- 1 Marshall also intervened in the Venezuelan crisis (1895), as testified by the letter written to The (...)
1During his lifetime, Alfred Marshall participated in debates surrounding two wars involving Britain—the Boer war (1899-1902) in South Africa, and World War I (1914–1918).1 Reflections and commentaries on these two conflicts are widespread in Marshall’s correspondence and writings.
- 2 For example, in a letter to The Times (22 August 1914) referring to Germany, Marshall wrote: “we ha (...)
- 3 In a letter to Westcott (20 January 1901), Marshall admitted that “if we provoke a war we must be p (...)
2Although defining himself as an anti-jingoist who considered unfavourably the advent of any war because of its waste of human and material resources, the experiences of both the Boer War and World War I forced Marshall to accept that there were occasions where military conflict could be unavoidable and therefore politically or ethically justifiable. This was true for the “miserable war” against the Boers, but only because the “work of the Jingoes” made any peaceful agreement impossible (letter to Pierson dated 6 April 1900, in Whitaker, 1996 II, 274-275). During World War I, in his private and public correspondence, he expressed (initial) confidence in Britain’s military strength2, as well as the likelihood of her ultimate victory over Germany3, yet also commented on the worrisome risks connected with jingoist feelings, most noticeably the ease with which it had allowed millions of men to be wasted (letter to The Times, 22 August 1914). Critically reflecting on Marshall thoughts on the Boer War and World War I is, in addition to highlighting his political and ethical positions, extremely useful for providing a better understanding of wider aspects of his economic analysis.
- 4 It should also be noted that World War I provided the occasion for Marshall to contribute a chapter (...)
3As will be set out below, many of Marshall’s thoughts on economic questions arising from both the Boer war and World War I were framed in terms of questions surrounding Britain’s relative economic decline from the late nineteenth century onwards.4 The experience of the Boer war—particularly Britain’s inability to quickly defeat the Boer Republics in South Africa—was a severe humiliation for Britain, and an enormous shock to her confidence as an imperial power. The war had brought to light the poor quality of British soldiers (many of those who volunteered for the army were rejected on the grounds that they were malnourished or medically unfit), the military and economic strength of other countries, and the relative decline of Britain in terms of innovations and competitiveness (Searle, 1971). As Marshall noted in 1901, “we work less long and not more vigorously than our fathers did: and, meanwhile, the average amount of thoughtful work done by Germany has nearly doubled; and a similar though less marked improvement is to be seen in other countries” (20 January 1901, Whitaker 1996 II, 294).
4Around this theme, this article is structured as follows. Section 1 will focus on Marshall’s response to protectionist measures (particularly those associated with the Tariff Reform League) that emerged following the Boer War. Section 2 will move to consider Marshall’s reflections on the experience of World War I, particularly related to the changing role of the government in the economic sphere and Britain’s international competitiveness. Section 3 will provide some concluding thoughts.
5The debate over Tariff Reform initiated by Joseph Chamberlain, then Secretary of State for the Colonies, and culminating in 1903 with the creation of the Tariff Reform League, was set against the backdrop of concerns arising from Britain’s experiences in the late nineteenth century. The League advocated defence of the industrial and economic interests of the Empire, primarily in order to allow Britain to keep pace with the growing competition of Germany and the United States. Data from the period attested to the relative decline in the volume of British exports (Alford, 1996; Semmel, 1968), especially for steel, iron and, from the late 1890s, textile and cotton industries (Belussi and Caldari, 2011). The main problem was the inability of Britain to update its productive processes and industrial organization. The so-called second industrial revolution, the success of science-based and capital-intensive industries, characterized the economic development of countries like Germany and America. In contrast, Britain was unable to rise to the challenge of the time and generally remained loyal to its old methods and approaches.
- 5 Among Chamberlain’s supporters included businessmen from the steel, iron, textile and tobacco indus (...)
6In 1886 a Royal Commission had been established to inquire into the depression of Trade and Industry affecting Britain. Businessmen and experts—including Marshall (see Keynes, 1926, 3-16)—were called upon to give evidence. The Commission’s Final Report highlighted that, through the increase in foreign competition, Britain no longer held her position as the world’s chief manufacturing nation (Alford, 1996, 26). In response to these concerns, plus those highlighted by the Boer War, Chamberlain’s Tariff Reform League proposed a system of preferences with the Dominions and the creation of an Imperial Federation, the latter modelled along the lines of the German Zollverein.5 These proposals were also coherent with the general awakening of imperialist sentiment of the time (Semmel, 1968), as well as ideas of social Darwinism expressed in the writings of, for example, Benjamin Kidd and Karl Pearson.
- 6 This kind of criticism is addressed also to the English economists who “implicitly assumed that wha (...)
7Marshall was highly sceptical of the idea of an Imperial Federation. This critical view, in addition to his innate anti-imperialistic feeling, was based on two main themes. Firstly, Marshall’s perspective was much wider, more cosmopolitan, rather than simply national. As noted by Groenenwegen, Marshall was a “cosmopolitan and internationalist in the Cobdenite free trade sense” (Groenewegen, 1995, 603). However, Marshall distinguished himself from the Cobdenite supporters on the basis that “some of their utterances grossly exaggerated the benefits of free trade & underrated the compensatory benefits which Protection might render—not indeed to England—but to New countries & even Germany” (letter to unknown correspondent, dated 6.6.1907 in Whitaker, 1996 III, 160).6 The second criticism draws upon his idea of a necessary balance between rigidity and flexibility in any system (organic, institutional, industrial, political, etc.), and hence his criticisms/suspicions of anything that implied any form of structural rigidity (Caldari, 2015).
- 7 The author writing under this pseudonym was actually W.A.S. Hewins, who at that time was an economi (...)
- 8 The manifesto was signed by Bastable, Gonner, Nicholson, Edgeworth, Phelps, Pigou, Sanger, Scott, S (...)
8Ultimately, the proposals of the Tariff Reform League were not accepted by the British electorate (Chamberlain lost the 1906 election) and Britain remained a free trade nation until the introduction of protectionist policies during the Great Depression of the early 1930s. Yet even though the Tariff Reform proposals were not accepted, the debate surrounding them ignited the political arena in the early twentieth century and developed in several public spheres. For example, a series of articles, published from June to September 1903 in The Times under the signature “An economist”7, sparked the involvement of a large body of economists, including Marshall. On one side of the debate were Tariff Reform supporters—such as Cunningham, Ashley, and Foxwell—who questioned Britain’s economic position, arguing that newly industrialized nations had become increasingly competitive through a strict policy of protectionism and that Britain should move to do the same. On the other side of the debate were those who promoted the traditional Free Trade policy. On 15 August 1903, the latter group published a manifesto in The Times denouncing the Tariff Reform programme as “detrimental to the material prosperity of this country” (quoted in Semmel, 1968, 200).8
9In commenting on the “monstrous” articles published by “An Economist” in The Times (letter dated 20 July 1903 in Whitaker, 1996 III, 39) and the “most glaring economic falsities” of Chamberlain and his League (letter dated 18 August 1903, in Whitaker, 1996 III, 53), he wrote to Lujo Brentano: “Chamberlain (who organizes the cleverest appeals to selfish ignorance all around) needs to be combated by rough &—to speak frankly more crude and unscientific arguments & methods than I have either the taste or the faculty for” (letter dated 29 September 1903 in Whitaker, 1996 III, 59-60).
10Notwithstanding his notorious dislike of entering public debates, Marshall endorsed the August 1903 manifesto, and promoted its principles in his Memorandum on Fiscal Policy of International Trade written in 1903 (and published in 1908; see Keynes, 1926 and Groenewegen, 1996). The Memorandum was commissioned by Charles Thomson Ritchie, Chancellor of the Exchequer in Balfour’s government, who was critical of Chamberlain’s programme (see the letter in Whitaker, 1996 III, 31-32). In the Memorandum, Marshall pointed out what, in his view, justified the maintenance of the traditional free trade policy. As mentioned above, a new fiscal policy in international trade was especially fostered because of the advance of Germany and United States—both nations applied protectionist policies—and the (consequent relative) decline of British industrial leadership. According to Marshall, however, the two questions were to be taken separately. Competitiveness was not indeed assured by a protectionist policy, save for rare exceptions. Every country has its own peculiarities and what was a good policy for one may be highly damaging for another. The United States, whose domestic trade was “larger than that of the whole Western world” (1903, 398) did need foreign trade; Germany had virtually exclusive access to large areas of Eastern Europe which, coupled with a large population within her own borders, meant that she could easily do without trade with the other countries. Britain’s situation was different for at least two reasons. To quote Marshall at length on this point:
England is not in a strong position for reprisals against hostile tariffs, because there are no important exports of hers, which other countries need so urgently as to be willing to take them from her at a considerably increased cost; and because none of her rivals would permanently suffer serious injury through the partial exclusion of any products of theirs with which England can afford to dispense (1903, 408, emphasis added).
11Secondly, and more importantly, in order to stimulate England’s industrial productivity and innovation it was essential to keep “her markets open to the new products of other nations, and especially to those of American inventive genius and of German systematic thought and scientific training.” (Marshall, 1903, 409, emphasis added)
12In the 1903 Memorandum, free trade was firmly advocated on the basis of the clear awareness of Britain’s loss of competitiveness and structural weakness. Marshall supported the principles of free trade in so far as it was a way to promote economic progress: free competition allowed for the circulation of ideas and knowledge essential for economic growth (Caldari, 2004 and 2006).
- 9 As an example, Marshall suggested education given to British farmers in order to avoid a careless t (...)
- 10 There are two important exceptions for which State management is not only accepted but even recomme (...)
13From his early works, Marshall had been sceptical, not to say highly critical, of a direct active role of Government in economic matters. Along with his support of free competition and freedom of markets, Marshall had long stressed that the important, indisputable role of government was in guaranteeing some fundamental goods and services of public interest. The constructive work of government was “life in one of its highest forms”, and taxation, local and central, was to be considered as means to that end (Marshall, 1897, in Keynes, 1926, 358). An “intensity of State activity” should only be conceived for “social ameliorations that are not fully within the range of private effort” (Marshall, 1907, 333). Accordingly, Marshall suggested that the definition of laissez-faire should be: “Let everyone work with all his might; and most of all let the Government arouse itself to do that work that is vital, and which none but Government can do efficiently” (Marshall, 1907, 336).9 State intervention was only justified for control and not for management activities.10
14The experience of World War I transformed Marshall’s perspective on this issue, and convinced him of two, interconnected things: (1) the existence of “special reasons for direct intervention by the state” especially in areas such as the mechanical and munitions industries (Marshall, 1919, 491), and (2) the beneficial influences the war had exerted in creating large businesses and the speeding up of mass standardization (Marshall, 1919, 491).
15During the war, British industry has been kept constantly at work with the Government serving as sole purchaser. Such operations and activities had been so large in number, and so increasingly simplified (largely through standardized products and methods), that various branches of production, such as those previously requiring the judgement and skill of a trained mechanic, were now handled by an unskilled adult (Marshall, 1919, 491-492). Products such as munitions and cloth required mass production and low costs and the government, as both absolute controller of all production and sole purchaser, was capable of (a) keeping plant steadily employed to an extent that would be possible under no other conditions, and (b) obtaining the best very results required in such exceptional times. This view was only related to the special circumstances of mass industrialised warfare as associated with World War I. Marshall also recognized that there would be important disadvantages, such as those connected with the large number of operatives that become specialized in kinds of work for which there will be no demand after the war; and the large amount of buildings and plants that, after the war, would not be utilized. However, given the dramatic events of the war, the government had no other choice but to implement these changes.
16The end of World War I brought renewed concerns about the international competitiveness of Britain’s industries, and a belief that only large businesses, applying highly standardized methods of production, could compete in post-war international market. The increasing competition and competitiveness of Germany and the United States—the latter evident before 1914, but even more so during and after the war—strengthened the general opinion that that changes in production methods and industry organization need to be urgently applied. The large size of businesses, encouraged by amalgamation and cooperation—all characteristic of Germany industry—were highlighted as the keys to future economic success. The situation was simple—Germany had been defeated militarily, yet she had emerged as the recognized winner in world economic competition and was, once again, considered the model to follow (Ford and Ford 1951, 151-160).
- 11 In his view, German industrial leadership was strictly connected with the fact that science was “in (...)
- 12 Marshall also expressed admiration for Germany. In a letter to Taussig in 191, he wrote “I love the (...)
17Marshall accepted some of these views, arguing that Germany’s economic strength lay in her productive efficiency and organization, her zeal for education, and the importance she attached to academic training, scientific training and laboratory work (Marshall, 1919, chapters VII and VIII).11 Yet Marshall remained highly critical of Germany’s economic policies, as clearly explained in a letter to Hilton from 3 October 1918: “I am still a great admirer of Germany, in some connections, but those sides of her character, which the war has made prominent, seem to have misguided the policy of her cartels and of her Government in relation to them” (Whitaker, 1996, III, 356).12 Those comments were further elaborated in a 1918 letter to Llewellyn Smith, in which he expressed great difficulty in accepting the suggestion that “British associations should do what German cartels habitually do.” (Whitaker, 1996, III, 354). On one level, cartels had some benefits effects, including important economies of marketing that made net contributions to “aggregate national wealth” (Marshall, 1919, 539), steadiness of output and prices (Marshall, 1919, 506-576), and increased stability in the general conditions of industry and trade (Marshall, 1919, 539-540). However, it was their natural tendency to limit the free play of competition, and so inhibit the expression of the most important element of economic progress, that Marshall believed dismissed the German case as the model to follow. Even if large size businesses and highly standardized productive processes could be justified in terms of efficiency and for special occasions, like a war, nothing could legitimize the formation of cartels in Britain.
18The primary aim of this article has been to critically frame Marshall’s reflections on aspect of military conflict in relation to the nineteenth century and early twentieth century concerns about Britain’s industrial weakness and relative competitiveness. The two conflicts occurred in a period (from the late nineteenth century through to the early twentieth century) when Britain was clearly losing her economic leadership to countries such as America and, more importantly, Germany. As we have seen, events during and following these two wars provided opportunities for Marshall to participate in public debates and to reflect upon, further develop, and (where necessary) adapt important aspects of his economic thought.
- 13 World War I reinforced bonds of affection and loyalty between Britain and her Dominions and Allies (...)
19For example, the Boer war strengthened Marshall’s opinion over tariffs and protectionist measures: Britain’s peculiarities compelled the adoption of free-trade policies, although other countries were successfully following other paths. Marshall’s profound concern about the possible success of Chamberlain’s Tariff Reform proposals—“the only eminent public man whom I have thoroughly distrusted” (as he wrote in a letter to Pierson 1900, in Whitaker, 1996, II, 273)—is clearly discernible from his correspondence during those years.13
20In contrast to his response to the Boer war, the experience of the World War I generated interesting—and significant—changes in Marshall’s thought. In terms of the role of government, World War I emphasized the urgency to have the public control and management of some crucial productions: this was also recognised and accepted by Marshall although, for him, this could be accepted only in very exceptional cases such as a war. Finally, large standardized businesses during the war became the only (and necessary) way to provide large quantities of war-related products at low costs. Yet this remained true even after the war, especially for commodities requiring large, mass productive processes. Notwithstanding Marshall’s preference for small and medium firms, in the years after World War I, he increasingly recognized the proper fundamental scope of large businesses. Yet he also remained highly critical of any combination, especially trusts and cartels, as being detrimental to public interest.
21As a final point, it is perhaps useful to note that Marshall’s cosmopolitan perspective went beyond the simply economic dimension of the idea of free trade. The experiences of World War I, coupled with his idea of a cosmopolitan order, reinforced Marshall’s creed that economic, political and even social relations had to become more peacefully integrated. As he wrote in the opening page of his 1919 work, Industry and Trade:
There still hangs above all countries, old and new alike, the shadow of war. A time may indeed come when the combative instincts, implanted in man’s nature by countless centuries of fierce struggle for existence, may be stilled by a Pax Cosmopolitana, enforced by an international police. (Marshall, 1919, 2)
22Such ideas—covering, as they did, the role of government and the participation of nations in fostering cosmopolitan interests—reflected Marshall’s ultimate hope for a future that would not know another terrible world conflict.
I would like to thank the anonymous referees and the editors Christopher Godden and Jean-Sébastien Lenfant for their useful comments.