of time, simple equilibrium notions lose their usefulness. At this point the economist must adopt a "biological tone" if he or she were to understand the "progress" of ordinary business life. (1) As a practical program for economic research, Marshall urged the study of the evolutionary hypothesis as pioneered by Herbert Spencer and later Charles Darwin. Armed with the powerful ideas of modern biology, the economist would no longer be satisfied with the naked equations of static equilibrium. Indeed, Marshall stated the matter quite succinctly when he wrote: "The Mecca of the economist is economic biology rather than economic dynamics". (2) Professor Brinley Thomas insisted that Marshall's steadily expanding appreciation of modern biology is what forced Marshall to totally abandon his earlier plan of producing a companion second volume to his Principles. (3) Marshall was convinced that industrial progress involved irreversible changes. The nature and character of the competitive market process included both the introduction of novel methods of production and the discovery of more noble uses to which industrial output might be put. Values and culture were undergoing organic growth and equilibrium economics was not insightful about these issues. Equilibrium economics was also not insightful about the problem of increasing returns and long term industrial change. According to Thomas, Marshall was forced to abandon the neoclassical research program centering around static equilibrium, and once abandoning that program could no longer produce the promised second volume of the Principles. (4) Professor John Whitaker has offered an alternative and considerably less heroic account of why Marshall never completed his second volume. According to Whitaker, Marshall abandoned his plans for a second volume simply because he chose instead to allocate more of his time to public service rather than pure academic research. (5) Marshall's participation on several Parliamentary commissions and the preparation of applied economic analysis absorbed much of his time. One after another, project after project, time slipped away. As his sixty-eighth birthday approached, Marshall found himself too old and tired to complete the project he had promised his readers in 1890. (6) Sadly, in 1910 Marshall removed the "Volume 1" from the title page of his Principles" and replaced it with the phrase "An introductory volume". The first volume would have to endure without the joy of a subsequent companion. Of the six books originally planned for Volume II of the Principles', Whitaker explained: Book VII (Foreign Trade) and VIII (Money and Banking) were covered fairly fully in Money Credit and Commerce while Book IX (Trade Fluctuations) was touched upon, but only marginally and inadequately. Books X, XI, XII (Taxation, Collectivism, Aims for the Future) were never treated comprehensively, being addressed only in occasional essays and evidence. The projected last work on Economic Progress that was to cover those topics must be dismissed as largely a fiction: a trace of George Eliot's Casaubon clings to Marshall. (7) Now, at least since Sigmund Freud, we know that the reasons a person offers for his actions may not be the real reasons. In Marshall's case, he may have abandoned plans to produce the second volume for reasons that have less to do with his physical health and more to do with changes in his personality. Whitaker echoes Keynes on this point when he refers to Marshall's "fear of failure" in the following way: Without indulging too far in popular psychology, one can suspect in his self-defeating propensity to elaboration an unreasonable perfectionism bordering on the pathological. The result was those "growing inhibitions" and consequent, almost insuperable; difficulties of "bringing him to the point of delivering up his mind's possessions" that were remarked by J. …