Grand Pursuit: A Story of Economic Genius

But the economic crisis and political upheavals of the 1860s revived the old animus against the discipline among intellectuals. Going a step beyond Carlyle’s epithet “the dismal science,” John Ruskin, the art historian, dismissed political economics as “that bastard science” and, like Dickens, called for a new economics; “a real science of political economy.”

The fundamental problem, observed Himmelfarb, was that “the science of riches” clashed with the evangelicalism of the late Victorian era.

Victorians were repelled by the notion that greed was good or that the invisible hand of competition guaranteed the best of all possible outcomes for society as a whole.

With the advent of the franchise for working men, both political parties were courting the labor vote. But “political economy” was invoked to oppose every reform—whether higher pay for farm laborers or relief for the poor—on the grounds that it would slow down the growth of the nation’s wealth. While the founders of political economy had been radical reformers in their day, championing women’s rights, the abolition of slavery, and middle-class interests versus those of the aristocracy, their theories pitted their disciples against labor. As Virginia Woolf’s father, Leslie Stephen, remarked: “The doctrine . . . was used to crush all manner of socialist schemes. . . . Political economists were supposed to accept a fatalistic theory, announcing the utter impossibility of all schemes for social regeneration.”

For example, when Henry Fawcett, the reform-minded professor of political economy at Cambridge, addressed striking workers, he told them that they were cutting their own throats. Such advice outraged Ruskin, who said, after a builders’ strike in 1869, “The political economists are helpless—practically mute; no demonstrable solution of the difficulty can be given by them, such as may convince or calm the opposing parties.”

Mill was an even more dramatic example than Fawcett. Now a Radical member of parliament, Mill called himself a Socialist, and had championed the Second Reform Act and the right of workers to unionize and strike. Yet Mill’s view of the future of the working classes was scarcely less dour than that of Ricardo or Marx. J. E. Cairnes, a professor at University College London who published a famous indictment of slavery as an economic system, echoed Mill’s position a few years later:

The margin for the possible improvement of their lot is confined within narrow barriers which cannot be passed and the problem of their elevation is hopeless. As a body, they will not rise at all. A few, more energetic or more fortunate than the rest, will from time to time escape . . . but the great majority will remain substantially where they are. The remuneration of labor, as such, skilled or unskilled, can never rise much above its present level.

At the heart of Mill’s pessimism lay the so-called wages fund theory. According to this theory, ultimately disowned by Mill but never replaced by him, only a finite amount of resources was available to pay wages. Once the fund was exhausted, there was no way to increase the aggregate amount of pay. In effect, the demand for labor was fixed, so that only the supply of labor had any effect on wages. Thus, one group of workers could obtain higher wages only at the expense of lower wages for others. If unions succeeded in winning a wage rate in excess of the rate of the wages fund, unemployment would result. If the government intervened by taxing the affluent to subsidize wages, the working population would increase, causing more unemployment and even higher taxation. Moreover, the use of taxes to subsidize pay would reduce efficiency by removing competition and the fear of unemployment. Eventually, Mill warned, “taxation for the support of the poor would engross the whole income of the country.”

Unless the working classes acquired prudential habits of thrift and birth control, the author of a popular American textbook claimed, “they will people down to their old scale of living.”

In her political economy primer, Millicent Fawcett cited the Corn Law repeal as proof that wages were tethered to a physiological minimum. Referring to the worker, she wrote:

Cheap food enabled him, not to live in greater comfort, but to support an increased number of children. These facts lead to the conclusion that no material improvement in the condition of the working classes can be permanent, unless it is accompanied by circumstances that will prevent a counter-balancing increase of population.

By the time the Second Reform Act passed however, the theory that wages could not rise in the long run no longer looked tenable, and not only because of the dramatic increase in average pay. The conquest of nature by the railway, steamship, and power loom suggested that society was not yet close to natural limits to growth. The fact that emigrants were prospering abroad and that a middle class of skilled artisans and white-collar workers was shooting up at home contradicted the notion that a mass escape from poverty was ruled out by the biological laws. Poverty that had once appeared to be a natural and near-universal feature of the social landscape began to look more and more like a blemish.

Was there an ingenious mechanism that could lift wages until the average wage sufficed for a middle-class life? Mill acknowledged that the wages fund theory was flawed, but neither he nor his critics could propose a satisfactory alternative. An extraordinary number of Victorian intellectuals—from Charles Dickens, Henry Mayhew, and Karl Marx to John Ruskin and Henry Sidgwick—attempted to fashion one. Since none had so far succeeded, no one could say whether hopes for social betterment really could be reconciled with economic reality, or whether the palpable gains of the 1850s and 1860s were doomed to be reversed. Tories such as Ruskin and Carlyle, an anti-Abolitionist, predicted disaster if the old feudal bonds were not restored. Socialists argued that without sweeping societal changes, the condition of workers was “un-improvable and their wrongs irremediable.”

The standard-of-living debate, as it became known, boiled down to one question: How much improvement was possible under existing social arrangements?

As he stood before “70 to 80 ladies” in a borrowed Cambridge college lecture hall on a spring evening in 1873, Alfred Marshall’s handsome face was lit with an inner flame, and he spoke with great force and fluency without notes. He addressed the women in plain, direct, homely terms as if he were speaking to his sister, urging them to stop “tatting their tatting and twirling their thumbs” and counseled them to resist the demands of their families. Instead he wanted them to get jobs as social workers and teachers like “Miss Octavia Hill.” Most of all, he insisted that they learn “what difficulties there are to be overcome, and . . . how to overcome them.”

Like his mentor Henry Sidgwick and other university radicals of the 1860s and 1870s, Marshall came to see education as a weapon in the struggle against social injustice, and like other admirers of Mill’s The Subjection of Women, published in 1869, he considered the educated woman society’s principal change agent. For Marshall, the existential problem for women and for the working classes was essentially the same: both lacked the opportunity to lead independent and fulfilling lives. Workers were condemned by low wages to lives of drudgery that prevented all but the most exceptional from fully developing their moral and creative faculties. Middle-class women were condemned by custom to ignorance and drudgery of a different sort. Inspired by the novels of contemporaries such as George Eliot and Charlotte Brontë, Marshall was particularly sensitive to the plight of women who were prevented from developing their intellects and regretted society’s loss of their talents. He was convinced that the task of liberating the working classes required the energies of middle-class women as well as a more scientific economics. On the topic of “the intimate connection between the free play of the full and strong pulse of women’s thought and the amelioration of the working classes,” Marshall was “a great preacher.” In an age that celebrated “the angel of the hearth,” Marshall taught extension courses for women, acted as an unpaid examiner, and personally financed an essay-writing prize in economics for female students, as well as, later on, contributing a substantial £60 to the construction fund for Newnham Hall, the nucleus of one of Cambridge’s first women’s colleges. In 1873, Marshall joined Sidgwick, other members of the Grote Club, and Millicent Fawcett—whose sister Elizabeth Garrett was attempting to study medicine—to found the General Committee of Management of the Lectures for Women.

Marshall’s lectures focused on the central paradox of modern society: poverty amid plenty. He taught by posing a series of questions: Why hadn’t the Industrial Revolution freed the working class “from misery and vice?” How much improvement is possible under current social arrangements based on private property and competition? His answers reflected how far he had distanced himself from the specific assumptions and conclusions of his predecessors. He told the women that philanthropy and political economy were not, as Malthus had supposed and latter-day Malthusians continued to believe, irreconcilable.

Even as he contradicted the conclusions of the founders of political economy, Marshall insisted that the science itself was indispensible. The problem of poverty was far more complicated than most reformers admitted. Economic science, like the physical sciences, was nothing more or less than a tool for breaking down complex problems into simpler parts that could be analyzed one at a time. Intervention based on faulty theories of causes could easily make the problem worse. Marshall cited Adam Smith, David Ricardo, Thomas Malthus, and John Stuart Mill to demonstrate the power of the “engine of analysis” they had constructed, as well as to show how it had to be improved. Without such a tool, he told them, discovering truths would always be a matter of accident and the accumulation of knowledge with time wholly impossible.

Marshall agreed with Mill that the industrial revolution hadn’t liberated him from the tyranny of economic necessity or supplied the material requisites for a “higher life.” “Our rapid progress in science and arts of production might have been expected to have prevented to a great extent the sacrifice of the interests of the laborer to the interests of production . . . It has not done so.”

What he strenuously disputed was the assertion by political economists that it could not do so, that the remuneration of labor as such, skilled or unskilled, could never rise much above its present level.

He did not doubt that the chief cause of poverty was low wages, but what caused wages to be low? Radicals claimed that it was the rapacity of employers, while Malthusians argued that it was the moral failings of the poor. Marshall proposed a different answer: low productivity. He cited as evidence the fact that, contrary to Marx’s claim that competition would cause the wages of skilled and unskilled workers to converge near subsistence level, skilled workers were earning “two, three, four times” as much as unskilled laborers. The fact that employers were willing to pay more for specialized training or skill implied that wages depended on workers’ contribution to current output. Or, put another way, that the demand for labor, not only the supply, helped to determine pay. If that was the case, the average wage wouldn’t be stationary. As technology, education, and improvements in organization increased productivity over time, the income of the workers would rise in tandem. The fruits of better organization, knowledge, and technology would, over time, eliminate the chief cause of poverty. Activity and initiative, not resignation, were called for.

Arnold Toynbee the historian later described the significance of Marshall’s insight: “Here is the first great hope which the latest analysis of the wages question opens out to the laborer. It shows him that there is another mode of raising his wages besides limiting his numbers.”

Workers themselves could influence their own and their children’s ability to earn better wages. “The chief remedy, then, for low wages is better education,” Marshall told his audience.

He took great pains to demolish Socialists’ claim that but for oppression by the rich, the poor could live in “absolute luxury.” England’s annual income totaled about £900 million, he told the women. The wages paid to manual workers amounted to a total of £400 million. Most of the remaining £500 million, Marshall pointed out, represented the wages of workers who did not belong to the so-called working classes: semiskilled and skilled workers, government officials and military, professionals, and managers. In fact, an absolutely equal division of Britain’s annual income would provide less than £37 per capita. Reducing poverty required expanding output and increasing efficiency; in other words, economic growth.

The chief error of the older economists, in Marshall’s view, was to not see that man was a creature of circumstances and that as circumstances changed, man was liable to change as well. The chief error of their critics—but, ironically, one that the founders of political economy shared—was a failure to understand the cumulative power of incremental change and the compounding effects of time.

There are I believe in the world few things with greater capability of poetry in it than the multiplication table . . . If you can get mental and moral capital to grow at some rate per annum there is no limit to the advance that may be made; if you can give it the vital force which will make the multiplication table applicable to it, it becomes a little seed that will grow up to a tree of boundless size.

Ideas mattered when the past was not simply being reproduced but something new was being created. “An organon” or instrument for discovering truths—truths that depended, like all scientific truths, on circumstances—would be an independent force. “The world is moving on,” Marshall said, “but the pace at which it moves, depends upon how much we think for ourselves.”

A year later, Marshall was deep in conversation with Henry Sidgwick in Anne Clough’s sitting room on Regent Street, discussing “high subjects” when he felt someone staring at him.

The young woman who sat with her sewing untouched in her lap looking toward them had a “brilliant complexion,” “deep set large eyes,” and masses of mahogany hair “which goes back in a great wave and is very loosely pinned up behind.”

Later, someone said of the twenty-year-old Mary Paley, “She is Princess Ida.” The eponymous heroine of the Gilbert and Sullivan opera had “forsworn the world, / And, with a band of women, shut herself / Within a lonely country house, and there / Devotes herself to stern philosophies!” Mary had just broken off her engagement to a handsome but stupid army officer to join a handful of female pioneers seeking a Cambridge education. Her part in this “outrageous proceeding” was not a rejection of men, or of the usual terms of marriage. “He who desires to gain their favor must / Be qualified to strike their teeming brains, / And not their hearts! / They’re safety matches, sir. / And they light only on the knowledge box.”

Mary went to one of Marshall’s lectures at the coach house at Grovedodge and listened, enchanted, as he rhapsodized over Kant, Bentham, and Mill. “I then thought I had never seen such an attractive face,” she confessed, captivated by his “brilliant eyes.” She went to a dance at Marshall’s college, and, emboldened by his “melancholy” look, she asked him to dance “the Lancers.” Ignoring his protestations that he didn’t know how, she led him through the complex steps only to be “shocked at my own boldness.”

Before long she was among the regular guests at his “Sunday evening parties” in his rooms at St. John’s, where he served her tea, crumpets, sandwiches, and oranges and showed her his “large collection of portraits arranged in groups of Philosophers, Poets, Artists . . .”

Possibly Mary reminded Marshall of Maggie Tulliver, the intelligent but math-phobic heroine of George Eliot’s The Mill on the Floss, who wanted to learn “the Euclid” like her brother, Tom.

At the time, Eliot’s novel was Marshall’s favorite. Meeting Mary Paley and her best friend, Mary Kennedy, in the street one day, Marshall proposed—not marriage, but something more outrageous. The young professor wanted his two best students to take the Moral Sciences Tripos, the final examination in political economy, politics, and philosophy that male undergraduates had to take to get a degree. This was a far more ambitious project than acquiring “general cultivation” by attending lectures in literature, history, and logic, Mary’s original object in coming to Cambridge.

The suggestion was also bolder than anything proposed by other education reformers whose main interest lay in raising the level of secondary-school teaching. “Remember, so far you have been competing with cart horses,” Marshall warned, “but for the Tripos it will be with racehorses.” He promised that he and Sidgwick would coach her. According to Mary Kennedy, “He explained that this would mean at least three years’ study, specializing in one or two subjects. We accepted the challenge lightly, not realizing what we were undertaking.”

Like Marshall, the young woman who would accept the challenge came from a strict evangelical household. Mary Paley’s great-grandfather was William Paley, the archdeacon of Carlisle and author of The Principles of Moral and Political Philosophy. Mary’s father was the rector of Ufford, near Stamford, about forty miles northwest of Cambridge. A “staunch Radical” who opposed fox hunting, horse racing, and High Church ritual, he refused to talk to neighboring clergymen and forbade his daughters Dickens and dolls. Mary recalled, “My sister and I were allowed dolls until one tragic day when our father burnt them as he said we were making them into idols and we never had any more.”

Mary’s father was nonetheless a more tolerant, better-educated, and more affluent man than William Marshall. Mary grew up in a “rambling old house, its front covered with red and white roses and looking out on a lawn with forest trees as a background, and a garden with long herbaceous borders and green terraces.” The Paley household was a hive of activity: rounders, archery, croquet, excursions to London, summer holidays in Hunstanton and Scarborough. “We had a father who took part in work and play and who was interested in electricity and photography,” Mary recalled. Her mother “was full of initiative and always bright and amusing.” In 1862 Mary was taken to London to tour the Second Great Exhibition. Although Charles Dickens was taboo, Mary read Arabian Nights, Gulliver’s Travels, the Iliad and the Odyssey, Greek and Shakespearean plays, and the novels of Sir Walter Scott, also favorites of Marshall’s.

When the Cambridge Higher Local Examination for Women over Eighteen was established in 1869, Tom Paley encouraged Mary to take it over the objections of her mother. After she succeeded brilliantly and broke off her engagement to the army officer, her father allowed her to go to Cambridge to live “when such a thing had never been done before.” Anne Jemima Clough, a friend of Sidgwick’s and one of the leaders of the women’s education movement, was opening a residence for a handful of female students. Mary later wrote, “My father was proud and pleased and his admiration for Miss Clough overcame his objections to sending his daughter to Cambridge (in those days an outrageous proceeding).”

In October 1871, Mary joined Miss Clough and four other young women at 74 Regent Street. The Cambridge community was wholly unprepared for coeducation. Since mixed classes were “improper,” sympathetic dons had to be recruited to repeat their regular lectures separately for the women, and Miss Clough, as chaperone, had to sit through them all. The “strong impulse towards liberty among the young women attracted by the movement” and the “unfortunate appearance” of the pretty ones were chronic sources of anxiety. Mary, who was just entering her “pre-Raphaelite period” and had papered her rooms in William Morris designs, was especially troublesome. She dressed as if she were a figure in an Edward Burne-Jones painting, in sandals, capes, and flowing gowns. An amateur watercolorist, she favored jewel tones and once covered her tennis dress with Virginia creeper and pomegranates.

Mary began to go regularly. Earnest as well as artistic, with a quick facility for “curves,” the graphs that Marshall employed to illustrate the interactions of supply and demand, Mary surprised herself by winning the essay prize. She was thrilled by Marshall’s bold proposal that she take the Tripos, and the long comments he wrote on her weekly papers in red ink became “a great event.”

Mary Paley took the Moral Sciences Tripos in December 1874. Until the eve of the examination, it was unclear whether the university examiners would be willing to let her sit for it. One was considered “very obdurate.” Although they grudgingly agreed to grade her examination, they refused to grant her the highest mark. “At the Examiners’ Meeting there was at that time no chairman to give a casting vote, and as two voted me first class and two second class I was left hanging, as Mr. Sidgwick said, ‘between heaven and hell,’ ” she later recalled. Still, her triumph turned Paley into a local celebrity.

Her time at Cambridge seemingly having run out, Mary returned to the family home in Ufford. There she promptly organized a series of extension lectures for women—“off my own bat!”—in nearby Stamford. She also agreed, at the suggestion of a Professor Stuart at Cambridge, to write a textbook on political economy for use in the extension courses. Then she got a letter from Sidgwick asking whether she could take over Marshall’s economics lectures at Newnham, where Miss Clough had assembled about twenty students.

At thirty-two, Marshall was one of the “advanced liberals” at Cambridge University. He wore his hair fashionably long, sported a handlebar mustache, and no longer dressed like a buttoned-up young minister. He had joined the recently founded Cambridge Reform Club and read the Bee Hive, a radical labor magazine.

In the spring of 1874, a farmworkers’ strike provoked a bitter quarrel between radicals and conservatives at Cambridge. Trade unions were then relatively novel, having only just been legalized. The National Agricultural Laborers’ Union, a radical new organization under the leadership of Joseph Arch, had sprung up in dozens of East Anglian villages the previous fall. The laborers demanded higher wages and shorter hours as well as the franchise and reform of the land laws.

Strikes erupted all around Cambridge. Determined to “crush the rebellion,” farmers banded together in “Defense Committees,” firing and evicting men with union cards and importing scab labor from as far away as Ireland. The Tory Cambridge Chronicle suggested that the farmers “do not make a stand so much against an increase of wage as against the cunning tactics and insufferable dictation of the union through demagogue delegates.”

By mid-May, the lockout was two and a half months old and had become the subject of national controversy.

At the university, where a large subscription had just been undertaken for famine victims in Bengal, opinion was sharply divided. Middle-class sympathies for the plight of the laborers had been awakened by a number of inquiries, most notably a Royal Commission report by the bishop of Manchester, who had exposed the long hours, low wages, horrific accidents, and diets of “tea kettle broth, dried bread and a little cheese” endured by agricultural workers.

During the lockout, the Times of London ran stories calculated to horrify Victorian readers, including one description of a cottage whose single bedroom was shared by “the laborer, and his wife, a daughter aged 24, and a son aged 21, another son of 19, and a boy of 14, and a girl of 7.”

Novelists seized on the subject as well. In George Eliot’s Middlemarch, which had appeared three years earlier, Dorothea Brooke tells her uncle, a well-to-do landlord, that she cannot bear the “simpering pictures in the drawing-room . . . Think of Kit Downes, uncle, who lives with his wife and seven children in a house with one sitting-room and one bedroom hardly larger than this table!—and those poor Dagleys, in their tumble-down farmhouse, where they live in the back-kitchen and leave the other rooms to the rats! That is one reason why I did not like the pictures here, dear uncle.”

Among conservatives, however, the unrest raised the specter of the Bread Riots of 1816–17 and the burning of hayricks in the 1830s. Most opposed the idea of unionization on principle. In the spring a leading member of the university community, who was of “recognized social position . . . occupying an influential position in one of [Cambridge’s] . . . colleges,” wrote several lengthy “Notes of Alarm” in the Cambridge Chronicle urging the farmers to stand fast. He labeled the union leaders “professional mob orators” and their liberal sympathizers “sentimental busybodies.” The writer—possibly a Cambridge don named William Whewell—signed himself only “CSM,” an acronym probably chosen to provoke his liberal opponents because it stood for Common Sense Morality. On the matter of wages and unionization, CSM invoked the laws of political economy, claiming, “It is simply a question of supply and demand, and ought to have been allowed to settle itself on ordinary principles without the interference of paid agitators and demagogues.”