Chapter 5: Retreat to the Ivory Tower

1. Philip Noel-Baker to Austin Robinson, October 21, 1964, Austin Robinson Papers, MLE, EAGR 6/6/4, 32.

2. Quoted in Christopher N. L. Brooke, A History of the University of Cambridge, Volume IV, 1870–1990 (Cambridge: Cambridge University Press, 1993): 469.

3. Philip Noel-Baker to Austin Robinson, October 21, 1964, Austin Robinson Papers, MLE, EAGR 6/6/4, 32.

4. A. C. Pigou, “An Economist’s Apologia,” in Economics in Practice: Six Lectures on Current Issues, by A. C. Pigou (London: Macmillan, 1935): 8.

5. Anonymous [Joan Robinson], “Professional Economics: The Theory of Unemployment,” Statesman and Nation (August 26, 1933): 240–241, Arthur Cecil Pigou Papers, MLE, Pigou 2/2/3. A copy of this review from an unknown source was found in Pigou’s own copy of The Theory of Unemployment, published in 1933.

6. Richard Overy explores interwar Britain’s preoccupation with “crisis of civilization.” Richard Overy, The Twilight Years: The Paradox of Britain Between the Wars (New York: Viking, 2009).

7. C. F. G. Masterman, The New Liberalism (London: L. Parsons, 1920).

8. “Harrow v. Cambridge in Fives,” Harrovian 35, no. 2 (April 1, 1922): 26–27.

9. J. H. Clapham, “Of Empty Economic Boxes,” Economic Journal 32, no. 127 (September 1922): 305. Aslanbeigui and Oakes provide an overview of Pigou’s involvement in the so-called cost controversy, which they trace back to the 1910s. Nahid Aslanbeigui and Guy Oakes, Arthur Cecil Pigou (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2015), chapter 5.

10. Aslanbeigui and Oakes assert that before Clapham’s article, debates at Cambridge had been settled privately, but with the article, “public airing of dissent became a legitimate and institutional feature of its culture.” Aslanbeigui and Oakes, Arthur Cecil Pigou, 137.

11. Ibid., 311. See also Carlo Cristiano, “Marshall at Cambridge,” in The Impact of Alfred Marshall’s Ideas: The Global Diffusion of his Work, ed. Tiziano Raffaelli, Giacomo Becattini, Katia Caldari, and Marco Dardi (Cheltenham, UK: Edward Elgar, 2010): 22–23.

12. Pigou inherited Clapham’s college rooms early in his tenure as a fellow. Pigou to Oscar Browning, n.d. [1902–4], The Papers of Oscar Browning, KCA, OB/1/1281/A.

13. For instance, Pigou noted, “when we are informed that a tax always raises the price of the taxed article by the amount of the tax, we know that our informant . . . is tacitly assuming that all articles are produced under conditions of constant return.” A. C. Pigou, “Empty Economic Boxes: A Reply,” Economic Journal 32, no. 128 (December 1922): 461–462.

14. Ibid., 462.

15. Ibid., 464.

16. Ibid. The only recourse was to “endeavour to train up more men of the calibre of Jevons” who might unite both theory and firm-level content. Clapham was unsatisfied that he was being “paid with a cheque drawn on the bank of an unborn Jevons.” J. H. Clapham, “The Economic Boxes,” Economic Journal 32, no. 128 (December 1922): 562.

17. A. C. Pigou and Dennis Robertson, “Those Empty Boxes,” Economic Journal 34, no. 133 (March 1924): 16–31.

18. Allyn Young, “Pigou’s Wealth and Welfare,” Quarterly Journal of Economics 27, no. 4 (August 1913): 683. Young claimed many of the factors of production (e.g., land in an agricultural setting) that contributed to higher prices when production increased were not “used up,” which meant that there were higher monetary, but not real, costs. See also Nahid Aslanbeigui, “The Cost Controversy: Pigovian Economics in Disequilibrium” European Journal of the History of Economic Thought 3, no. 2 (Summer 1996): 281–285; Roberto Marchionatti, “The ‘Increasing Returns and Competition’ Dilemma: From Marshall to Pigou,” in The Elgar Companion to Alfred Marshall, ed. Tiziano Raffaelli, Giacomo Becattini, Katia Caldari, and Marco Dardi (Cheltenham, UK: Edward Elgar, 2006): 617–624. Jacob Viner later dubbed these effects later pecuniary external economies, or diseconomies. See Jacob Viner, “Cost Curves and Supply Curves,” Zeitschrift für Nationalökonomie 3, no. 1 (February 1932): 23–46.

19. Pigou to Macmillan, October 20, 1924, Macmillan Papers, BL, Add. MSS 55199, 87.

20. See Pigou to Macmillan, October 28, 1924, Macmillan Papers, BL, Add. MSS 55199, 89.

21. A. C. Pigou, ed. Memorials of Alfred Marshall (London: Macmillan, 1925).

22. A.C. Pigou, “In Memoriam: Alfred Marshall,” in A.C. Pigou, ed. Memorials of Alfred Marshall (London: Macmillan, 1925): 90.

23. Ibid.

24. For example, see Pigou to Alfred Marshall, January 25, 1923, Marshall Papers, MLE, Marshall 1/168.

25. They included Edwin Cannan and Piero Sraffa.

26. Pigou to Macmillan, October 9, 1925, Macmillan Papers, BL, Add. MSS 55199.

27. Pigou stayed at 33 Beaumont Street. Gerard Pigou lived in St. Andrews Mansions in Dorset Street. Electoral Register for St. Marylebone, Westminster, London, 1928, ss 2010; Pigou’s sister lived at 8 Weymouth Street. Outwards Passenger List of the Ranchi, Feburary 3, 1928, Records of the Board of Trade, TNA, BT 27, Digital Images Ancestry.com, July 8, 2014. Electoral Registers, Parliamentary Borough and Parish of St. Marylebone, London, London Metropolitan Archives, 1928, LCC/PER/B/1882, 120, Digital Images Ancestry.com, July 9, 2014. For Noel-Baker’s address, see Parliamentary Borough of Westminster, St. George’s Division London, London Metropolitan Archives, 1924, LCC/PER/B/1776, 77, Digital Images Ancestry.com. July 9, 2014.

28. Pigou to Macmillan, October 9, 1925, Macmillan Papers, BL, Add. MSS 55199.

29. “Lectures Proposed by the Special Board for Economics and Politics, 1925–26,” Cambridge University Reporter 56, no. 5 (October 9, 1925): 71.

30. Piero Sraffa, “The Laws of Returns under Competitive Conditions,” Economic Journal 36, no. 144 (December 1926): 538. Sraffa’s article was a revision of a longer piece he had published in Italian the previous year. Piero Sraffa, “Sulle relazioni fra costo e quantita prodotta,” Annali di Economia 2, no. 1 (1925): 277–328.

31. Echoing Clapahm’s argument of four years before, Sraffa cited the “heterogeneousness” of a given industry and argued that “to classify the various industries” as having increasing or decreasing returns was functionally impossible. Sraffa, “The Laws of Returns under Competitive Conditions,” 538.

32. There is an extensive literature on Sraffa’s attack on Marshall. See Cristiano, “Marshall at Cambridge,” 23–27; Scott Moss, “The History of the Theory of the Firm from Marshall to Robinson and Chamberlin: The Source of Positivism in Economics,” Economica 51, no. 203 (August 1984): 307–318; Neil Hart, “From the Representative to the Equilibrium Firm: Why Marshall Was Not a Marshallian,” in The Economics of Alfred Marshall, ed. Richard Arena and Michel Quéré (Basingstoke, UK: Palgrave Macmillan, 2003): 158–181. Aslanbeigui and Oakes cover the material with attention to Pigou: Aslanbeigui and Oakes, Arthur Cecil Pigou, 157–164. Maria Cristina Marcuzzo and Annalisa Rosselli argue that Sraffa’s fundamental objection was to marginalism itself. Maria Cristina Marcuzzo and Annalisa Rosselli, “Sraffa and His Arguments Against ‘Marginism,’” Cambridge Journal of Economics 35 (2011): 219–231.

33. A. C. Pigou, “The Laws of Diminishing and Increasing Cost,” Economic Journal 37, no. 146 (June 1927): 188–197. See also David Collard, “Introduction,” in A.C. Pigou, Journal Articles 1902–1922, ed. David Collard (London: Macmillan, 2002): xxii. The next year, Pigou returned to the theoretical underpinnings of the supply curve in an agnostic survey of possible theories of supply. It included a conciliatory gesture of replacing Marshall’s notion of the “representative firm” with the “equilibrium firm” which was at equilibrium when its industry was. Collard, “Introduction,” 2002, xxiii; A. C. Pigou, “An Analysis of Supply,” Economic Journal 38, no. 150 (June 1928): 238–257. Scott Moss writes, “Pigou’s equilibrium firm has become the exclusive subject of analysis in the conventional theory of the firm.” Moss, “The History of the Theory of the Firm,” 313. On subsequent theorizing at Cambridge, see Dennis P. O’Brien, “The Theory of the Firm after Marshall,” in The Elgar Companion to Alfred Marshall, ed. Tiziano Raffaelli, Giacomo Becattini, Katia Caldari, and Marco Dardi (Cheltenham, UK: Edward Elgar, 2006): 625–633. See also Nahid Aslanbeigui and Guy Oakes, The Provocative Joan Robinson (Durham, NC: Duke University Press, 2009), chapter 2.

34. Sraffa recast local external effects as having to do with monopoly situations and had thereby undercut a basic part of Pigou’s apparatus of welfare economics.

35. There has been debate over the extent to which Joan Robinson’s book, The Theory of Imperfect Competition (1933), was Marshallian. Cristina Marcuzzo sees it as broadening Marshallian theory to apply to cases of imperfect competition and as a defense against Sraffa’s attack on marginalism. See Maria Cristina Marcuzzo, “Joan Robinson and the Three Cambridge Revolutions,” Review of Political Economy 15, no. 4 (October 2003): 545–560. See also Marcuzzo and Rosselli, “Sraffa and His Arguments Against ‘Marginism.’” Others see Robinson as less Marshallian. See Aslanbeigui and Oakes, The Provocative Joan Robinson, 93–100; George R. Feiwel, “Joan Robinson Inside and Outside the Stream,” in Joan Robinson and Modern Economic Theory, ed. George R. Feiwel (London: Macmillan, 1989): 4–10. Dennis P. O’Brien sees Robinson’s book as a fundamental break with Marshall. O’Brien, “The Theory of the Firm after Marshall;” D. P. O’Brien, “The Evolution of the Theory of the Firm,” in Methodology, Money and the Firm I (Aldershot, UK: Edward Elgar, 1994): 254–258.

36. Sir Ernest Benn. “The Teaching of Economics,” Times (November 17, 1926): 15–16. On Dobb, see Timothy Shenk, Maurce Dobb: Political Economist (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2013).

37. A. C. Pigou. “Economics at the Universities,” Times (November 19, 1926): 15.

38. Ibid.

39. This is Karen Knight’s contention. Karen Knight, “A.C. Pigou’s The Theory of Unemployment and Its Corrigenda: The Letters of Maurice Allen, Arthur L. Bowley, Richard Kahn and Dennis Robertson,” Discussion Paper 14-08 (Perth: Business School, University of Western Australia, 2014), http://www.business.uwa.edu.au/_data/assets/rtf_file/0010/2478916/14–08-A.C.-Pigous-The-Theory-of-Unemployment-and-its-Corrigenda.rtf. See also Norikazu Takami, “Pigou and Macroeconomic Models in the 1930s: Models and Math,” CHOPE Working Paper 2011–06 (Durham, NC: Center for History of Political Economy, Duke University, August 2011), http://lupus.econ.duke.edu/HOPE/CENTER/Working%20Paper%20Series/takami-pigou-workingpaper2.pdf.

40. A. C. Pigou, “Newspaper Reviews, Economics and Mathematics,” in Essays in Economics (London: Macmillan, 1952): 117. This essay was originally published in 1941.

41. E. A. G. Robinson, “Pigou, Arthur Cecil (1877–1959), Economist,” in Dictionary of National Biography Archive, 1971, http://www.oxforddnb.com/view/olddnb/35529.

42. See Robert Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937 (London: Macmillan, 1992): 405–406.

43. Frank Knight, “Economics at Its Best,” American Economic Review 16, no. 1 (March 1926): 51–58. On Knight’s own complex ethics and politics, see Angus Burgin, “The Radical Conservatism of Frank H. Knight,” Modern Intellectual History 6, no. 3 (November 2009): 513–538.

44. A. C. Pigou, The Economics of Welfare, third ed. (London: Macmillan, 1929): 5.

45. Hugh Dalton to Pigou, March 10, 1951, Crosland Collection, LSE, Crosland 10/2.

46. Pigou, Wealth and Welfare (London: Macmillan, 1912): 3

47. Ibid., 488.

48. Pigou, The Economics of Welfare, third ed., 6–7.

49. “Industrial Fluctuations,” Spectator (April 15, 1927): 24. On Pigou’s influence on business cycle theory, see David Collard, “Pigou and Modern Business Cycle Theory,” Economic Journal 106, no. 437 (July 1996): 913.

50. In Wealth and Welfare and the first edition of The Economics of Welfare, there were three criteria of economic welfare: the size, distribution, and volatility of national income. Industrial Fluctuations covered the volatility criterion, which dropped out of the second edition of The Economics of Welfare (1924). Pigou had written an essay on the “trade cycle” that was published in 1924 that previewed many of the arguments he would make in the Industrial Fluctuations. See A. C. Pigou, “Correctives of the Trade Cycle,” in Is Unemployment Inevitable? ed. J. J. Astor, A. L. Bowley, Robert Grant, J. H. Jones, et al. (London: Macmillan, 1924).

51. Pigou to Macmillan, June 19, 1927, Macmillan Papers, BL, Add. MSS 55199, 112.

52. Collard, “Pigou and Modern Business Cycle Theory,” 920.

53. Part III of Wealth and Welfare was modified only slightly to form part VI of the first edition of The Economics of Welfare (1920).

54. A. C. Pigou, Industrial Fluctuations (London: Macmillan, 1927): 219.

55. Pigou, Industrial Fluctuations, 240, 243. On the moral language of Pigou’s work on unemployment, see Norikazu Takami, “The Sanguine Science: Historical Contexts of Pigou’s Welfare Economics,” Discussion Paper 1202 (Kobe, Japan: Graduate School of Economics, Kobe University, 2012), http://www.lib.kobe-u.ac.jp/repository/81003748.pdf.

56. Pigou, Industrial Fluctuations, 220. Quoted in Collard, “Pigou and Modern Business Cycle Theory,” 915. See, for comparison, Pigou, Wealth and Welfare, 403–407.

57. Ibid., 222.

58. Part III of Wealth and Welfare and part VI of the first edition of The Economics of Welfare offered a more focused inquiry on the variability of the real income of the representative worker. Pigou only briefly surveyed causes of general fluctuations in national income. A notable feature of part III of Wealth and Welfare that disappeared in subsequent versions concerned “the variability of the bounty of nature and of foreign demands,” in which Pigou argued against tariffs, because they exacerbated fluctuations due to poor domestic harvests. Pigou, Wealth and Welfare, 447–452. Though The Economics of Welfare treated variations in harvest quality, it did not bear such clear evidence of a free trade agenda. Joseph Schumpeter claimed that “nobody rose to what would have been a most difficult feat of leadership [in business cycle theory],” but Pigou came closest. Schumpeter might have been swayed in his assessment of the field by his reluctance to accept Keynes. Joseph Alois Schumpeter and Elizabeth Brody Schumpeter, History of Economic Analysis (London: Allen & Unwin, 1954): 1135.

59. Pigou, Industrial Fluctuations, 188.

60. Collard, “Pigou and Modern Business Cycle Theory,” 917.

61. Donald Chapman to Hugh Dalton, n.d. [1950s], Hugh Dalton Papers, LSE, Dalton 2/9/18, 51.

62. Pigou, Industrial Fluctuations, 289.

63. Ibid., 303–312. See J. J. Astor et al., eds., Is Unemployment Inevitable?, 359–382. Bowley was both an editor and the principal author of part IV, “Statistical Inquiries.”

64. Pigou, Industrial Fluctuations, 307; Pigou, Wealth and Welfare, 476–486.

65. Collard, “Pigou and Modern Business Cycle Theory,” 915; Pigou, Industrial Fluctuations, 320.

66. Pigou, Industrial Fluctuations, 225–226. “The heart of the matter is that industrial fluctuations involve evil consequences of such a sort that, if an individual takes certain sorts of action to remove or lessen them, the social gain resulting from his action will not enter at full value into his private profit.” Pigou lauded the practice of compelling individuals to subscribe to unemployment insurance, which mitigated the effects of downturns, but which indiviudals would likely not buy unless obliged. Ibid., 329–333.

67. Ibid., 241. When it came to adjustments in bank credit, Pigou saw the prime agent as the semi-public Bank of England rather than the state.

68. On the gold standard, see ibid., 277–280; on wage plasticity, see 282–285. Pigou noted that perfect plasticity could result in unconscionably low wages that were “out of harmony with the moral sense of the time and incompatible with our social structure.” Such wage cuts were “out of court, as, in a broad sense, anti-social.”

69. A. C. Pigou, A Study in Public Finance (London: Macmillan, 1928): v.

70. Hugh Dalton, “A Study in Public Finance by A.C. Pigou,” Economica 3 no. 23 (June 1928): 216.

71. Jens P. Jensen, “A Study in Public Finance by A.C. Pigou,” American Economic Review 18, no. 4 (December 1928): 770.

72. Dalton, “A Study in Public Finance by A.C. Pigou,” 216.

73. Allyn Young, “A Study in Public Finance by A.C. Pigou,” Economic Journal 39, no. 153 (March 1929): 78. On the book’s influence, see David Collard, “Introduction,” in A.C. Pigou’s Collected Economic Writings, Volume 1, ed. David Collard (London: Macmillan, 1999): xxvii.

74. In Public Finance, Pigou did not continue advocating a capital levy to discharge remaining war debt. Interest on debt payments that accrued to (wealthy) domestic lenders was assessed and taxed by income and death taxes, so that discharging debt would actually save the public comparatively little. Pigou, Public Finance, 291. Moreover, a levy, if then instituted, would be “impeded by strong and organized opposition” of large banks and provoke uncertainty about further duties. Ibid., 307.

75. See especially part III, chapter III, and part III, chapter V, ibid., 256–269, 274–285. See also Industrial Fluctuations, part I, chapter XIII, and part II, chapter IV. In these chapters, Pigou railed against the inflationary damage of financing government expenditure by bank credit, as had occurred during the war, and stressed the importance of limiting fiduciary notes and returning to the gold standard, policies recommended by the bodies on which he served. He also noted that inflation resulting from the expansion of bank credits represented a very regressive form of taxation, “generally acknowledged to be exceedingly oppressive to the poor.” Ibid., 266.

76. Pigou called these unanticipated effects “announcement effects.” Today they are commonly called “excess burden.”

77. Pigou, Public Finance, first ed., 61.

78. Ibid.

79. The discussion of spending constituted only fifty-three pages out of a 323-page book. Furthermore, the type of spending on which Pigou primarily focused—compensation—related specifically to the recent period of wartime requisition. The section was adapted from an article written immediately after the war. A. C. Pigou, “Problems of Compensation,” Economic Journal 35, no. 140 (December 1925): 578. In the third edition of Public Finance (1946), Pigou devoted an additional fifty pages to government spending, responding to new conceptions of the government as an economic actor arising from the Great Depression. A. C. Pigou, A Study in Public Finance, third (revised) ed. (London: Macmillan, 1949). Pigou, Public Finance, first ed., 1–53.

80. The rationale against trade duties was deployed by Pigou and the thirteen other economists in the letter to the Times in 1903. F. Barnstable, A. L. Bowley, E. Cannan, L. Courtney, F. Y. Edgeworth, C. K. Gonner, A. Marshall, et al., “Professors of Economics and the Tariff Question,” Times (August 15, 1903): 4. Quoting Sidgwick, he affirmed, “I do not think we can reasonably expect our actual governments to be wise and strong enough to keep their protective interference within due limits.” Pigou, Public Finance, 227. Pigou quoted Sidgwick’s Political Economy. On liberalism and unearned income, see Fuad Shebab, Progressive Taxation: A Study in the Development of the Progressive Principle in the British Income Tax (Oxford: Clarendon, 1953), especially chapter 13.

81. On death duties, see Pigou, Public Finance, 138–146; on monopolies, see 154–155; on windfalls, see 156–164.

82. Ibid.,133.

83. Pigou to Macmillan, September 1, 1927, Macmillan Papers, BL, Add. MSS 55199, 117.

84. A. C. Pigou, The Policy of Land Taxation (London: Longmans, Green, and Co.): 20.

85. Pigou to J. M. Keynes, n.d. [1929] Keynes Papers, KCA, JMK/PP/45/254/32.

86. Pigou to Macmillan, September 1, 1927, Macmillan Papers, BL, Add. MSS 55199, 117.

87. Emphasis added. A. C. Pigou, “The Function of Economic Analysis,” in Economic Essays and Addresses, A. C. Pigou and Dennis Robertson (London: P. S. King & Son, 1931): 18.

88. A. C. Pigou, “Presidential Address: Looking Back from 1939,” Economic Journal 49, no. 194 (June 1939): 219.

89. David Collard, “Cambridge After Marshall,” in Generations of Economists (Abingdon, Oxon, UK: Routledge, 2011): 57; Aslanbeigui and Oakes, The Provocative Joan Robinson, 90–92.

90. Defining what constituted an “economist” is not a straightforward task. Collard, for instance, does not include Ifor Leslie Evans, J. H. Clapham, or Ernest Benians as economists, but presumably counts them as historians or political scientists, even though they taught for the Tripos and held college positions that included the teaching of economics. David Collard, “Cambridge After Marshall,” 54.

91. C. W. Guillebaud, “The Variorum Edition of Alfred Marshall’s Principles of Economics,” Economics Journal 71, no. 284 (December 1961): 677–690.

92. They were Gerald Shove (who was also a fellow of King’s), Frederick Lavington, Dennis Robertson, Philip Sargent Florence, C. W. Guillebaud, Austin Robinson, and Maurice Dobb. Collard, “Cambridge After Marshall,” 58–59. Of the three remaining economists, two, Leonard Alston and Marjorie Tappan-Holland, did not teach for the Tripos. The only economist Collard identifies who was not trained at Cambridge but gave lectures for the Tripos was George Udny Yule, who was more a statistician than an economist.

93. Pigou taught this course continuously from 1908 to 1930, with the exception of two years before the publication of his Wealth and Welfare. Collard, “Introduction,” 1999, xxiv. Collard writes that Pigou taught the course from 1909 to 1930, but he actually started in Michaelmas term, 1908. See “Lectures Proposed by the Special Board for Economics and Politics, 1908–9,” Cambridge University Reporter 39, no. 3 (October 10, 1908): 46.

94. See A. W. Coats, “Sociological Aspects of British Economic Thought (ca. 1880–1930),” Journal of Political Economy 75, no. 5 (October 1967): 706–729; Ralf Dahrendorf, LSE: A History of the London School of Economics and Political Science 1895–1995 (Oxford: Oxford University Press, 1995): 210–221.

95. Pigou to Dennis Robertson, n.d. (1922), The Papers of Dennis Robertson, Trinity College Archives, Cambridge, United Kingdom (hereafter TCA), ROBERTSON/C/1/4; A. C. Pigou, “The Value of Money,” Quarterly Journal of Economics 32, no. 1 (November 1917): 38–65.

96. Young, “A Study in Public Finance by A.C. Pigou,” 78.

97. Pigou was angered to learn in 1927 that Keynes’s 1924 election had been unsuccessful because of Keynes’s treatment of France in his Economic Consequences of the Peace. In a twist of fate, the then-president of the academy was none other than Arthur Balfour, the man who had recused himself for Pigou’s 1908 professorial election. Donald Winch, “Pigoviana,” last modified 2014, Economists’ Papers, http://www.economistspapers.org.uk/?p=1026.

98. Pigou, “The Function of Economic Analysis,” 1–3.

99. J. S. Stamp, “Industrial Fluctuations by A.C. Pigou,” Economic Journal 37, no. 147 (September 1927): 418. Jacob Perlman, “Industrial Fluctuations by A. C. Pigou; Business Cycles and Business Measurements. Studies in Quantitative Economics by Carl Snyder; Forecasting Business Conditions by Charles O. Hardy; Garfield V. Cox,” Journal of Land & Public Utility Economics 3, no. 4 (November 1927): 423; L.R.C. [L. R. Connor], “A Study in Public Finance by A. C. Pigou,” Journal of the Royal Statistical Society 91, no. 3 (1928): 412.

100. Anon., “A Study in Public Finance by A. C. Pigou,” Annals of the American Academy of Political and Social Science 141 (January 1929): 281. See also Warren M. Persons, “Pigou, Industrial Fluctuations,” Quarterly Journal of Economics 42, no. 4 (August 1928): 669.

101. Pigou and Robertson, “Those Empty Boxes,” 16.

Chapter 6: Paradigms Lost

1. Joan Robinson, Economics Is a Serious Subject (Cambridge: W. Heffer & Sons Limited, 1932).

2. Barbara Wootton, Lament for Economics (London: George Allen & Unwin, 1938); Lionel Robbins, An Essay on the Nature and Significance of Economic Science, third edition (London: Macmillan, 1984).

3. Pigou to Philip Noel-Baker, n.d., [probably June 1948], The Papers of Baron Noel-Baker, CCA, NBKR 9/58/1. Robbins attended the local state secondary school, Southall Country School. See Susan Howson, Lionel Robbins (Cambridge: Cambridge University Press, 2011), chapter 1.

4. Joan Robinson, “List of Dedicatees of Economics Is a Serious Subject,” n.d. (1932), The Papers of Joan Violet Robinson, KCA, JVR/1/2/2. The pamphlet was ultimately dedicated to “The Fundamental Pessimist,” a reference to Piero Sraffa. Robinson, Economics Is a Serious Subject, 2.

5. A. C. Pigou, “Presidential Address: Looking Back from 1939.” Economic Journal 49, no. 194 (June 1939): 221.

6. Pigou to J. M. Keynes, n.d. (December 1925), The Papers of John Maynard Keynes, KCA, JMK/TM/1/2/50.

7. Correspondence Relating to the Treatise on Money, Keynes Papers, KCA, JMK/TM/1/2.

8. Dennis Robertson to J. M. Keynes, August 30, 1925, Keynes Papers, KCA, JMK/TM/1/2/33.

9. A. C. Pigou, “The Value of Money,” Quarterly Journal of Economics 32, no. 1 (November 1917): 38–65. The equation determined the demand for money through the price level and national income. Mathematically, this was expressed as M^d = k ∙ P ∙ Y. Money demand was a function of the price level, P, the national income, Y, and the “Cambridge k,” the proportion of the national income held in cash that would not be used for transactions. Since in equilibrium, demand equalled supply, the Cambridge k, by defining demand, the equation suggested that it led supply.

10. Keynes determined the price level for consumption goods and production goods completely differently. Pascal Bridel and Bruna Ingrao, “Managing Cambridge Economics: The Correspondence between Keynes and Pigou” in Economists in Cambridge: A Study Through Their Correspondence, ed. Maria Cristina Marcuzzo and Annalisa Rosselli (London: Routledge, 2005): 159.

11. J. M. Keynes to Pigou, May 15, 1931, Keynes Papers, KCA, JMK/TM/1/2.

12. It is this new perception to which Robert Skidelsky alludes in his subtitle for the middle volume of his biography on Keynes: The Economist as Saviour. Robert Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937 (London: Macmillan, 1992).

13. See J. M. Keynes, Economic Consequences of the Peace (London: Macmillan, 1919). In 1929, Keynes and H. D. Henderson authored a pamphlet titled Can Lloyd George Do It?, referring to tackling unemployment. The short piece was intended to support the Liberal candidate in the 1929 general election. J. M. Keynes and H. D. Henderson, Can Lloyd George Do It?: An Examination of the Liberal Pledge (London: The Nation and Athenaeum, 1929).

14. See Barry Eichengreen, “The British Economy Between the Wars,” in The Cambridge Economic History of Modern Britain, ed. Roderick Floud and Paul Johnson (Cambridge: Cambridge University Press, 2004): 322–328; W. R. Garside, British Unemployment 1919–1939: A Study in Public Policy (Cambridge: Cambridge University Press, 1920): 3–28; John Stevenson and Chris Cook, The Sump: Society and Politics During the Depression (London: Jonathan Cape, 1977): 54–73.

15. Garside, British Unemployment 1919–1939, 5.

16. See also Labour’s 1929 election manifesto, Labour Party, Labour’s Appeal to the Nation (London: Labour Party, 1929). On Labour’s economic policy, see Garside, British Unemployment 1919–1939, 318–336; More generally, see Robert W. D. Boyce, British Capitalism at the Crossroads: A Study in Politics, Economics, and International Relations (Cambridge: Cambridge University Press, 1987).

17. See Eichengreen, “The British Economy Between the Wars”; Charles P. Kindleberger, The World in Depression, 1929–1939 (Berkeley: University of California Press, 1973), particularly chapters 6 and 7.

18. As a percentage of total workers, 8 percent were unemployed in 1929, 12.3 percent in 1930, and over 15 percent for the next three years. Unemployed insured workers were more troubling to government administrators, because the government was paying their stipends. Garside, British Unemployment 1919–1939, 5.

19. These numbers reflect unemployment rates among insured workers. For comparison, rates in northeastern England jumped from 13.7 percent in 1929 to 28.5 percent in 1932. Ibid., 11.

20. H. D. Henderson to J. M. Keynes, March 12, 1930, Keynes Papers, KCA, JMK/EA/1. On the EAC, see Susan Howson and Donald Winch, The Economic Advisory Council 1930–1939 (Cambridge: Cambridge University Press, 1977): 46–72.

21. J. M. Keynes to Ramsay MacDonald, July 10, 1930, Keynes Papers, KCA, JMK/EA/1/31.

22. J. M. Keynes to Ramsay MacDonald, July 10, 1930, Keynes Papers, KCA, JMK/EA/1/32.

23. Hugh Dalton, Call Back Yesterday: Memoirs 1887–1931 (London: F. Muller, 1953): 60.

24. Pigou to J. M. Keynes, n.d., [August 1930], Keynes Papers, KCA, JMK/EA/1/64.

25. The Manchester Guardian wrote, “Mr. Keynes drew up a report embodying his new Protectionist theories.” However, by contemporary standards, they were not radically protectionist, especially considering the subsequent level of tariffs. In February 1932, the Import Duties Act taxed manufactured imports at 10 percent, as Keynes had suggested. The Import Duties Advisory Committee doubled the rates the same year. After this, the duties on various individual goods were raised. Imported steel was taxed at 50 percent by 1935. “Wages and Tariffs: Economists Differ: Reports to the Government,” Manchester Guardian (December 9, 1930): 11. See also Tim Rooth, British Protectionism and the International Economy: Overseas Commercial Policy in the 1930s (Cambridge: Cambridge University Press, 1993); Howson, Lionel Robbins, 178–194; Frank Trentmann, Free Trade Nation: Commerce, Consumption, and Civil Society in Modern Britain (Oxford: Oxford University Press, 2008): 337–340.

26. Howson and Winch note that “Pigou’s oblique opposition to Keynes took the form of an unwillingness to discuss the committee’s brief in any terms other than those which he had become accustomed to using in his writings. . . . There was no direct antagonism between the two men but there does seem to have been a distinct coolness, attributable perhaps to a clash of intellectual styles.” Howson and Winch, The Economic Advisory Council, 64.

27. Keynes recognized the EAC as a mechanism whereby economists traded on their scientific reputations to advocate for policies. Internal discussion and presentation to policymakers were to be distinct. In 1939 he wrote to Stamp of a particular report, noting that despite the “wild,” inappropriate use of statistics, “so far as action is concerned,” the report was “just what we ought to tell them [the government].” J. M. Keynes to Josiah Stamp, July 25, 1939, Keynes Papers, KCA, JMK/EA/1/195.

28. Keynes convinced Hemming that Robbins should not need to sign recommendations with which he disagreed. Keynes wrote, “I think that there is no doubt that Robbins entertains a genuine scruple of conscience and there is a presumption in favor of giving way to such scruples if no serious harm results.” J. M. Keynes to A. F. Hemming, October 22, 1930, Keynes Papers, KCA, JMK/EA/1/93. See Howson, Lionel Robbins, 189–193.

29. As Terence Hutchison noted, aside from the issue of the tariff, Pigou and Keynes did not have radically different views on what steps might be taken to reduce unemployment in 1930. Terence Hutchison, On Revolutions and Progress in Economic Knowledge (Cambridge: Cambridge University Press, 1978): 178–182.

30. Ben Pimlott, ed. The Political Diary of Hugh Dalton 1918–49, 1945–1960 (London: Jonathan Cape, 1986): 123–124.

31. Quoted in Howson, Lionel Robbins, 192.

32. Howson and Winch, The Economic Advisory Council 1930–1939, 63–64, 225–226. Pigou’s dissent was revealed in an anonymous letter to the Manchester Guardian, which exposed the schisms between Keynes and antiprotectionists, including Robbins and William Beveridge. See also Nahid Aslanbeigui, “On the Demise of Pigovian Economics,” Southern Economic Journal 65, no. 3 (January 1990): 618–619.

33. See Howson and Winch, The Economic Advisory Council, 63. After his experience with the EAC, throughout the Depression, Pigou sought to remain the picture of the objective authority who spoke without consideration of political fortunes. See Evidence Given By A.C. Pigou to the Macmillan Committee, 1930, Robbins Collection, LSE, Robbins 1/3, 6; Correspondence between A.C. Pigou and J.M. Keynes having to do with the Committee of Economists, September 26–29, 1930, Keynes Papers, KCA, JMK/EA/1, 68–69.

34. Pigou’s action did not signal a return to advising the government, since his letters were specifically addressed to the public, which in aggregate could solve the slump by spending more.

35. J. M. Keynes to Edwin Cannan, October 13, 1932, Cannan Collection, LSE, Cannan/1032/212; Edited Typescript by Pigou, October 13, 1932, Cannan Collection, LSE, Cannan/1032/213–215. The article appeared in the Times four days later. D. H. Macgregor, A. C. Pigou, J. M. Keynes, et al., “Private Spending: Money for Private Investment,” Times (October 17, 1932): 13.

36. William Beveridge also held out because of hesitance to comment on anything with political implications. William Beveridge to Edwin Cannan, October 18, 1932, Cannan Collection, LSE, Cannan/1032/230. See also Edwin Cannan to J.M. Keynes, October 14, 1932, Cannan Collection, LSE, Cannan/1032/221; Edwin Cannan to Pigou, October 25, 1932, Cannan Collection, LSE, Cannan/1032/252.

37. Pigou to Edwin Cannan, October 27, 1932, Cannan Collection, LSE, Cannan/1032/258.

38. See Barry Eichengreen, “Keynes and Protection,” Journal of Economic History 44, no. 2 (June 1984): 364–366.

39. See John Stevenson and Chris Cook, The Slump: Society and Politics During the Depression (London: Jonathan Cape, 1977): 54–73; Clark, The Keynesian Revolution in the Making, 174–181. In arguably his most concrete policy suggestion of the period, after the EAC’s report, Pigou wrote to Philip Snowden to suggest raising income taxes and reducing employment taxes so as to stimulate employment. Pigou’s suggestion was rejected. “Surely this ignores all practical considerations . . . no Chancellor of the Exchequer is likely to add more to direct taxation at this juncture,” ran an internal Treasury memo. Pigou to Philip Snowden, February 21, 1931, Chancellor of the Exchequer’s Office, TNA, T 172/1763, 26. P.J. Gregg to R.C.M. Hopkins, March 6, 1931, Chancellor of the Exchequer’s Office, TNA, T 172/1763, 5.

40. See Stevenson and Cook, The Slump, 167–194.

41. From the Daily Telegraph, November 1, 1932, quoted in Stevenson and Cook, The Slump, 177.

42. Pigou to J. M. Keynes, n.d. [1930], Keynes Papers, KCA, JMK/PP/45/254/41. Though college life was largely insulated, as the greater part of college endowments were concentrated in real estate, the part of King’s endowment that was invested in the market and managed by Keynes took a nearly 15 percent dip in 1930 and slid by a further 10 percent in 1931. See David Chambers and Elroy Dimson, “John Maynard Keynes, Investment Innovator,” Journal of Economic Perspectives 27, no. 3 (Summer 2013): 216.

43. “Lectures Proposed by the Board of the Faculty of Economics and Politics,” Cambridge University Reporter 61, no. 3 (October 1, 1930): 72–73.

44. Pigou to Macmillan, April 24, 1933, Macmillan Papers, BL, Add. MSS 55199, 163.

45. A. C. Pigou, The Theory of Unemployment (London: Macmillan, 1933): v.

46. Ibid., 156.

47. Ibid., 155.

48. Ibid., 125–126. State-provided bounties on workers functioned essentially the same as wage cuts from the perspective of the employers.

49. See Nahid Aslanbeigui, “Pigou’s Inconsistencies or Keynes’s Misconceptions?” History of Political Economy 24, no. 2 (1992): 418. On confusion about the Theory, see Robert Leeson and Daniel Schiffman, “A Reassessment of Pigou’ Theory of Unemployment: Part I—The Nonmonetary Economy,” working paper (Ariel, Israel: Ariel University Center, 2014), http://www.ariel.ac.il/sites/dschiffman/Reassessment.pdf.

50. Pigou, The Theory of Unemployment, 28.

51. Ibid., 106. Pigou argued that if all individuals were wage earners, a fall in money wages would be offset by a fall in prices, so that real wages would not fall. However, in reality, the existence of non-wage earners, whose incomes accounted for about 2/3 of national income, allowed money wages to drag real wages with them (100–101). A percentage reduction in the money wage rate resulted in a percentage reduction “EmEr times as large in the real rate of wage,” where E_m was elasticity of money demand and E_r was elasticity of real demand for labor. Pigou estimated that the elasticity of money demand was –20/13, and the elasticity of real demand for labor was –4. So, a 10 percent cut in money wages would result in a 3.84 percent cut in real wages and a corresponding 15 percent boost to aggregate labor demand.

52. J.H.R., “The Theory of Unemployment by A.C. Pigou,” Journal of the Royal Statistical Society 97, no. 1 (1934): 175. Reviews noted Pigou’s rigor. Constantino Bresciani-Turroni, “The Theory of Unemployment, by A.C. Pigou,” Weltwirtschaft-liches Archiv 40 Bd. (1943): 169–173; Carlo Pagni, “The Theory of Unemployment by A.C. Pigou,” Giornale degli Economisti e Rivista di Statistica, Serie Quarta 75, no. 8 (August 1935): 675–676. See also David Collard, “Introduction,” in A.C. Pigou’s Collected Economic Writings, Volume 1, ed. David Collard (London: Macmillan, 1999): xxxii.

53. Edison L. Bowers, “The Theory of Unemployment by A.C. Pigou,” American Economic Review 24, no. 2 (June 1934): 282; S. E. Harris, “Professor Pigou’s Theory of Unemployment,” Quarterly Journal of Economics 49, no. 2 (February 1935): 286.

54. See Karen Knight, “A.C. Pigou’s The Theory of Unemployment and Its Corrigenda: The Letters of Maurice Allen, Arthur L. Bowley, Richard Kahn and Dennis Robertson,” Discussion Paper 14-08 (Perth: Business School, University of Western Australia, 2014), http://www.business.uwa.edu.au/__data/assets/rtf_file/0010/2478916/14–08-A.C.-Pigous-The-Theory-of-Unemployment-and-its-Corrigenda.rtf. Aslanbeigui, “Pigou’s Inconsistencies or Keynes’s Misconceptions”; Collard, “Introduction.” Others go further, arguing that Keynes’s work was not novel in a Pigovian context. See, for example, T. W. Hutchinson, On Revolutions and Progress in Economic Knowledge (Cambridge: Cambridge University Press, 1978): 190; Jürg Niehans, A History of Economic Theory: Classic Contributions 1720–1980 (Baltimore: Johns Hopkins University Press, 1990): 245–255. There have also been defenses of Keynes’s position on Pigou. See Michael E. Brady, “A Note on the Keynes-Pigou Controversy,” History of Political Economy 26, no. 4 (Winter 1994): 697–705; Allin Cottrell, “Keynes’s Appendix to Chapter 19: A Reader’s Guide,” History of Political Economy 26, no. 4 (Winter 1994): 681–695; Allin Cottrell, “Brady on Pigou and Keynes: Comment,” History of Political Economy 26, no. 4 (Winter 1994): 707–711. Gerhard Michael Ambrosi comprehensively tracks how Keynes’s work on unemployment was inspired by and reactive to Pigou’s. In this way, Ambrosi claims, The General Theory is “post-Pigovian.” Gerhard Michael Ambrosi, “Keynes, Pigou, and the General Theory” (lecture, University of Cambridge, Cambridge, UK, October 22, 2008). See also Ambrosi, Keynes, Pigou, and the Cambridge Keynesians: Authenticity and Analytical Perspective in the Keynes-Classics Debate (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2003).

55. J. M. Keynes to D. H. Robertson, September 5, 1933, The Papers of Dennis Robertson, TCA, ROBERTSON/C2/3/51.

56. J. M. Keynes to R. G. Hawtrey, July 18, 1930, Keynes Papers, KCA, JMK/TM/1/2/33/171. Both Keynes and the “classics” agreed that “hoarding” money (e.g., taking it out of circulation by stowing it under a mattress) would hurt the economy. As the money supply dwindled, reduced spending dragged the economy down. However, in a stylized version of the “classical” system, there would never be such a thing as excess savings (money deposited in a bank), since the financial industry would ensure that this money was loaned out and invested, a process it would mediate by lowering the interest rate. Keynes’s theory suggested that there could be excess savings, because in times of crisis, a very low interest rate would not be sufficient incentive for firms to invest.

57. See Skidelsky, John Maynard Keynes: The Economist as Saviour, chapters 12 and 13. For a more complete exposition of the Keynes-Pigou debate, see Ambrosi, Keynes, Pigou and the Cambridge Keynesians.

58. This divergence was “more than can be discussed in a letter.” J. M. Keynes to John Hicks, August 1933, in O. F. Hamouda, John R. Hicks: The Economist’s Economist (Oxford: Blackwell, 1993): 16–17.

59. J.M. Keynes to D.H. Robertson, September 5, 1933, Robertson Papers, TCA, ROBERTSON/C2/3/51.

60. Ibid.

61. Pigou, The Theory of Unemployment, v.

62. Ibid., 28.

63. Collard, “Introduction,” xxxi–xxxiii. See also Ambrosi, Keynes, Pigou, and the Cambridge Keynesians, 57–71.

64. Peter Clarke, The Keynesian Revolution and Its Economic Consequences (Cheltenham, UK: Edward Elgar, 1998): 97.

65. See Hutchison, On Revolutions and Progress in Economic Knowledge, chapter 6; Clarke, The Keynesian Revolution, 79–80.

66. Pigou, The Theory of Unemployment, 250.

67. Ibid.

68. Pigou, Wealth and Welfare, 482–486. Pigou elaborated on this in chapter 9 of Unemployment (1913). Pigou, Unemployment (London: Williams and Norgate, 1913). However, in the 1910s, Pigou was not advocating for an activist fiscal policy whose magnitude was designed to curb unemployment. Rather, following from the Minority Report of the Royal Commission on the Poor Law (1909), he argued for adjusting the timing of government spending already deemed necessary so as to mitigate unemployment. See The Minority Report of the Poor Law Commission (London: Fabian Society, 1909).

69. Pigou, The Theory of Unemployment, 213.

70. As Amartya Sen argues, Pigou’s work on unemployment put greater stress on inequality than did Keynes’s. Amartya Sen, “Capitalism Beyond the Crisis,” New York Review of Books (March 26, 2009), accessed November 20, 2014, http://www.nybooks.com/articles/2009/03/26/capitalism-beyond-the-crisis/.

71. For Hutchison, Keynes and his acolytes’ version of Pigou was vital for the process of mythologizing the so-called Keynesian revolution. “Revolutions,” Hutchison wrote, “depend upon and create their own myths.” Hutchison, On Revolutions and Progress in Economic Knowledge, 175. See also Ambrosi, Keynes, Pigou and Cambridge Keynesians, especially part I, chapters 5 and 6.

72. Aslanbeigui, “Pigou’s Inconsistencies or Keynes’s Misconceptions,” 414. See also Hawtrey’s review, R. G. Hawtrey, “The Theory of Unemployment by Professor A.C. Pigou,” Economica, New Series 1, no. 2 (May 1934): 147–166. Hawtrey was also one of the leading scholars on the business cycle. See also Ralph Hawtrey, Currency and Credit (London: Longmans, Green, and Company, 1919).

73. R. F. Harrod, “Professor Pigou’s Theory of Unemployment,” Economic Journal 44, no. 173 (March 1934): 19.

74. Pigou, The Theory of Unemployment, vii.

75. D. H. Robertson to J. M. Keynes, September 15, 1933, Robertson Papers, TCA, ROBERTSON/C2/3/47. Walter Layton was a former economics lecturer at Cambridge, a fellow of Gonville and Caius College, and the editor of the Economist. See David Hubback, No Ordinary Press Baron: A Life of Walter Layton (London: Weidenfeld & Nicolson, 1985).

76. Joan Robinson, The Economics of Imperfect Competition (London: Mac-millan, 1933). See Nahid Aslanbeigui and Guy Oakes, The Provocative Joan Robinson (Durham, NC: Duke University Press, 2009): 89–155.

77. Pigou to Joan Robinson, n.d. [probably 1933], Joan Robinson Papers, KCA, JVR/7/347/28.

78. Pigou to Austin Robinson, n.d. [June 1934], Joan Robinson Papers, KCA, JVR/7/347, 36. The parents ultimately settled on Ann.

79. Aslanbeigui and Oakes, The Provocative Joan Robinson, 116–117.

80. Quoted in ibid. R. F. Kahn to Joan Robinson, February 10–13, 1933; Joan Robinson to R. F. Kahn, January 23, 1933.

81. Joan Robinson, “List of Dedicatees of ‘Economics is a Serious Subject,’” n.d. (1932), Joan Robinson Papers, KCA, JVR/1/2/2.

82. Aslanbeigui and Oakes, The Provocative Joan Robinson, 186–187. See also Maria Cristina Marcuzzo and Annalisa Rosselli, eds., Economists in Cambridge: A Study Through Their Correspondence (London: Routledge, 2005).

83. See Correspondence between R.F. Kahn and A.C. Pigou, 1947–1953, The Papers of Richard Ferdinand Kahn, KCA/RFK/13/83 and RFK/19/3. On Kahn and Keynes, see Skidelsky, John Maynard Keynes: The Economist as Saviour, 287–289.

84. R. F. Kahn, “Some Notes on Ideal Output,” Economic Journal 45, no. 1 (March 1935): 1–35. Paul Samuelson called this work “very much in the Cambridge tradition, reflecting Alfred Marshall and A.C. Pigou.” Paul Samuelson, “Richard Kahn: His Welfare Economics and Lifetime Achievement,” Cambridge Journal of Economics 18, no. 1 (February 1994): 55–56.

85. Aslanbeigui and Oakes, The Provocative Joan Robinson, 185–189. Pigou published a short comment on imperfect competition in 1933. A. C. Pigou, “A Note on Imperfect Competition,” Economic Journal 43, no. 169 (March 1933): 108–112.

86. Pigou to Philip Noel-Baker, n.d. (May 1945), Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou’s economics have also been attacked as sexist, as outlined in Nahid Aslanbeigui, “Rethinking Pigou’s Misogyny,” Eastern Economic Journal 23, no. 3 (Summer 1997): 301–316. See also Nerio Naldi, “The Prof and His Younger Colleagues: Pigou and the Correspondence with Kahn, Kaldor, J. Robinson and Sraffa,” in Economists in Cambridge: A Study Through Their Correspondence, 1907–1946, ed. Maria Cristina Marcuzzo and Annalisa Rosselli (Oxford: Routledge, 2005): 331–349.

87. Hicks came from comparatively humble origins; his father was a local newspaper journalist. Hicks went to Balliol, Oxford, on a mathematical scholarship. There he received an economics education developed from Pigovian and Marshallian discipline-building efforts. He began lecturing at the LSE in 1926.

88. John Hicks, “Recollections and Documents,” Economica 4, no. 157 (February 1973): 4.

89. Aslanbeigui and Oakes note that the economic historian C. F. Fay was also opposed to the spread of Keynesianism at Cambridge. Nahid Aslanbeigui and Guy Oakes, Arthur Cecil Pigou (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2015): 265.

90. Pigou to Dennis Robertson, n.d. [1934–5], Robertson Papers, TCA, ROBERTSON/C7/6. The book they co-authored was Economic Essays and Addresses.

91. Hamouda, John R. Hicks, 20–25.

92. John R. Hicks, The Theory of Wages (London: Macmillan, 1932).

93. On The General Theory’s genesis and spread, see Peter Clarke, The Keynesian Revolution in the Making 1924–1936 (Oxford: Clarendon Press, 1988), part IV.

94. Of the economists of his own generation, Keynes only shared proofs with Ralph Hawtrey, not with Pigou, Robertson, or H. D. Henderson. As Robert Skidelsky puts it, “the battle-lines were forming up.” Skidelsky, John Maynard Keynes: The Economist as Saviour, 532, 572–593.

95. Part IV of the book addressed this issue. Pigou, Theory of Unemployment, 185–246. See also Norikazu Takami, “How Pigou Converted to IS-LM: Pigou’s Macroeconomic Theories in the 1930s and 40s” (presentation, History of Economic Society Annual Meeting, South Bend, IN, June 17–20, 2011), http://hes2011.nd.edu/assets/42969/takami.pdf.

96. J. M. Keynes, The General Theory of Employment Interest and Money (New York: Harcourt, 1964): 378. See also chapter 15 of the same volume.

97. Pigou thought it “more suited to students, as against experts.” Pigou to Macmillan, December 5,1934, Macmillan Papers, BL, Add. MSS 55199, 173–174.

98. Frederic Benham, “The Economics of Stationary States by A.C. Pigou,” Economica 3, no. 9 (February 1936): 89.

99. For a detailed appraisal, see Ambrosi, Keynes, Pigou and Cambridge Keynesians, chapters 10 and 11. See also Aslanbeigui, “Pigou’s Inconsistencies or Keynes’s Misconceptions?”

100. Keynes, The General Theory, 274.

101. Ibid. Keynes saw Pigou’s model as sloppy and underdetermined. In Keynes’s reading, Pigou’s theory depended solely on a single variable, the number of wage workers (men working in “wage-good” industries). “The pitfalls” of this “pseudo-mathematical method . . . could not be better illuminated. For it is no good to admit later on that there are in fact other variables, and yet to proceed without re-writing everything that has been written up to that point.” Ibid., 275–276.

102. Keynes continued, “the purpose of the concept of the elasticity of the real demand for labour in the aggregate is to show by how much full employment will rise or fall.” Ibid., 275.

103. Ibid., 275–278.

104. Ibid., 129.

105. Ibid., 7.

106. Keynes was the editor of the Economic Journal at the time. “Examination Papers,” May 1905–September 1905, Keynes Papers, KCA, JMK/UA/3/1; “Reports to the Fellowship Electors,” n.d. [1907–09], Keynes Papers, KCA, JMK/TP/4.

107. A. C. Pigou, “Mr. J.M. Keynes’s General Theory of Employment, Interest and Money,” Economica, New Series 3, no. 10 (May 1936): 115–116.

108. Ibid., 117–118. There was some falloff in the correspondence between the two during this period. Bridel and Ingrao, “Managing Cambridge Economics,” 150–151.

109. J. M. Keynes to Bernard Shaw, January 1, 1935, quoted in Peter Clarke, The Keynesian Revolution, 75; J. M. Keynes to R. F. Harrod, August 27, 1935, quoted in Clarke, The Keynesian Revolution, 75.

110. Pigou, “Mr. J.M. Keynes’s General Theory of Employment, Interest and Money,” 115.

111. Ibid.

112. See Skidelsky, John Maynard Keynes: The Economist as Saviour, 610–624; Hamouda, John R. Hicks.

113. There is a massive literature on the so-called Keynesian revolution. On the history of the notion of the Keynesian revolution itself, see Peter Clarke, “Keynes’s General Theory: A Problem for Historians,” in The Keynesian Revolution and its Economic Consequences (Cheltenham, UK: Edward Elgar, 1998): 75–113, and Roger E. Backhouse, “The Keynesian Revolution,” in The Cambridge Companion to Keynes, ed. Roger E. Backhouse and Bradley W. Bateman (Cambridge: Cambridge University Press, 2006): 19–38. Following Terence Hutchison, Backhouse contends that much of the “Keynesian revolution” was self-created by Keynes and his followers. Hutchison, On Revolutions and Progress in Economic Knowledge, 178–182. The book that popularized the notion of the revolution was: Lawrence Klein, The Keynesian Revolution (New York: Macmillan, 1947). Robert Cord, Reinterpreting the Keynesian Revolution (New York: Routledge, 2013) presents a more up-to-date analysis. On the immediate reception of The General Theory, see chapter 16 in Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937. For a more intimate picture of Keynesian Cambridge, see Maria Cristina Marcuzzo and Annalisa Rosselli, eds., Economists in Cambridge: A Study Through Their Correspondence. For a technical analysis, see Ambrosi, Keynes, Pigou and Cambridge Keynesians.

114. The relevant letters can be found in The Collected Writings of John Maynard Keynes, vol. 14 (Cambridge: Cambridge University Press, 1992): 255–268. Bridel and Ingrao, “Managing Cambridge Economics,” 156–161.

115. In contrast, Keynes held that unemployment would only be affected by a change in consumption, the efficiency of capital, or in liquidity preference (i.e., how much cash people would choose to keep on hand). See Collard, “Introduction,” xxxv.

116. See Nicholas Kaldor to J. M. Keynes, November 1, 1937, The Papers of Nicholas Kaldor, KCA, NK/3/30/118, 97. See also Aslanbeigui and Oakes, Arthur Cecil Pigou, 230–238; and Nahid Aslanbigui and Guy Oakes, “The Editor as Scientific Revolutionary: Keynes, The Economic Journal, and the Pigou Affair, 1936–1938,” Journal of the History of Economic Thought 29, no. 1 (March 2007): 15–48. Aslanbeigui and Oakes argue that Keynes and Kahn manipulated Pigou and Kaldor so as to suggest to a wider public that Pigou had capitulated. Though Aslanbeigui and Oakes’s account is a touch dramatic, the evidence is strong that Keynes and his confidants employed private tactics to discredit Pigou’s article. Aslanbeigui and Oakes cast Pigou as a victim, and certainly not as a strong, self-confident force. Kaldor did oppose Pigou: “I have discovered,” Kaldor wrote in 1937, “that I actually made too much concession to Pigou.” Nicholas Kaldor to J. M. Keynes, October 27, 1937, Kaldor Papers, KCA, NK/3/30/118, 97. Joan Robinson and her husband Austin were also against Pigou. “He is gone so far that you have to rationalise him to some extent even to find a coherent error,” Joan Robinson wrote Keynes. In Collard, “Introduction,” xxxvi. See also Takami, “How Pigou Converted to IS-LM.”

117. Collard, “Introduction,” xxxv–xxxvi.

118. Pigou to Nicholas Kaldor, n.d. [September 1937], Kaldor Papers, KCA, NK/3/30/118, 114.

119. Ibid.

120. See correspondence in The Collected Writings of John Maynard Keynes, vol. XIV, 243–268.

121. Ingrao and Bridel, “Managing Cambridge Economics,” 158.

122. Pigou to Philip Noel-Baker, n.d. [July 1937], Noel-Baker Papers, CCA, NBKR 9/58/3. The same shaky hand was also on display in the letters sent from the nursing home at 17 Manchester Street in London, where Pigou spent the summer. See Pigou to Philip Noel-Baker, n.d. (August 1937), Noel-Baker Papers, CCA, NBKR 9/58/3. See also Philip Noel-Baker to Austin Robinson, October 21, 1964, Austin Robinson Papers, MLE, EAGR 6/6/4.

123. Pigou to J. M. Keynes, August 18, 1938, in Bridel and Ingrao, “Managing Cambridge Economics,” 153. Hicks had never been welcomed by the Cambridge Keynesians. Hamouda, John R. Hicks, 20–25.

124. Kalecki also had a difficult time fitting in at Cambridge. See Jan Toporowski, Michał Kalecki: An Intellectual Biography, Volume 1: Rendezvous in Cambridge, 1899–1939 (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2013), 122–148.

125. D. G. Champernowne was one of Keynes’s star students and served as a lecturer in statistics at Cambridge during the 1930s. He later returned to teach economics.

126. Bridel and Ingrao, “Managing Cambridge Economics,” 153.

127. Pigou to Joan Robinson, n.d. (1939), Joan Robinson Papers, KCA, JVR/7/347.

128. Ibid. Some years later, Pigou would refer to Robinson as “dogmatic and arrogant.” See Donald Winch, “Keynes and the British Academy,” Historical Journal 57, no. 3 (September 2014): 769.

129. See “Lectures proposed by the Board of the Faculty of Economics and Politics, 1935–1936,” Cambridge University Reporter 66, no. 3 (October 4, 1935): 87–88; “Lectures proposed by the Board of the Faculty of Economics and Politics, 1942–1943,” Cambridge University Reporter 73, no. 3 (October 2, 1942): 72.

130. Officially, the Economic Journal was the organ of the Royal Economics Society.

131. Pigou to J. M. Keynes, June 10, 1938, Keynes Papers, KCA, GTE/2/4/46–47.

132. J. M. Keynes to Pigou, June 17, 1938, Keynes Papers, KCA, JMK/GTE/2/4/48.

133. Udny Yule taught statistics, and Kahn, Sraffa, and Keynes all taught modeling in their courses. The list of courses for each term is in the Cambridge University Reporter.

134. “Reports to the Fellowship Electors,” n.d. [1907–09], Keynes Papers, KCA, JMK/TP/4.

135. “Fellowship Report,” 1930, Kahn Papers, KCA/RFK/2/8.

136. Marshall explained the practice to Arthur L. Bowley: “I went more and more on the rules—(1) Use mathematics as a shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can’t succeed in 4, burn 3. This last I did often.” A. C. Pigou, ed., The Memorials of Alfred Marshall (London: Macmillan, 1925): 427.

137. A. C. Pigou Principles and Methods of Industrial Peace (London: Macmillan, 1905): vi.

138. Pigou to J. R. N. Stone, n.d., The Papers of John Richard Nicholas Stone, KCA, KRNS/3/1/102.

139. L.R.C. [L. R. Connor], “The Economics of Welfare by A.C. Pigou,” Journal of the Royal Statistical Society 93, no. 1 (1930): 125–126.

140. Ragnar Frisch (1895–1973), the first editor of Econometrica, was also the first to use the term “econometrics” in its current meaning in 1926. See Ragnar Frisch, “Sur un problème d’économie pure,” Norsk Matemastik Forenings Skrifter Series I, no. 16 (1926): 1–40. See also John S. Chipman, “The Contributions of Ragnar Frisch to Economics and Econometrics,” in Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium, ed. Steiner Strøm (Cambridge: Cambridge University Press, 1998): 58–108.

141. See Marcel Boumans, How Economists Model the World into Numbers (London: Routledge, 2004).

142. In 1941, Pigou addressed the usefulness of mathematics in economics. Math, he noted, eliminated ambiguities and saved time. See A. C. Pigou, “Newspaper Reviewers, Economics and Mathematics,” Economic Journal 51, no. 202/203 (June–September 1941): 276–280.

143. Warren M. Persons, “Industrial Fluctuations by A.C. Pigou,” Quarterly Journal of Economics 42, no. 4 (August 1928): 669. Persons may have been judging Pigou against the work on economic statistics at the American National Bureau of Economic Research. On American economic statistics, see Thomas A. Stapleford, The Cost of Living in America: A Political History of Economic Statistics, 1880–2000 (Cambridge: Cambridge University Press, 2009), chapter 3. Another reviewer “grumbled” at Pigou’s use of statistics and noted that he was “much happier when he abandons attempts at statistical measurement and relies on ‘common-sense judgment and . . . guess-work.’” Henry W. Macrosty, “Industrial Fluctuations by A.C. Pigou,” Journal of the Royal Statistical Society 90, no. 3 (1927): 598.

144. J. C. Stamp, “Industrial Fluctuations by A.C. Pigou,” Economic Journal 37, no. 147 (September 1927): 420.

145. Pigou to Sara Turing, November 26, 1956, The Papers of Alan Matheson Turing, KCA, AMT/A/10.

146. W. S. Farren and H. T. Tizard, “Hermann Glauert, 1892–1934,” Obituary Notices of Fellows of the Royal Society 1, no. 4 (December 1935): 607–610.

147. A. C. Pigou, The Economics of Stationary States (London: Macmillan, 1935): v; Pigou, The Theory of Unemployment, vii.

148. Pigou to Sara Turing, November 26, 1956, Turing Papers, KCA, AMT/A/10.

149. Ibid.

150. See Collard, “Introduction,” xxx n.1. In 1928, for instance, Pigou admitted to Sraffa, then a lecturer at Trinity College, that he had probably not understood one of Sraffa’s mathematical problems. Pigou to Piero Sraffa, n.d. [January 1928], The Papers of Piero Sraffa, TCA, Sraffa C239/1. See also Naldi, “The Prof and his Younger Colleagues,” 331–332. The Theory of Unemployment contained several small mathematical errors, which were pointed out to him in private letters as well as in reviews. Kahn wrote with corrections, as did Robertson, Bowley from the London School of Economics, and Maurice Allen from Oxford. These corrections addressed issues that did not undercut the thrust of Pigou’s argument, though they did provoke a corrigenda slip. See also Knight, “A.C. Pigou’s The Theory of Unemployment and Its Corrigenda,” 9–10. All the original sources are in Items found in Pigou’s Copy of The Theory of Unemployment, Arthur Cecil Pigou Papers, MLE, Pigou 2/3.

151. Keynes, The General Theory, 107.

152. Sidney Webb and Beatrice Webb, Soviet Communism: A New Civilization? (London: Longmans, Green, and Co. 1935).

153. See Stevenson and Cook, The Slump, chapters 5 and 8. See also John Stevenson, British Society 1914–45 (London: Allen Lane, 1984), especially chapter 10. John Jewkes and Sylvia Jewkes, The Juvenile Labour Market (London: Gollancz, 1938); Wal Hannington, The Problem of the Distressed Areas (London: Gollancz, 1937).

154. See Susan Howson, “The Origins of Lionel Robbins’s Essay on the Nature and Significance of Economic Science,” History of Political Economy 36, no. 3 (Fall 2004): 413–433; and Howson, Lionel Robbins, 213–214. Hugh Dalton also was one of these figures and had been an early supporter of Robbins, though Dalton came to regret Robbins’s dogmatic conservatism. See Ralf Dahrendorf, LSE: A History of the London School of Economics and Political Science 1895–1995 (Oxford: Oxford University Press, 1995): 213–215.

155. Howson, “The Origins of Robbins’s Essay on the Nature and Significance of Economic Science,” 423.

156. Marshall wrote: “Economics is the study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.” Alfred Marshall, The Principles of Economics, eighth ed. (London: Palgrave Mac-millan, 2013): 1.

157. John Saltmarsh’s Lecture Notes on Pigou, c. 1926–9, Austin Robinson Papers, MLE, EAGR/6/1/6, 3.

158. Lionel Robbins, An Essay on the Nature and Significance of Economic Science, 2, 21.

159. Ibid., 16.

160. The contemporary best-selling textbook Principles of Economics by N. Gregory Mankiw, defines economics as “the study of how society manages its scarce resources.” N. Gregory Mankiw, Principles of Economics (Cincinnati: South-Western, 2011): 4. See also Robert Cooter and Peter Rappoport, “Were the Ordinalists Wrong about Welfare Economics?” Journal of Economic Literature 22, no. 2 (June 1984): 507–530. Backhouse and Medema argue that Robbins’s definition “had a symbiotic role” in the axiomatization of economic theory as early as the 1930s and 1940s. Roger E. Backhouse and Steven G. Medema, “Robbins’s Essay and the Axiomatization of Economics,” Journal of the History of Economic Thought 31, no. 4 (December 2009): 485–499. However, as Backhouse and Medema note, it took decades for the definition to assume the prominence it now has. Roger E. Backhouse and Steven Medema, “Defining Economics: The Long Road to the Acceptance of the Robbins Definition,” Economica 76 (October 2009): 805–820.

161. Robbins, An Essay on the Nature and Significance of Economic Science, xxxvii.

162. See Dennis P. O’Brien, Lionel Robbins (London: Macmillan, 1988): 25.

163. Robbins, An Essay on the Nature and Significance of Economic Science, xxxviii–xxxix. In the preface to the first edition, Robbins acknowledged his “especial indebtedness to the works of Professor Ludwig von Mises.” Robbins, An Essay on the Nature and Significance of Economic Science, xliii. On Robbins and the Austrians, see Howson, Lionel Robbins, especially 196–204; and Backhouse and Medema, “Robbins’s Essay and the Axiomatization of Economics.” The so-called Austrian School stressed the purposeful actions of individuals. On the Austrians, see Harald Hagermann, Tamotsu Nishizawa, and Yukihiro Ikeda, eds. Austrian Economics in Transition: From Carl Menger to Friedrich Hayek (New York: Palgrave Macmillan, 2010).

164. For Weber, the sociologist needed a self-awareness of this tension. Without such awareness, they could become “petty prophets in lecture rooms.” Max Weber, “Science as a Vocation,” in From Max Weber: Essays in Sociology, ed. C. Wright Mills and H. H. Gerth (New York: Oxford University Press, 1980): 153.

165. On the socialist calculation debate, see Don Lavoie, Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (Cambridge: Cambridge University Press, 1985). Market liberals contended that planning boards were unable to efficiently distribute resources. This view would reach its most eloquent expression in: F. A. Hayek, “The Use of Knowledge in Society,” American Economic Review 34, no. 4 (September 1945): 519–530. Hayek held that planned economies could never outdo the market, because even if a planning board could optimize allocation of resources over the utility functions of a country’s citizens, the board could not access the information required, which was only knowable to the individuals themselves. Left-leaning economists, notably Lerner and Lange, suggested systems of “market socialism,” wherein the government would ultimately plan the economy and own the productive resources but would employ a system of prices to capture information about demand. In this way, choices about production would be concentrated and in the hands of a few central planners. See Abba Lerner, The Economics of Control: Principles of Welfare Economics (New York: Macmillan, 1944); Oskar Lange, On the Economic Theory of Socialism (Minneapolis: University of Minnesota Press, 1938). Lange himself drew extensively from Pigou, invoking The Economics of Welfare as part of the “economist’s case for socialism.” Lange, On the Economic Theory of Socialism, 98–103.

166. See Peter Hennipman, “Hicks, Robbins, and the Demise of Pigovian Welfare Economics: Rectification and Amplification,” Southern Economic Journal 59, no. 1 (July 1992): 88–97; Roger E. Backhouse, “Robbins and Welfare Economics: A Reappraisal,” Journal of the History of Economic Thought 31, no. 4 (December 2009): 474–484. Malcolm Rutherford suggests that Robbins was attacking the American Institutionalists, though Robbins’s intentions on this matter are somewhat harder to demonstrate. See Malcolm Rutherford, The Institutionalist Movement in American Economics, 1918–1947: Science and Social Control (Cambridge: Cambridge University Press, 2011): 310.

167. O’Brien, Lionel Robbins, 23. See also Lionel Robbins, “Interpersonal Comparisons of Utility: A Comment,” Economic Journal 48 (1938): 635–637; Lionel Robbins, Politics and Economics (London: Macmillan, 1963): 12–19.

168. Aslanbeigui provides an overview of the two challenges facing Pigou (from Keynes and Robbins). Aslanbeigui, “On the Demise of Pigovian Economics.” See also Aslanbeigui and Oakes, Arthur Cecil Pigou, chapter 6.

169. Robbins did not attack interpersonal comparisons directly in his Essay, though he did so implicitly when attacking the extra-scientific nature of the law of diminishing marginal utility. Robbins, An Essay on the Nature and Significance of Economic Science, 139–141.

170. One of the few political economists who did not make this assumption was F. Y. Edgeworth, who held that the rich were extra sensitive to pleasure and pain, making inequality justifiable on utilitarian grounds. See David Colander, “Edgeworth’s Hedonometer and the Quest to Measure Utility,” Journal of Economic Perspectives 21, no. 2 (Spring 2007): 215–225.

171. Robbins, An Essay on the Nature and Significance of Economic Science, 139–141.

172. Compare to Aslanbeigui and Oakes, who suggest that it was primarily the interpersonal comparisons of utility that provided the tension between Pigou and Robbins. Aslanbeigui and Oakes, Arthur Cecil Pigou, 181. Pigou, The Economics of Stationary States, 4.

173. Quoted in Howson, “Robbins’s Nature and Significance,” 422.

174. Robbins, An Essay on the Nature and Significance of Economic Science, xxxvi.

175. Howson, Lionel Robbins, 232.

176. Lindley Fraser, “How Do We Want Economists to Behave?” Economic Journal 42, no. 168 (December 1932): 570.

177. This position was forcefully expressed by a young American, Ralph Souter. “The issues involved,” Souter wrote, “are so vast that I can do no more than barely indicate how Professor Robbins here again has been victimized by the fallacy of exclusion [of ethics from economics].” R. W. Souter, “‘The Nature and Significance of Economic Science’ in Recent Discussion,” Quarterly Journal of Economics 47, no. 3 (May 1933): 401. See also Howson, Lionel Robbins, 232–234.

178. Cannan continued, “They will say, ‘You know perfectly well that what we want from you is to be told whether this proposed change will make us and our children better off. For goodness sake give us a reasoned reply without beating about the bush and quoting dozens of foreign economists whom we shall never read.’” Edwin Cannan, “An Essay on the Significance of Economic Science by Lionel Robbins,” Economic Journal 42, no. 167 (September 1932): 426–427.

179. Frank H. Knight, “The Nature and Significance of Economic Science by Lionel Robbins,” International Journal of Ethics 44, no. 3 (April 1934): 361. Joan Robinson, writing in a vindicatory vein in Economics Is a Serious Subject, held that economics had already “built up a body of technique . . . [of] which we need none of us be ashamed.” Robinson, Economics Is a Serious Subject, 4–5. For more on Knight’s own conflicted relationship with the purpose of economics, see Angus Burgin, “The Radical Conservatism of Frank H. Knight,” Modern Intellectual History 6, no. 3 (November 2009): 513–538.

180. Fraser, “How Do We Want Economists to Behave?” 562. Reviewers were also aware that Robbins’s work had a political valence. Robbins assumed that “‘rational,’ i.e. economical choice is something worth striving for.” Ibid., 557. Robinson held that Robbins forgot that economics was not only tied up with welfare judgments but also predicated on the assumption that “each person acts in a sensible manner from the point of view of his own economic interests,” a totally unrealistic assertion. This assumption, however, implicitly worked to justify choice as a means to a satisfactory (and thereby ethically weighted) end. Robinson, Economics Is a Serious Subject, 10.

181. Robinson, Economics Is a Serious Subject, 4. R. W. Souter found it natural for Pigou to be ethically motivated and that the mechanics of his economics were still scientific. Souter, “‘The Nature and Significance of Economic Science’ in Recent Discussion,” 403.

182. A. C. Pigou The Economics of Welfare, fourth ed., 3–4.

183. Pareto optimality refers to an outcome in which it is impossible to make any individual better off without making another worse off. See Robbins, “Interpersonal Comparisons of Utility: A Comment,” 635–641. Robbins, An Essay on the Nature and Significance of Economic Science, 75.

184. Two short articles, one by Hicks and one by Kaldor, were the founding documents of New Welfare Economics. The first is Nicholas Kaldor, “Welfare Propositions of Economics and Interpersonal Comparisons of Utility,” Economic Journal 49, no. 195 (September 1939): 549–552, in which Kaldor explicitly “was in entire agreement” with Robbins’s theory and sought to “examine its relevance . . . to what is commonly called “welfare economics.” The other is J. R. Hicks, “The Foundations of Welfare Economics,” Economic Journal 49, no. 196 (December 1939): 696–712.

185. Hicks, “The Foundations of Welfare Economics,” 697.

186. Robert Cooter and Peter Rappoport argue that “ordinalists offered different questions, not better answers,” and thus that “the ordinalist revolution represented a change, not progress in economics.” Cooter and Rappoport, “Were the Ordinalists Wrong about Welfare Economics?”

187. In America, New Welfare Economics was most notably advocated by the LSE- and Cambridge-educated Tibor Scitovsky. See Tibor Scitovsky, “A Note on Welfare Propositions in Economics,” Review of Economic Studies 9, no. 1 (November 1941): 77–88. New Welfare Economics soon came into conflict with an American strain of welfare economics centered around the work of Abram Bergson and Paul Samuelson. However, Pigou was absent from those debates. On the rise (and fall) of New Welfare Economics, see J. R. Hicks, “The Scope and Status of Welfare Economics,” Oxford Economic Papers, New Series 27, no. 3 (November 1975): 307–326; and E. J. Mishan, “A Survey of Welfare Economics, 1939–59,” Economic Journal 70, no. 278 (June 1960): 197–265. See also the postscript in Roger Backhouse and Tamotsu Nishizawa, eds., No Wealth but Life (Cambridge: Cambridge University Press, 2010): 223–235.

188. See U. Hla Myint, Theories of Welfare Economics (New York: Reprints of Economics Classics, Augustus M. Kelley, 1965); Backhouse and Medema, “Defining Economics: The Long Road to the Acceptance of the Robbins Definition.”

189. Pigou to Macmillan, November 16, 1932, Macmillan Papers, BL, Add. MSS 55199, 156.

190. Pigou to Macmillan, December 5, 1934, Macmillan Papers, BL Add. MSS 55199, 173.

191. A. C. Pigou, Economics in Practice: Six Lectures on Current Issues (London: Macmillan, 1935): 8. Pigou cited misuse of statistics by government ministers, archbishops, and social reformers. Ibid., 16–18.

192. Ibid., 20.

193. Ibid., 25.

194. Ibid., 22.

195. See Pigou’s inaugural address as professor. A. C. Pigou, Economic Science in Relation to Practice (London: Macmillan, 1908).

196. The Economics of Stationary States, a textbook that Pigou wrote in 1935, was sent to the Cambridge group. See Pigou to Macmillan, December 5, 1934, Macmillan Papers, BL, Add. MSS 55199, 173–174.

197. Pigou was quick to add that after the abandonment of the gold standard, falling gold prices could be absorbed in exchange rates rather than domestic prices, and that the government could engage in public works to stabilize prices. Thus, the current tariffs and encouragement of municipal thrift was at best “now not needed,” and at worst, counterproductive. Pigou, Economics in Practice, 73–74, 79.

198. Ibid., 145–147.

199. See Trentmann, Free Trade Nation, part II.

200. Pigou, Economics in Practice, 149.

201. Ibid., 142.

202. Pigou continued to probe the limits of nationalism. “And, if it is proper for the group of people living in England to frame policies without regard for their consequences abroad, why not a still narrower patriotism? Why should not the Dons of Cambridge forbid to undergraduates the purchase of London-made books, and, endowed, as a consequcnce of this, with well-merited wealth, pile high their College cellars with bottled sunshine from Portugal and France?” Ibid., 133.

203. Ibid., 152.

204. Webb and Webb, Soviet Communism: A New Civilization? In subsequent editions, the Webbs dropped the question mark from the end of the title. A. C. Pigou, Socialism versus Capitalism (London: Macmillan, 1937): v.

205. Pigou to Beatrice Webb, January 13, 1937, Passfield Collection, LSE, Passfield 2/4/K. Pigou likely did not engage actively with the work of Oskar Lange or Abba Lerner, who worked on how socialist planning could render efficient outcomes. Lange did engage with Pigou, who he saw as explaining some of the failures of free-market capitalism. See Lange, On the Economic Theory of Socialism, 99–104.

206. Pigou to Beatrice Webb, January 13, 1937, Passfield Collection, LSE, Passfield 2/4/K. Pigou investigated and found that Edgeworth had written of the separation of economic and utilitarian calculus in the introduction to his Mathematical Psychics (1881). Pigou to Beatrice Webb, n.d. [after January 19, 1937], Passfield Collection, LSE, Passfield 2/4/K. Webb was likely interested in the term “economic calculus” because of an essay published in 1936 by her planning-friendly LSE colleague Evan Durbin (1906–1948). E.F.M. Durbin, “Economic Calculus in a Planned Economy,” Economic Journal 46, no. 184 (December 1936): 676–690. Though in the 1930s, the term was infrequently used, Hayek and others began to use it more in subsequent decades. See Bruce Caldwell, “F.A. Hayek and the ‘Economic Calculus’: The Cambridge and Virginia Lectures” (paper presented at the conference on Friedrich Hayek and the Liberal Tradition at the University of Richmond, Richmond, Virginia, April 13, 2013).

207. Pigou to Macmillan, May 18, 1937, Macmillan Papers, BL, Add. MSS 55199, 206. He also dismissively referred to it as “a small sop to public spirit” to Philip Noel-Baker. Pigou to Philip Noel-Baker, n.d. (October 1937), Noel-Baker Papers, CCA, 9/58/3.

208. These accusations arose when a British government document surfaced that identified a Soviet agent. Through the document was redacted, parts of the censored material were visble, and members of the press determined the name of the agent was five letters long and started with a P or B. The spy in question was Anthony Blunt (1907–1983), who had confessed secretly in 1964. Accusations in the press of Pigou’s guilt provoked strong responses from Pigou’s friends and supporters. See Press Clippings, The Papers of Lancelot Patrick Wilkinson, KCA, LPW/8/7; “Spy Stories,” Kaldor Papers, KCA, NK/3/93. See also Christopher Andrew, “Cambridge Spies: The ‘Magnificent Five,’ 1933–1945,” in Cambridge Contributions, ed. Sarah J. Ormrod (Cambridge: Cambridge University Press, 1998): 208–228.

209. Pigou, Socialism versus Capitalism, 12, 67.

210. Assuming that wages would generally be equal under a socialist economy, planners would be obliged to use an “accounting” wage to account the relative worth of a worker’s labor. Ibid., 114. An “accounting” interest rate would also be necessary; ibid., 128.

211. Ibid., 118.

212. See, for instance, his 1935 essay, “State Action and Laisser Faire,” in Economics in Practice: Six Lectures on Current Issues (London: Macmillan, 1935), which is discussed in chapter 4.

213. Ibid., 99–101, 136.

214. Ibid., 138–139.

215. Pigou was the organization’s president from 1937 to 1940. See Aslanbeigui and Oakes, Arthur Cecil Pigou, 262.

216. A. C. Pigou, “Presidential Address,” Economic Journal 49, no. 194 (June 1939): 218. Pigou singled out Foxwell as the notable exception.

217. Ibid., 219.

218. Ibid., 218–219. The consolation was that there was “scope for useful work by men and women who are not of the first intellectual” rank.

219. Ibid., 217–218.

220. Collard, “Introduction,” xxx.

221. Pigou, “Presidential Address,” 220.

222. Emphasis added. Ibid., 221.

Chapter 7: Another War and a Fresh Start

1. Pigou to Philip Noel-Baker, n.d. [September–October, 1939], The Papers of Baron Noel-Baker, CCA, NBKR 9/58/3.

2. Ibid.

3. Pigou to Philip Noel-Baker, n.d. [September–October, 1939], Noel-Baker Papers, CCA, NBKR 9/58/3.

4. A. C. Pigou, The Political Economy of War, second edition (London: Macmillan, 1940): 169.

5. Pigou to Philip Noel-Baker, n.d. [September–October 1939], Noel-Baker Papers, CCA, NBKR 9/58/3. Wilfrid Noyce (1917–1962) encountered Pigou at King’s and became a lifelong friend. Though he originally joined the Ambulance Unit, in 1942 he left for India, where he served as an intelligence officer. An accomplished climber, he fell while on a hike in the Lake District in 1946 and was rescued by Noel-Baker, then an MP.

6. Pigou to Philip Noel-Baker, n.d. [late 1939], Noel-Baker Papers, CCA, NBKR 9/58/3.

7. D. G. Champernowne, “Arthur Cecil Pigou 1877–1959,” Statistical Journal 122, no. 2 (1959): 265; Alan Hodges, Alan Turing: The Enigma (Princeton, NJ: Princeton University Press, 2012): 186.

8. For more on this period, see Christopher N. L. Brooke, A History of the University of Cambridge, Volume IV, 1870–1990 (Cambridge: Cambridge University Press, 1993), chapter 16.

9. J. M. Keynes to Pigou, n.d. [June–July 1940], The Papers of John Maynard Keynes, KCA, JMK/PP/45/254/53.

10. Pigou to J. M. Keynes, June 12, 1940, quoted in Pascal Bridel and Bruna Ingrao, “Managing Cambridge Economics: The Correspondence between Keynes and Pigou,” in Economists in Cambridge: A Study Through Their Correspondence, ed. Maria Cristina Marcuzzo and Annalisa Rosselli (London: Routledge, 2005): 155.

11. Pigou to J. M. Keynes, n.d. [June–July 1940], The Papers of John Maynard Keynes, KCA, JMK/PP/45/254/51.

12. Keynes was not optimistic about his own situation either: “I have no idea whether my appointment . . . to a new super-dud Committee at the Treasury is going to be a complete washout or not. I have little confidence in it. . . . All this advisory business is a hopeless ploughing of the sands.” J. M. Keynes to Pigou, n.d. [June–July 1940], Keynes Papers, KCA, JMK/PP/45/254/53.

13. Pigou’s main contribution to Greenwood’s office was a historical analysis, “An Analytical Account of the General Economic Movement in the United Kingdom between the Armistice and the Restoration of the Gold Standard.” See A. C. Pigou, “General Economic Movement,” 1941, Arthur Cecil Pigou Papers, MLE, Pigou 1/7/1. After Pigou secured permission from the relevant authorities, this report was published in 1947. A. C. Pigou, Aspects of British Economic History 1918–1925 (London: Macmillan, 1947).

14. Pigou to Philip Noel-Baker, n.d. [January 1941], Noel-Baker Papers, CCA, NBKR 9/58/3; Pigou to Philip Noel-Baker, n.d. [June 1941], Noel-Baker Papers, CCA, NBKR 9/58/3; Pigou to Philip Noel-Baker, n.d. [March 1942], Noel-Baker Papers, CCA, NBKR 9/58/3; Pigou to Philip Noel-Baker, n.d. [April 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

15. Pigou to Philip Noel-Baker, n.d. [October 1941], Noel-Baker Papers, CCA, NBKR 9/58/3.

16. Jackson, who was known as “the Queen,” administered the Pigou household “with strict discipline” and continued to live in an uninsulated addition to the house after Pigou’s death. Nicholas Elliott, Never Judge a Man by His Umbrella (London: Michael Russell, 1991): 67.

17. Pigou to Philip Noel-Baker, June 5, 1945, Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou wrote to congratulate Hayek on the latter’s election to the British Academy. Pigou to F. A. Hayek, July 12, 1944, Friedrich A. von Hayek Papers, The Hoover Institution, Stanford University, Palo Alto, California, Box 8, Folder 9.

18. Philip Noel-Baker to Pigou, August 26, 1949, Noel-Baker Papers, CCA, NBKR 9/58/1.

19. Philip Noel-Baker to Pigou, April 15, 1943, Noel-Baker Papers, CCA, NBKR 9/58/2.

20. Pigou to Philip Noel-Baker, August 10, 1941, Noel-Baker Papers, CCA, NBKR 9/58/3.

21. Pigou to Philip Noel-Baker, n.d. [June 1943)], Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou to Philip Noel-Baker, n.d. [mid-1943], Noel-Baker Papers, CCA, NBKR 9/58/2.

22. Pigou was particularly concerned about Wilfrid Noyce. He kept up correspondence with Noyce, who was stationed in Northern India and China and repeatedly asked Noel-Baker’s advice, trying to arrange a future career in the diplomatic service. Gaunt’s full name was Howard Charles Adie Gaunt.

23. Pigou to Philip Noel-Baker, n.d. [January 1941], Noel-Baker Papers, CCA, NBKR 9/58/3; Pigou to Philip Noel-Baker, n.d. [August–September 1940], Noel-Baker Papers, CCA, NBKR 9/58/3.

24. Pigou to Philip Noel-Baker, n.d. [November 1943], Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou’s misogynistic tendencies were clear. In letters to Noel-Baker, he would alternatively refer to women as “dancing girls” and “serpents.” In 1944, he received a letter from a woman in Sharonville, Ohio, asking for his opinion on the “theoretical assumption of economic planning, positive theory of laissez-faire, and the contrast or the comparison of the above two ideas.” Pigou commented, “I’m shortly starting a great work called ‘Woman, A Psychological Study’! This will be its frontispiece!” Philip Noel-Baker to Pigou, n.d. [May–June 1944], Noel-Baker Papers, CCA, NBKR 9/58/2.

25. Pigou to Philip Noel-Baker, n.d. [August 1940], Noel-Baker Papers, CCA, NBKR 9/58/3. Noel-Baker, ever the optimist, predicted the war would end in 1942.

26. Pigou to Philip Noel-Baker, n.d. [late 1941], Noel-Baker Papers, CCA, NBKR 9/58/3.

27. Pigou to Philip Noel-Baker, n.d. [May 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

28. In one letter, Pigou set May 1953 as his prediction. Pigou to Philip Noel-Baker, n.d. [April 1942], Noel-Baker Papers, CCA, NBKR 9/58/3. Pigou to Philip Noel-Baker, n.d. [November 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

29. Philip Noel-Baker to Pigou, January 26, 1943, Noel-Baker Papers, CCA, NBKR 9/58/3; Pigou to Philip Noel-Baker, n.d. [February 1944], Noel-Baker Papers, CCA, NBKR 9/58/2; Pigou to Philip Noel-Baker, n.d. [June 1944], Noel-Baker Papers, CCA, NBKR 9/58/2.

30. Philip Noel-Baker to Pigou, January 26, 1943, Noel-Baker Papers, CCA, NBKR 9/58/3.

31. Pigou to Philip Noel-Baker, n.d. [early February 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

32. “Whisky Arthur’s department is . . . incompetent,” Pigou wrote. “The typist they arranged to provide for my work for them, who was to send in her account and to be paid monthly, and who started in November, hasn’t received a penny yet! No wonder we are losing the war!” Pigou to Philip Noel-Baker, n.d. [March 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

33. Pigou to Macmillan, May 9, 1944, Macmillan Papers, BL, Add. MS 55200, 40. The book was published in 1945. A. C. Pigou, Lapses from Full Employment (London: Macmillan, 1945). A. C. Pigou, “Night Life on High Hills,” Alpine Journal 53 (1946): 246. Pigou also wrote what he described to Noel-Baker as a “masterful study of Beve-ridge” that took the form of two articles in the Manchester Guardian. Pigou to Philip Noel-Baker, n.d. [1943], Noel-Baker Papers, CCA, NBKR 9/58/3. Pigou’s work on Beveridge also appeared in Agenda in 1944 and subsequently in Essays in Economics (London: Macmillan, 1952) under the title “Employment Policy.” Pigou was in sympathy with the work “Sir William did so well” in the report on Social Security, but he was somewhat less enthusiastic with Beveridge’s more theoretical economic analysis of unemployment. A. C. Pigou, “Employment Policy,” in Essays in Economics (London: Macmillan, 1952): 85, 107.

34. See David Collard, “Introduction,” in A.C. Pigou’s Collected Economic Writings, Volume 1, ed. David Collard (London: Macmillan, 1999): xxxvii–xxxix.

35. A. C. Pigou and Nicholas Kaldor, “Models of Short-Period Equilibrium,” Economic Journal 52, no. 206/7 (June-September 1942): 250–258.

36. Paul A. Samuelson, “Professor Pigou’s Employment and Equilibrium,” American Economic Review 31, no. 3 (September 1941): 545.

37. Ibid., 545, 552. Pigou’s model consisted of four endogenous variables (consumption goods, investment goods, the interest rate, and the money wage) with three equations. To “make it a determinate system,” Pigou suggested two alternatives. First, one could assume that in the long run, there was no unemployment. Alternatively, one could assume that in the short term, money wages were fixed. See Pigou, Employment and Equilibrium, 170. The most important innovation of the book, according to both Samuelson and David Collard, was its treatment of multipliers. See Collard, “Introduction,” xxxviii.

38. Abba Lerner, “Employment and Equilibrium by A.C. Pigou,” Review of Economics and Statistics 24, no. 2 (May 1942): 87.

39. A. C. Pigou, “The Classical Stationary State,” Economic Journal 53, no. 212 (1943): 243–251. The book to which Pigou was responding was Alvin H. Hansen, Fiscal Policy and Business Cycles (New York: W. W. Norton & Company, 1941).

40. See Michał Kalecki, “Professor Pigou on ‘The Classical Stationary State’ A Comment,” Economic Journal 54, no. 213 (April 1944): 131–132. Patinkin coined the term “Pigou Effect,” in 1948. Don Patinkin, “Price Flexibility and Full Employment,” American Economic Review 38, no. 4 (September 1948): 543–564. See also Norikazu Takami, “Managing the Loss: How Pigou Arrived at the Pigou Effect,” CHOPE Working Paper 2011-06 (Durham, NC: Center for the History of Political Economy, Duke University, March 2011), http://hope.econ.duke.edu/node/134.

41. David Collard, “Introduction,” in A.C. Pigou, Journal Articles 1902–1922, ed. David Collard (London: Macmillan, 2002): xxx.

42. Pigou, Economics of Welfare, fourth ed. (London: Macmillan, 1932): 31.

43. Colin Clark, National Income and Outlay (London: Macmillan, 1937): 4.

44. Ibid. In America, where Simon Kuznets was working on developing the modern measure of GDP, Pigou’s influence was less significant. On Kuznets’s contributions, see Robert William Fogel, Enid M. Fogel, Mark Guglielmo, and Nathaniel Grotte, Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics (Chicago: University of Chicago Press, 2013).

45. Hayek used this formulation in his 1945 essay, “The Use of Knowledge in Society,” but strains of this thought appear throughout his and Ludwig von Mises’s work of the 1930s and 1940s. F. A. Hayek, “The Use of Knowledge in Society,” American Economic Review 34, no. 4 (September 1945): 519–530. See Bruce Caldwell, Hayek’s Challege: An Intellectual Biography of F.A. Hayek (Chicago: University of Chicago Press, 2004), especially chapter 10.

46. F. A. Hayek, The Pure Theory of Capital (London: Macmillan, 1940): 298–299. See J. R. Hicks, “Capital Controversies Ancient and Modern,” American Economic Review 64, no. 2 (May 1974): 307–316.

47. One passage—”changes in the measurable dimension of the capital stock itself play no essential role in the complete economic calculus”—especially concerned him; he vigorously put three lines alongside it. Pigou’s copy of F. A. Hayek, The Pure Theory of Capital (London: Macmillan, 1941): 300. Found in King’s College Library, TKV Hay.

48. Pigou’s copy of Hayek, The Pure Theory of Capital, 305. Found in King’s College Library, TKV Hay.

49. Pigou also defended the concept for marking a difference between “real” and “psychic” or perceived income, since the breakdown of physical productive capacity represented a loss of income. See Emma Rothschild, “Maintaining (Environmental) Capital Intact,” Modern Intellectual History 8, no. 1 (2011): 193–212

50. A. C. Pigou, “Maintaining Capital Intact,” Economica, New Series 8, no. 31 (August 1941): 275.

51. F. A. Hayek, “Maintaining Capital Intact: A Reply,” Economica, New Series 8, no. 31 (August 1941): 276–280.

52. Hayek published a three-part series in Economica called “Scientism and Society,” in which he railed against the fallacy that social science, specifically economics, yielded objective, eternal truths just as natural sciences did. Hayek associated this belief with Marxist teleology and the dogmatism of collectivist totalitarian regimes. Because they studied human behavior, social sciences, Hayek argued, gave patterns, not law. Human choice ensured that economic activity was not determined. F. A. Hayek, “Scientism and the Study of Society,” Economica, New Series 9, no. 36 (August 1942): 267–291; F. A. Hayek, “Scientism and the Study of Society,” Economica, New Series 10, no. 37 (February 1943): 34–63; “Scientism and the Study of Society Part II,” Economica, New Series 11, no. 41 (February 1944): 27–39.

53. Hicks, “Capital Controversies Ancient and Modern,” 314–315.

54. On the importance of statistics for state planning, see Thomas A. Stapleford The Cost of Living in America: A Political History of Economic Statistics, 1880–2000 (Cambridge: Cambridge University Press, 2009); Adam Tooze, Statistics and the German State, 1900–1945: The Making of Modern Economic Knowledge (Cambridge: Cambridge University Press, 2001); Timothy Mitchell, Rule of Experts: Egypt, Techno-Politics, Modernity (Berkeley, University of California Press, 2002).

55. J. R. Hicks, “Maintaining Capital Intact: A Further Suggestion,” Economica, New Series 9, no. 32 (May 1942): 174–179

56. Hicks, “Capital Controversies Ancient and Modern,” 308.

57. Hicks, “Maintaining Capital Intact: A Further Suggestion, 174.

58. Notes on election of Robertson to succeed Pigou, 1943, Austin Robinson Papers, MLE, EAGR/6/6/3.

59. Pigou’s alternative was “to do schoolmastering; but, of course, I don’t know whether I should be good at preventing boys from bringing rabbits and frogs into class.” Pigou to Philip Noel-Baker, n.d. [February 1943], Noel-Baker Papers, CCA, NBKR 9/58/3.

60. Pigou to Philip Noel-Baker, n.d. [March 1943], Noel-Baker Papers, CCA, NBKR 9/58/3.

61. Philip Noel-Baker to Pigou, March 6, 1943, Noel-Baker Papers, CCA, NBKR 9/58/3.

62. Ibid.

63. Pigou to Philip Noel-Baker, n.d. [March 1943], Noel-Baker Papers, CCA, NBKR 9/58/3.

64. Pigou to Philip Noel-Baker, n.d. [October 1943], Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou wrote, “How does one talk into the wretched machine? I shall probably either shout or whisper. You’d better tell me what to do.” Noel-Baker enthusiastically replied: “I hope it will be such a howling success among the seven year old proletarians who listen, that you will repeat it on many occasions.” Philip Noel-Baker to Pigou, October 25, 1943, Noel-Baker Papers, CCA, NBKR 9/58/2.

65. Pigou to J. M. Keynes, n.d. [April 1943], Keynes Papers, KCA, JMK/PP/45/254/57. Pigou proposed “a special levy of 20 times assessed income tax payment on everybody except that (1) all earned income left out (2) all income after war be left out subject to the owner priority that his war loan has been acquired with new money, i.e. not through the proceeds of selling other securities.”

66. Pigou to J. M. Keynes, n.d. [April 1943], Keynes Papers, KCA, JMK/PP/45/254/59.

67. Pigou to J. M. Keynes, n.d. [April 1943], Keynes Papers, KCA, JMK/PP/45/254/62.

68. Pigou to Philip Noel-Baker, n.d. [June 1944], Noel-Baker Papers, CCA, NBKR 9/58/2. This was a theme to which Pigou would repeatedly return. Later, he wrote that the atomic bomb was “the last guarantee of the pro-lobster world,” and that the plan for the stellar universe should be illustrated by “lantern slides depicting lobsters in various altitudes.” Pigou to Philip Noel-Baker, n.d. [mid-1946], Noel-Baker Papers, CCA, NBKR 9/58/1.

69. Pigou to Philip Noel-Baker, n.d. [August 1943], Noel-Baker Papers, CCA, NBKR 9/58/2; Pigou to Philip Noel-Baker, n.d. [September 1943], Noel-Baker Papers, CCA, NBKR 9/58/2.

70. Pigou to Philip Noel-Baker, n.d. [September 1943], Noel-Baker Papers, CCA, NBKR 9/58/2; Pigou to Philip Noel-Baker, n.d. [March 1942], Noel-Baker Papers, CCA, NBKR 9/58/3.

71. Pigou to Philip Noel-Baker, n.d. [December 1940], Noel-Baker Papers, CCA, NBKR 9/58/3. With the exception of Churchill, these individuals constituted the leader-ship of the Labour Party and the country in the postwar period. Shinwell eventually became Minister of Defence. Attlee served as Prime Minister from 1945 to 1951. Morrison, a Labour strategist, worked as Home Secretary, Foreign Secretary, and Deputy Prime Minister. Bevan was Minister of Health, responsible for implementing the National Health Service (NHS). Dalton was Chancellor of the Exchequer. See Kenneth O. Morgan, Labour in Power 1945–1951 (Oxford: Clarendon Press, 1984); Henry Pelling, The Labour Governments, 1945–51 (New York: St. Martin’s Press, 1984).

72. Pigou’s thought fascism was a “function of many variables.” A. C. Pigou, “The Road to Serfdom,” Economic Journal 54, no. 214 (June–September 1944): 219.

73. Elliott, Never Judge a Man by His Umbrella, 67. See this book, written by Claude Elliott’s son, for information about Elliott, who taught economics at St. John’s College, Cambridge, and was headmaster of Eton. Gaunt was also an alumnus of King’s and a climber. He later became headmaster of Malvern College.

74. Wilfrid Noyce to Philip Noel-Baker, August 7, 1945, Noel-Baker Papers, CCA, NBKR 9/58/2.

75. According to Austin Robinson, Pigou “did not wish to continue his subscription to a club that had never meant anything to him.” Austin Robinson to E. T. Williams, November 16, 1966, The Papers of Austin Robinson, MLE, EAGR 6/6/6, 29. Pigou’s election had been delayed several times because of politics and resistance to his perceived pacifism. He had been shocked to discover in 1927 “the scandalous behaviour of the British Academy” in denying Keynes membership in 1920 because of Economic Consequences of the Peace. “Of course,” Pigou wrote to Keynes in 1927, “if I had known of it, I should never have accepted election to a body that could behave in such a way.” Pigou to J. M. Keynes, n.d. [1927], Keynes Papers, KCA, JMK/PP/45/254, 25. See also Donald Winch, “Keynes and the British Academy,” Historical Journal 57, no. 3 (September 2014): 751–771.

76. David Kynaston, Austerity Britain, 1945–51 (London: Bloomsbury, 2007): 60–70.

77. Pigou to Philip Noel-Baker, n.d. [May–June 1945], Noel-Baker Papers, CCA, NBKR 9/58/2. Pigou wrote in the same letter that Sraffa “foresees that O.S. will play up Tito, de Gaulle, and the bloody-handed one [Stalin] for all he’s worth, so as to create a sense of urgent danger, and his own indispensability, but that nevertheless and despite the little rat [Attlee] handicap, the comrades will walk over him.” Pigou joked further, “I, on the other hand, am confident that, since Winnie sounds like a girl’s name, the flappers [women] will plump for it. . . . and the comrades are for the wilderness.” Ibid.

78. Pigou to Philip Noel-Baker, July 20, 1945, Noel-Baker Papers, CCA, NBKR 9/58/2; Pigou to Philip Noel-Baker, n.d. [August 1945], Noel-Baker Papers, CCA, NBKR 9/58/2. Attlee did not appoint Noel-Baker to the cabinet, “a gross case of injustice by the Rat.” Noel-Baker would run “the international business, while Bevin takes the credit! . . . That’s Rat nature.” On the election, see Pelling, The Labour Governments, 1945–51, chapter 2.

79. Labour Party, Let Us Face the Future: A Declaration of Labour Policy for the Consideration of the Nation (London: Labour Party, 1945).

80. On Labour’s proposed welfare programs, see Morgan, Labour in Power 1945–1951, chapter 4; and Pelling, The Labour Governments, 1945–51, chapter 6.

81. Pigou considered Beveridge a “good man.” He resented Beveridge’s “wife-induced self-advertisement,” but held that “if only someone would murder her, [he] might be quite useful.” Pigou to Philip Noel-Baker, n.d. [March 1945], Noel-Baker Papers, CCA, NBKR 9/58/2; See also José Harris, William Beveridge: A Biography (Oxford: Clarendon Press, 1977): 378–418.

82. Pigou, “Employment Policy,” in Essays in Economics, 107. This essay was originally published in Agenda magazine in August 1944 under the title “Employment Policy and Sir William Beveridge.” It responded to Beveridge’s book, Full Employment in a Free Society. William Beveridge, Full Employment in a Free Society: A Report (London: G. Allen, 1944).

83. Pigou to Philip Noel-Baker, n.d. [August 1945], Noel-Baker Papers, CCA, NBKR 9/58/2. Many would hold Shinwell responsible for the massive coal shortages two years later.

84. Pigou to Philip Noel-Baker, October 5, 1945, Noel-Baker Papers, CCA, NBKR 9/58/2.

85. A. C. Pigou, “Draft of Speech for Philip Noel-Baker,” n.d. [late 1945], Noel-Baker Papers, CCA, NBKR 9/58/2.

86. Pigou continued: “What is there on the other side? The TORIES say that we have kept the country tied up in Red Tape and Controls. . . . We have in fact released many controls (give details). The rest we have kept we, so long as shortages continue, must keep, to prevent bad allocation of resources and soaring prices. We have learned the lesson of the last war; the disastrous result of removing controls too soon. . . . Even the TORIES admit we must not do that again. But they nag at us for doing what, had they been in office, they would themselves have been forced to do! (Cymbals).”

87. See David J. Whittaker, Fighter for Peace: Philip Noel-Baker 1889–1982 (York, UK: Sessions, 1989).

88. A. C. Pigou, “Draft of Speech for Philip Noel-Baker,” n.d. [late 1945], Noel-Baker Papers, CCA, NBKR 9/58/2.

89. “Everyone is agreed,” Pigou wrote, “that . . . it is impossible for the government to stand wholly aside.” Either the government “must regulate” or “through some form of public agency, operate these things directly.” A. C. Pigou, “Draft of Speech for Philip Noel-Baker,” late 1945, Noel-Baker Papers, CCA, NBKR 9/58/2.

90. Ibid.

91. See Andrew Thorpe, A History of the British Labour Party, third ed. (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2008): 120–141.

92. Ibid.

93. See Kenneth Harris, Attlee (London: Weidenfeld and Nicolson, 1984), chapter 19. On nationalization, see Kenneth O. Morgan, Labour in Power 1945–1951 (Oxford: Clarendon Press, 1984), chapter 3.

94. Ibid.

95. A. C. Pigou, “An Economist’s Apologia,” in Economics in Practice: Six Lectures on Current Issues (London: Macmillan, 1935): 8.

96. Pigou to Philip Noel-Baker, n.d. [December 1946], Noel-Baker Papers, CCA, NBKR 9/58/1.

97. Clement Attlee long tried to eject Dalton from the cabinet. Attlee got his chance when a harried Dalton responded to a reporter’s questions about tax changes in the forthcoming 1947 budget. His answers were reported in the evening papers before the markets closed, and since the budget had not been released, Dalton had technically released a budget secret, and so he resigned. Pigou to Philip Noel-Baker, n.d. [November 1947], Noel-Baker, CCA, NBKR 9/58/1; Philip Noel-Baker to Pigou, November 15, 1947, Noel-Baker Papers, CCA, NBKR 9/58/1. See chapter 29 of Ben Pimlott, Hugh Dalton (London: Jonathan Cape, 1985).

98. Pigou to Philip Noel-Baker, n.d. [November 1947], Noel-Baker Papers, CCA, NBKR 9/58/1.

99. Pigou to Philip Noel-Baker, n.d. [early 1947], Noel-Baker Papers, CCA, NBKR 9/58/1.

100. Pigou to Philip Noel-Baker, n.d. [October 1946], Noel-Baker Papers, CCA, NBKR 9/58/1. Noel-Baker, Pigou advised, should appear above such rowdiness. “Your proper role is to be the international man and a gent. . . . When . . . [the Comrades] go home to their wives and little ones, it is the gents that they talk about and really believe in. The little Rat [Attlee] . . . is a gent: and that is why the Comrades think a lot more of him than of Whisky Arthur [Greenwood] or Eupeptic Hugh [Dalton] to say nothing of Shifty [Shinwell].”

101. Pigou to Philip Noel-Baker, n.d. [early 1938], Noel-Baker Papers, CCA, NBKR 9/58/3.

102. Pigou continued: “Of course that phrase is completely ambiguous: but the Comrades will think they know what it means, and anyway a disquisition about what [if anything] it does mean would be beyond their capacities.” Pigou to Philip Noel-Baker, n.d. [early 1947], Noel-Baker Papers, CCA, NBKR 9/58/1.

103. Emphasis mine. Pigou to Philip Noel-Baker, n.d. [October 1946], Noel-Baker Papers, CCA, NBKR 9/58/1.

104. Pigou to Philip Noel-Baker, n.d. [January 1948], Noel-Baker Papers, CCA, NBKR 9/58/1.

105. Pigou to Philip Noel-Baker, n.d. [May 1945], Noel-Baker Papers, CCA, NBKR 9/58/2.

106. Pigou to Philip Noel-Baker, n.d. [mid-1946], Noel-Baker Papers, CCA, NBKR 9/58/1.

107. A. C. Pigou, Income (London: Macmillan, 1946): 76–77.

108. Ibid., 108.

109. Ibid., 109.

110. This bears a resemblance to what later thinkers have referred to as “fair equality of opportunity.” See John Rawls, A Theory of Justice, revised ed. (Cambridge, MA: Harvard University Press, 1999): 75–78. On death duties, Pigou quoted Sir William Harcourt, a Victorian Liberal: “Nature gives man no power over his earthly goods beyond the term of his life. What power he possesses to prolong his will after his death—the right of a dead hand to dispose of property—is a pure creation of the law, and the State has the right to prescribe the conditions and the limitations under which that power shall be exercised.” Pigou, Income, 110.

111. Ibid., 112.

112. Pigou to Philip Noel-Baker, n.d. [April 1945], Noel-Baker Papers, CCA, NBKR 9/58/2.

113. Pigou to Philip Noel-Baker, n.d. [February 1946], Noel-Baker Papers, CCA, NBKR 9/58/2.

114. Pigou to Macmillan, October 4, 1947, Macmillan Papers, BL, Add. MSS 55200, 96.

115. A. C. Pigou, The Veil of Money (London: Macmillan, 1949). It was intended to be popular, but at least one reviewer found it hard going. “The book makes no concession to the reader, and the argument is often hard to follow through its extreme conciseness.” G. Rottier, “The Veil of Money by A.C. Pigou,” Economica, New Series 16, no. 64 (November 1949): 380.

116. A. C. Pigou, “Wage Earnings since the War,” Times (July 13, 1955): 9; A. C. Pigou, “Wage Earnings since the War,” Times (July 14, 1955): 5.

Chapter 8: To “Really Do a Little Good”

1. Pigou suggested Adcock as a potential volunteer for the Ambulance Unit. Pigou to Josephine Baker, n.d., The Papers of Baron Noel Baker, CAC, NBKR 9/45/8.

2. Pigou to Piero Sraffa, May 31, 1957, The Papers of Piero Sraffa, TCA, Sraffa C239, 7.

3. Nicholas Elliott, Never Judge a Man by His Umbrella (London: Michael Russell, 1991): 68–71.

4. Pigou to Noel-Baker, n.d. [November 1949], Noel-Baker Papers, CAC, 9/58.

5. Pigou to Noel-Baker, April 25, 1950, Noel-Baker Papers, CAC, 9/58; Pigou to Noel-Baker, September 11, 1950, Noel-Baker Papers, CAC, 9/58.

6. Letters on Malvern College letterhead, but addressed from King’s, appear in Pigou’s correspondence with Macmillan. See Pigou to Macmillan, January 2, 1950, Macmillan Papers, BL, Add. MSS 55200, 131. Elliott, Never Judge a Man by His Umbrella, 70.

7. Pigou to Philip Noel-Baker, n.d. [November 1949], Noel-Baker Papers, CAC, 9/58/1.

8. Pigou to Philip Noel-Baker, n.d. [early 1949], Noel-Baker Papers, CAC, NBKR 9/58/1; Pigou to Philip Noel-Baker, n.d. [June 1949], Noel-Baker Papers, CAC, NBKR 9/58/1.

9. Pigou to Noel-Baker, n.d. [late 1950-early 1951], Noel-Baker Papers, CCA, NBKR 9/58/1. Noel-Baker responded to this poem with the sarcastic suggestion that Pigou publish a collection. It would find a good reception, Noel-Baker quipped, among the “Junior Imperial League, the Housewives League, and the Conservative Women’s Association for the suppression of Popular Rights!” Noel-Baker to Pigou, January 6, 1951, Noel-Baker Papers, CAC, NBKR 9/58/2.

10. Pigou to Francis Noel-Baker, n.d. [May 1949], Noel-Baker Papers, CCA, NBKR 9/58/1.

Another example was written in January 1951. Pigou to Philip Noel-Baker, n.d. [January 1951], Noel-Baker Papers, CCA, NBKR 9/58/1.

11. Rosemary Ballard to Austin Robinson, November 20, 1964, Austin Robinson Papers, MLE, EAGR 6/6/6, 122.

12. Pigou to Macmillan, January 12, 1953, Macmillan Papers, BL, Add. MSS 55200, 193.

13. L. P. Wilkinson, “A.C. Pigou,” Cambridge Review 80, no. 1953 (April 25, 1959): 431.

14. Pigou had considered leaving Anthony John Pigou £1,000. Anthony was the only one of his several nephews and nieces that Pigou even strongly considered in writing his will. “Will of A.C. Pigou,” January 28, 1958, Academic and Tutorial Records, KCA, KCAC/6/1/11/36; “Codicil to Will,” December 18, 1958, Academic and Tutorial Records, KCA, KCAC/6/1/11/36. Pigou did ask Noel-Baker to secure his brother Gerard extra petrol in the 1940s. “My brother, who has diabetes requiring frequent injections impractical on a long train journey, can’t get them because of petrol rationing for his car.” Pigou to Noel-Baker, n.d. [May 1946], Noel-Baker Papers, CAC, NBKR 9/58/1. Pigou needled in December 1947, “Our Hugh recently coerced Shifty into allowing Elliott a substantial petrol supplement. Aren’t you as good a man as our Hugh?” Pigou to Noel-Baker, n.d. [December 1947], Noel-Baker Papers, CAC, NBKR 9/58/1. Pigou ultimately left the bulk of his estate to Wilfrid Noyce and Tom Gaunt, with small remembrances for his housekeeper, Ann Jackson, Gaunt’s son, and a Michael Sebastian Halliday. King’s and a University Travel fund also received legacies. “Will of A.C. Pigou,” January 28, 1958, Academic and Tutorial Records, KCA, KCAC/6/1/11/36.

15. His last published article appeared in 1954. For examples of technical articles, see A. C. Pigou, “A Comment on Duopoly,” Economica, New Series 15, no. 60 (November 1948): 254–258; A. C. Pigou, “Unrequited Exports,” Economic Journal 60, no. 238 (June 1950): 241–254; A. C. Pigou. “Professor Duesenberry on Income and Savings,” Economic Journal 61, no. 244 (December 1951): 883–885.

16. A. C. Pigou, “Central Planning and Professor Robbins,” Economica, New Series 15, no. 57 (February, 1948): 20. Pigou thought guaranteeing a minimum level of security and income and primary plans were important, but that full planning was impossible because of the information required.

17. A. C. Pigou, “Mill and the Wages Fund,” Economic Journal 59, no. 234 (June 1949): 171–180.

18. Pigou to R. F. Kahn, n.d. [1947–1953], The Papers of Richard Ferdinand Kahn, KCA, RFK/13/83/8. Pigou asked Kahn to help distinguish “between bunk and non-bunk” on more than one occasion. See also Pigou to R. F. Kahn, n.d. [October, 1953], Kahn Papers, KCA, RFK/13/83/9.

19. Pigou to J. R. N. Stone, n.d. [January 1948], The Papers of John Richard Nicholas Stone, KCA, JRNS/3/1/102.

20. Pigou to J. R. N. Stone, n.d. [early 1950s], Stone Papers, KCA, JRNS/3/1/102.

21. Pigou to Hugh Dalton, March 12, 1951, Crosland Collection, LSE, 10/2.

22. Pigou to R. F. Harrod, n.d. [late 1949], Papers of the Royal Economic Society, LSE, RES 6/1/383.

23. Pigou asserted that Keynes’s work was not revolutionary. A. C. Pigou, Keynes’s “General Theory”: A Retrospect (London: Macmillan, 1951): 65–66. Collard takes these negative comments to outweigh the positive. See David Collard, “Introduction,” in A.C. Pigou’s Collected Economic Writings, Volume 1, ed. David Collard (London: Macmillan, 1999): xxxix. The book was not published until 1951 so as not to coincide with the release of Harrod’s biography, The Life of John Maynard Keynes. Pigou had also written a generous memorial to Keynes on the latter’s death in 1946. A. C. Pigou, “John Maynard Keynes, 1883–1946,” Proceedings of the British Academy (1946): 395–414. See also Nahid Aslanbeigui and Guy Oakes, Arthur Cecil Pigou (Houndmills, Basingstoke, UK: Palgrave Macmillan, 2015): 236–238.

24. A. C. Pigou, “The Transfer Problem and Transport Costs,” Economic Journal 62, no. 248 (December 1952): 939–940.

25. A. C. Pigou, “Real Income and Economic Welfare,” Oxford Economic Papers 3, no. 1 (February 1951): 16. Paul Samuelson, “Evaluation of Real National Income,” Oxford Economic Papers, New Series 2, no. 1 (January 1950): 21.

26. Pigou held that only in a case “where quantity of resources and technical conditions have changed and tastes and purchasing power are alike for all purchasers and have not changed, that inferences about economic welfare are possible.” Pigou, “Real Income and Economic Welfare,” 20.

27. A. C. Pigou, “Some Aspects of Welfare Economics,” American Economic Review 41, no. 3 (June 1951): 287.

28. A. C. Pigou, Alfred Marshall and Current Economic Thought (London: Macmillan, 1953): 3.

29. Pigou to Hugh Dalton, March 16, 1951, Crosland Collection, LSE, Crosland 10/2.

30. Pigou, “Some Aspects of Welfare Economics,” 287.

31. Ibid., 292.

32. “Premi «Antonio Feltrinelli» Finora Conferiti,” Academia Nazionale dei Lincei, accessed January 18, 2014, http://www.lincei.it/premi/assegnati_feltrinelli.php. On receiving the prize, Pigou wrote Sraffa, “I wired and wrote gratefulness etc. but wished you had been available to hold my hand. The 5 million lire are, no doubt, en route under escort of Italian and British fleets!” Pigou to Piero Sraffa, June 29, 1955, Papers of Piero Sraffa, TCA, Sraffa C239, 6.

33. New liberalism, in a sufficiently loose definition, was intimately related to this transformation. In The New Liberalism, Michael Freeden wrote, “from the vantage point of the modern British welfare state it is the new liberalism of the turn of the century which appears to have gained the upper hand over its rival ideologies.” Michael Freeden, The New Liberalism: An Ideology of Social Reform (Oxford: Clarendon Press, 1978): 1. See also Peter Clarke, Liberals and Social Democrats (Cambridge: Cambridge University Press, 1978): 2–3. For an overview of the historiography of the British welfare state, see the introduction in Bernard Harris, The Origins of the British Welfare State: Society State and Social Welfare in England and Wales, 1800–1945 (Basingstoke, UK: Palgrave Macmillan, 2004).

34. Pigou to Noel-Baker, n.d. [late August 1945], Noel-Baker Papers, CAC, NBKR 9/58/2; Pigou to Noel-Baker, n.d. [early 1947], Noel-Baker Papers, CAC, NBKR 9/58.

35. A. C. Pigou, “Some Aspects of the Welfare State,” Diogenes 7, no. 2 (Summer 1954): 4.

36. Ibid., 6

37. Ibid.

38. Ibid., 7.

39. Ibid.

40. “Whereas for a single person or family to be forced to accept a lower living standard while their friends—and their enemies—are left as before may be very distressing; but if the whole of their class or group suffer alike, they will scarcely suffer at all.” Ibid., 8.

41. Philip Noel-Baker to Austin Robinson, October 21, 1964, Austin Robinson Papers, MLE, 6/6/4, 33–34.

42. Pigou, “Some Aspects of the Welfare State,” 11

43. A. C. Pigou, Income Revisited (London: Macmillan, 1955): v.

44. Ibid.

45. Ibid., 77.

46. Ibid., 80.

47. Ibid., 84. This mode of thought anticipates the work of so-called Luck Egalitarians, including Oxford philosopher G. A. Cohen, decades later. See G. A. Cohen, “On the Currency of Egalitarian Justice,” Ethics 99, no. 4 (July 1989): 906–944.

48. Pigou, Income Revisited, 81.

49. It is instructive to compare the trajectory of Pigou’s life with that of William Beveridge, who also moved from Liberal reform, to interwar disenchantment, and then to being supportive of the welfare state in the 1940s. See José Harris, William Beveridge: A Biography (Oxford: Clarendon Press): 471–473.

Epilogue

1. R. H. Coase, “The Problem of Social Cost,” Journal of Law & Economics 3 (October 1960): 1.

2. See Dipesh Chakrabarthy, “The Climate of History: Four Theses,” Critical Inquiry 35, no. 2 (Winter 2009): 197–222. See also, for instance, Julia Adeney Thomas, “History and Biology in the Anthropocene: Problems of Scale, Problems of Value,” American Historical Review 119, no. 5 (December 1, 2014): 1587–1607; Jeddidiah Purdy et al., “Forum: The New Nature,” Boston Review (January 11, 2016), https://bostonreview.net/forum/jedediah-purdy-new-nature.

3. John Cassidy, “An Economist’s Invisible Hand,” Wall Street Journal (November 28, 2009), http://online.wsj.com/article/ SB10001424052748704204304574545671352424680.html.

4. Elizabeth Kolbert, “Paying For It,” New Yorker (December 10, 2012), accessed June 25, 2014, http://www.newyorker.com/talk/comment/2012/12/10/121210taco_talk_kolbert.

5. Robert H. Frank, “Heads, You Win. Tails, You Win, Too,” New York Times (January 5, 2013), accessed June 25, 2014, http://www.nytimes.com/2013/01/06/business/pigovian-taxes-may-offer-economic-hope.html.

6. Cassidy, “An Economist’s Invisible Hand”; John Cassidy, How Markets Fail: The Logic of Economic Calamities (New York: Picador, 2010): 170–182.

7. Amartya Sen, “Capitalism Beyond the Crisis,” New York Review of Books (March 26, 2009), accessed November 20, 2014, http://www.nybooks.com/articles/2009/03/26/capitalism-beyond-the-crisis/.

8. Liam C. Malloy and John Case, “Want Less Inequality? Tax It,” American Prospect (November 14, 2012), http://prospect.org/article/what-would-pigou-do; John Schwartz, “Be It Enacted: A Tax on the Taxing,” New York Times (February 9, 2013), http://www.nytimes.com/2013/02/10/business/yourtaxes/pigovian-taxes-can-erase-deficits-and-other- irritants.html?pagewanted=all.

9. A. C. Pigou, Economic Science in Relation to Practice (London: Macmillan, 1908): 13–14.