Striking a prophetic note, he envisioned a new type of society:
In America, mobility was creating an equality of condition . . . Where nearly all receive the same school education, where the incomparably more important education which is derived from the business of life, however various in form it be, yet is for every one nearly equally thorough, nearly equally effective in developing the faculties of men, there cannot but be true democracy. There will of course be great inequalities of wealth; at least there will be some very wealthy men. But there will be no clearly marked gradation of classes. There will be nothing like what Mill calls so strongly marked line of demarcation between the different grades of laborers as to be almost equivalent to the hereditary distinction of caste.
Explaining how individual choices might add up to social good—the very thing that Carlyle denied was possible—Marshall defined two types of moral education. One was characteristic of England, where, he claimed, “the peaceful molding of character into harmony with the conditions by which it is surrounded, so that a man . . . will without conscious moral effort be impelled on that course which is in union with the actions, the sympathies and the interests of the society amid which he spends his life.” In America, by contrast, mobility had opened up a second route to moral evolution, namely, “the education of a firm will by the overcoming of difficulties, a will which submits every particular action to the judgment of reason.”96
Most Victorian social commentators, including Karl Marx, feared that the industrial system was not merely destroying traditional social relations and livelihoods but deforming human nature through “ignorance, brutalization, and moral degradation.”97 In America, Marshall saw another possibility: “It appears to me that on the average an American has the habit of using his own individual judgment more consciously and deliberately, more freely and intrepidly, with regards to questions of Ethics than an Englishman uses his.”
Marshall seemed to be talking about mankind in general, but he was also talking about himself. He had developed a firm will by overcoming all sorts of difficulties—a tyrant of a father, genteel poverty, and the oppressive strictures of class. He had broken with authority—by losing his religious belief and defying his father’s wishes that he enter the ministry. Now he felt that his own independence would lead not to his downfall but to great things. What he witnessed in America filled him with hope. “Such a society may degenerate into licentiousness and thence into depravity. But in its higher forms it will develop a mighty system of law, and it will obey law . . . Such a society will be an empire of energy.”98
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“I have been rather spoilt” when it comes to “go” and a “strong character” in women,” Marshall had written in a letter from America. In another, he described his “riveting evening” with Miss Nunn, confessing that he found her naïveté “mingled with enterprise” charming. But he added that “for steady support I would have the strength that has been formed by daring and success.”99 Apparently he was thinking of Mary Paley, who had triumphed over the Tripos in his absence.
When they got engaged on his return to Cambridge, Marshall was thirty-four and Mary twenty-six. He was a rising star of the “New Economics.” She was a college lecturer. Marshall’s view of marriage was inspired by intellectual partnerships such as those of George Eliot and George Lewes and Thomas and Jane Carlyle. “The ideal of married life is often said to be that husband and wife should live for each other. If this means that they should live for each other’s gratification it seems to me intensely immoral,” Marshall wrote in an essay. “Man and wife should live, not for each other but with each other for some end.”100 For Mary, who had entered her first engagement “out of boredom,” this was a thrilling vision. Like the other unusual, idiosyncratic Victorian marriages Phyllis Rose describes in Parallel Lives: Five Victorian Marriages, the secret of Alfred Marshall and Mary Paley’s alliance lay in their “telling the same story.”101 The couple immediately decided to make Mary’s textbook a joint project and spent most of their engagement working on it.
They were married at the Parish Church in Ufford, next to the “rambling old house, its front covered with red and white roses,” where Mary had grown up. Mary wore no veil, only jasmine in her hair. In a gesture that proclaimed their untraditional views and high expectations, bride and groom contracted themselves out of the “obey clause.”102
By marrying, Marshall forfeited his fellowship at St. John’s. He and Mary flirted briefly with the notion of teaching at a boarding school, but when the principalship of a newly founded redbrick college in Bristol—the first experiment in coeducation in Britain—suddenly became vacant, they leapt at the opportunity. When they moved to Bristol in 1877, Mary had a tennis court installed and most of the rooms papered with Morris while Marshall chose the secondhand furniture and piano. But she was soon back in the classroom, lecturing on economics and tutoring women students.
Underwritten by Bristol’s business community, University College was to provide “middle and working class men and women with a liberal education.”103 Though strapped for funds, the college managed, during the Marshalls’ tenure, to offer day and evening classes to some five hundred students, sponsor public lectures in working-class neighborhoods, provide technical instruction to textile workers, and run a work-study program jointly with local businesses for engineering students. Marshall’s administrative duties were heavy and so was his teaching load. His regular classes, attended by a mix of small businessmen, trade unionists, and women, were “less academic than those at Cambridge . . . a mixture of hard reasoning and practical problems illuminated by interesting sidelights on all sorts of subjects,” a student recalled.104 Marshall “spoke without notes and his face caught the light from the window while all else was in shadow. The lecture seemed to me the most wonderful I had ever heard. He told of his faith that economic science had a great future in furthering the progress of social improvement and his enthusiasm was infectious.”105 The couple continued to work on The Economics of Industry most afternoons, took long walks, and played many games of lawn tennis. One friend referred to “their perfect happiness.”106
Marshall later said that reading Marx convinced him that “economists should investigate history; the history of the past and the more accessible history of the present.”107 But it was Dickens and Mayhew who inspired him to go into factories and industrial towns to interview businessmen, managers, trade union leaders, and workers. “I am greedy for facts,” he used to say.108 He wanted to write for men and women engaged in the “ordinary business of life.”109
He was convinced that he would have to blend theory, history, and statistics, as Marx had done in Das Kapital. But he was instinctively aware that his audience would require useful practical conclusions and a generous sprinkling of direct observation. He was too much of a scientist to theorize without verifying facts, or to rely on secondhand descriptions.
Marshall made a commitment to study the particulars of every major industry. He gathered data on wage rates by occupation and skill level. He paid a great deal of attention to Mill’s “arts of production”110—manufacturing techniques, product design, management—although he admitted that the constant effort of business owners to improve their products, production methods, and suppliers was hard to capture in formal theories. He was particularly interested in how the family-owned, privately held firm functioned versus the increasingly important joint stock company or corporation. Marshall participated in commissions and learned societies and sat on the board of a London charity, carried on a huge scientific correspondence, and, with Mary as an active partner, devoted several weeks each summer to fieldwork.
On one such quest, Mary’s notes refer to “14 different towns, mines, iron and steel works, textile plants, and [the] Salvation Army.”111 The itinerary was extraordinarily ambitious: Coniston copper mines, Kirby slate quarries, Barrow docks, iron and steel works, Millom iron mines, Whitehaven coal mines close to the sea, Lancaster, and Sheffield.
Marshall invented a device for organizing and retrieving information from his personal database. His “Red Book” was a homemade notebook sewn together with thread. Each page contained data on a variety of topics, ranging from music to technology to wage rates, arranged in chronological order. Marshall had only to stick a pin through one of the points on a page to see what other developments had occurred simultaneously.
In contrast to the majority of Victorian intellectuals, Marshall admired the entrepreneur and the worker. Carlyle, Marx, and Mill considered modern production to be an unpleasant necessity, labor to be degrading and debilitating, businessmen to be predatory and philistine, and urban life to be vile. Mill considered Communism superior to competition in every respect but two (motivation and tolerance for eccentricity) and looked forward to a stationary, Socialistic state in the not very distant future. But none of these intellectuals could claim the familiarity with business and industry that Marshall was acquiring. Of course, as Burke’s phrase “drudging through life” implied, much of human labor had and was having such effects. But, once again, Marshall’s reliance on firsthand observation suggested that at least some work in modern firms expanded horizons, taught new skills, promoted mobility, and encouraged foresight and ethical behavior, not to mention provided the savings to go to school or into business. What was more, he observed, that sort of work was growing while the other was becoming less common. In short, the business enterprise could be and often was a step toward controlling one’s destiny.
Although Dickens is often thought of as a chronicler of the industrial revolution, almost the only factory scene in Dickens is phantasmagorical. The Coketown factory in Hard Times is a Frankenstein, seen only from a distance, that turns men into machines and re-creates the natural and social environment in its own monstrous image; noisy, dirty, monotonous, its air and water poisoned.
It was a town of red brick, or of brick that would have been red if the smoke and ashes had allowed it; but, as matters stood it was a town of unnatural red and black like the painted face of a savage. It was a town of machinery and tall chimneys, out of which interminable serpents of smoke trailed themselves for ever and ever, and never got uncoiled. It had a black canal in it, and a river that ran purple with an ill-smelling dye, and vast piles of building full of windows where there was a rattling and a trembling all day long, and where the piston of the steam-engine worked monotonously up and down, like the head of an elephant in a state of melancholy madness.112
Coketown is inhabited by an army of “people equally like one another, who all went in and out at the same hours, with the same sound upon the same pavements, to do the same work.” Significantly, Dickens imagines that inside the factory they “do the same work” and that “every day was the same as yesterday and to-morrow, and every year the counterpart of the last and the next.” Production, in other words, involves never creating anything new.
Marx’s description of the factory in Das Kapital stresses the same features as Dickens’s but lacks all detail, not surprising given that Marx had never been inside even a single one. Again, men are transformed into a “mere living appendage” of the machine, work becomes “mindless repetition,” and automation “deprives the work of all interest.”113
Marshall’s descriptions of factories and factory life are more specific, nuanced, and varied. He spends hours observing. He records manufacturing techniques and pay scales and layouts. He questions everyone, from the owner to the foremen to the men on the shop floor. When he encounters the same problematic phenomenon as Dickens or Marx—the effects of the assembly line on workers—he doesn’t necessarily draw the same inferences.
The characteristic of the firm is the way in which every operation is broken up into a great number of portions, the work of each individual being confined to a very small portion of the whole operation. Does this prevent the growth of intelligence? I think not . . . If a man has no brains we get rid of him: There is plenty of opportunity for this in consequence of the fluctuations of the market. If a man has some brains, he stays on at his work; but if he has any ambition, he must get to know all that goes on in the shop in which he is working: otherwise he has no chance of becoming foreman of that shop . . . Most improvements in detail are made by the foremen of the several shops: & improvements on a very large scale are made by a man who does nothing else . . . Their improvements were in small details as regards manufacture e.g. numerous contrivances for securing that certain parts should be airtight, that certain others should work easily. The Englishman had invented the harp stop.114
For Dickens and Marx, firms existed to control or exploit the worker. For Mill they existed solely to enrich their owners. For Marshall, the business firm was not a prison. Management wasn’t just about keeping the prisoners in line. Competing for customers (or workers) required more than mindless repetition. Marshall’s business enterprises were forced to evolve in order to survive. Of course, Marshall did not deny that businessmen pursued profits. His point was that to make profits competitive, firms had to generate enough revenue to still have something left over after paying workers, managers, suppliers, landlords, taxes, and so on. To do that, managers had to constantly seek out ways to do a little more with the same or fewer resources. In other words, higher productivity, the long-run determinant of wages, was a by-product of competition.
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The British publisher Macmillan & Co. brought out The Economics of Industry in 1879. A slim volume purporting to contain nothing new and written in simple and direct prose suitable for a primer, it contained the essentials of Marshall’s New Economics. Its message was summarized in the following passage:
The chief fault in English economists at the beginning of the century was not that they ignored history and statistics . . . They regarded man as so to speak a constant quantity and gave themselves little trouble to study his variations. They therefore attributed to the forces of supply and demand a much more mechanical and regular action than they actually have; But their most vital fault was that they did not see how liable to change are the habits and institutions of industry.115
Marshall’s obsessive effort to understand how businesses worked led to his most important discovery. The economic function of the business firm in a competitive market was not only or even primarily to produce profits for owners. It was to produce higher living standards for consumers and workers. How did it do this? By producing and distributing more goods and services of better quality and at lower cost with fewer resources. Why? Competition forced owners and managers to constantly make small changes to improve their products, manufacturing techniques, distribution, and marketing. The constant search to find efficiency gains, economize on resources, and do more with less resulted over time in doing more with the same or fewer resources. Multiplied over hundreds of thousands of enterprises throughout the economy, the accumulation of incremental improvements over time raised average productivity and wages. In other words, competition forced businesses to raise productivity in order to stay profitable. Competition forced owners to share the fruits of these efforts with managers and employees, in the form of higher pay, and with customers, in the form of higher quality or lower prices.
The implication that business was the engine that drove wages and living standards higher ran counter to the general condemnation of business by intellectuals. Even Adam Smith, who famously described the benefits of competition in terms of an invisible hand that led producers to serve consumers without their intending to do so, had not suggested that the role of butchers, bakers, and giant joint stock companies was to raise living standards. Although Karl Marx had recognized that business enterprises were engines of technological change and productivity gains, he could not imagine that they might also provide the means by which humanity could escape poverty and take control of its material condition.
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A serious crisis followed the publication of the Marshalls’ book. Marshall was diagnosed with a kidney stone in the spring of 1879. Surg
ery and drugs were not options at that time. His doctor said, “There must be no more long walks, no more games at tennis, and that complete rest offered the only chance of cure,” Mary recalled later. “This advice came as a great shock to one who delighted so in active exercise.”116 The painful, debilitating condition revived Marshall’s old fears of impending annihilation, still lurking from childhood. Only a few weeks earlier, he had spent a vacation hiking alone on the Dartmouth moors. Now he had become a housebound invalid who took up knitting to pass the time. A Bristol acquaintance recalled seeing Marshall and thinking that he must be seventy or so:
He . . . looked to me very old and ill. I was told he had one foot in the grave and I quite believed it. I can see him now, creeping along Apsley Road . . . in a great-coat and soft black hat . . . The next time I saw him was . . . in 1890 . . . I was astonished to find him apparently thirty or forty years younger than I remembered him a dozen years before.117
It made him more dependent on Mary and caused him to cast her ever more into the role of nurse rather than intellectual companion. Illness concentrated his mind. Marshall always had a tendency toward writer’s block. Now he realized he had to focus his energies and get on with his book. His hopes for writing a work that would eclipse Mill’s (and perhaps also Marx’s)—a synthesis of new theory and freshly distilled reports from the real world—were matched by fears that he was not up to the task. As his vision grew in scope and complexity, he grew proportionately less satisfied with what he had written. He had decided to drop plans to publish his volume on trade well before his illness flared. “I have come to the conclusion that it will never make a comfortable book in its present shape,” he wrote in the summer of 1878.118 And he quickly grew to dislike the book he had written with Mary. But in 1881, on a rooftop in Palermo, Sicily, he began to compose Principles of Economics.