Simon J. Cook Society and Culture in the History of British Political Economy Introduction In this essay I explore conceptions of culture in the history of British political economy. I would like to dedicate this essay to Donald Winch, who not only pioneered the new (and now blossoming) contextual reading of Adam Smith, but was also the first to situate the history of classical political economy in relation to the longstanding ‘culture war’ between economists and self-proclaimed human beings. While Professor Winch might well resist several of the interpretations developed in this essay, the fact remains that the great many of them, directly or indirectly, grow out of his work. This means, in effect, an extended review of Adam Smith’s ‘science of the legislator’ as developed in the Scottish Enlightenment, a brief account of how Smith’s ideas were reformulated in England in the wake of the Napoleonic wars as what came to be called ‘Classical Political Economy’, and a discussion of Alfred Marshall’s Victorian reformulation of classical doctrines in the context of an intense political concern with the education of the working classes. Such a focus is of course highly selective: the pre-Smithian French roots of political economy (notably Jean-Francois Melon’s model of trade) have recently received much attention, while there can be no doubt that J.B. Say’s French translation of the Wealth of Nations reached a wider audience than did Ricardo’s Principles of Political Economy. But Karl Marx’s debt to Ricardian political economy and the subsequent ideological battles of the Cold War have helped fashion a by-now entrenched assumption that political economy is an English science that began with Adam Smith (who in the nineteenth century inexplicably became an ‘Englishman’). Nevertheless, these vagaries in the fortunes of political economy need not concern us overmuch. For the primary intention of this essay is simply to illustrate that the relationship between economy and culture in the history of political economy has been more subtle, complicated and interesting than is usually assumed, and for this purpose the unquestionably seminal work of both Smith and Marshall will serve admirably. Culture is a bit like the proverbial elephant: hard to define, but recognizable when encountered. In order to get started, here are three working definitions. Culture might be identified with: (i) those elements of society and ourselves that are the product of artifice rather than nature; (ii) the kinds of bonds and relations that exist between people once we take self-interest (and also our animal instincts) out of the picture; (ii) the kinds of practices, values and ideas that distinguish one group of people from another. The first definition resonates with some strands of the nineteenth-century focus upon education, but in the first instance derives from the early modern idea of culture as cultivation and, as such, the product of industry. When the natural is identified with the necessary, as it was in the eighteenth century by both Bernard Mandeville and Jean-Jacques Rousseau, culture becomes synonymous with luxury. The second definition arises from the nineteenth-century idea of culture as somehow the very opposite of the supposedly selfish and calculating mentality of modern industry; but this second definition also resonates with the early modern debate between proponents of natural sociability and those who understood society to be the product of need, indigence and utility (which generated what Kant called our ‘unsocial sociability’). The third definition is associated with the twentieth-century discipline of anthropology; and the social specificity of culture as so defined may be juxtaposed with (as either complimenting or contradicting) the supposedly universal motivations analysed by economics. It is not possible to properly inquire into the relationship of ideas of culture and economy in the history of British political economy as a whole without attending, at least to some degree, to each of these different conceptions of culture. There are two parts to this essay. In the first I survey Adam Smith’s social thought, identifying the significance of his various conceptions of culture (which, it should be born in mind, was not a term that he used). My underlying concern here has been to reconstruct the way in which Smith’s political economy was embedded within the wider project of his moral philosophy (a project which he described in terms of an overarching ‘science of the legislator’). Such reconstruction reveals Smith to have been committed to an extensive investigation of modern commercial society; an investigation that made use of and frequently combined, historical, political and moral as well as economic components. In the second part of this paper I enter the world of nineteenth-century England, and follow the progress of political economy as it was first separated from the wider context of Smith’s project of moral philosophy and ultimately reformulated in the 1870s by Alfred Marshall. We are here dealing with a science of political economy supposedly independent of any wider moral or political philosophy. My argument, however, is that a tradition of mid-Victorian moralizing, by means of which the doctrines of political economy were initially interpreted, gave way to the moralization of these doctrines. Put another way, neo-classical economics arose by way of an injection of a conception of culture into the body of classical economic theory. I conclude this essay with the observation that, having by now firmly substituted an anthropological for what was originally a predominantly moral conception of culture, a Marshallian tradition of ‘cultural economics’ is at present thriving within the economics departments of many European universities. Adam Smith Just as Adam Smith has long been hailed as the founder of political economy, so presentations of his thought have long been distorted in order to fit whatever happens to be the reigning political and economic orthodoxy. If today Smith is still identified as a thinker either indifferent or hostile to the analysis of culture, this is because our image of him is still obscured by the distortions of the last two centuries. In the discussion that follows it will be shown that each one of the three definitions of culture given above may be identified within Smith’s writings, and its relationship to his particular thinking on political economy ascertained. Our overall findings may be baldly summarized as follows: Smith held that the professionalization of armed force had made the modern world safe for culture (as the production and consumption of luxuries), but argued that his predecessors had made too much of the economic importance of culture; he identified self-interested behaviour as one among a range of (potentially) moral activities, but at the same time declared that self-interest was a foundation of society while culture (as defined in contrast to self-interest) provided but an ornament; and he explained culture (as varying among different social groups) in terms of both different systems of needs and variations in the interplay of mutual sympathy. What emerges from this discussion as a whole is a picture of Smith as a subtle theorist of both culture and commerce whose composite vision may provide us with an acute starting-point for theoretical reflection upon the world as we find it today. We may begin from the observation that Smith developed some of the key strands of the debate over luxury that ran throughout the eighteenth-century. In his Glasgow lectures of 1762, for example, he explained to his students that prior to the Persian wars the only arts known in Greece were arms and music. But commerce and opulence generated a taste for luxury, and by the time of Demosthenes the Athenians had not only embraced commerce but had also begun to cultivate eloquence. But this was by no means an unmitigated blessing; for Smith accepted the widespread civic humanist conviction that luxury and the arts corrupt the martial spirit. John Pocock, Virtue, Commerce, and History: Essays on Political Thought and History chiefly in the Eighteenth Century, Cambridge: CUP, 1985. On a different note, I would like to thank Tiziano Raffaelli for reading an earlier draft of this essay and prodding me to redraft this section on Smith. Hence all of Demosthenes’s eloquence had been unable to stir the now-corrupted citizenry of Athens to defend their liberty against the predatory designs of Philip of Macedon. Adam Smith, Lectures on Rhetoric and Belles Lettres, 1983 [delivered 1762], pp. 135-8 and 149-51 (all references to Smith’s writings in this paper are to the Glasgow Edition of his collected works). This history of the fall of Athens provided but one instance of a basic cycle of pre-modern history, whereby martial virtue is a prerequisite for liberty and the preservation of wealth, and yet wealth gives rise to luxury and the arts, which in turn corrupt military virtue and so lead to the decline, invasion and eventual collapse of the social order. A variation on this story appears in the Wealth of Nations, where Smith explains how modern commercial society arose when luxury consumption dissipated the power of the feudal barons. This power had rested upon an agricultural surplus derived from massive landed estates, which was originally used to feed an army of idle dependents. But with the rise of foreign trade, and the availability in the market of luxury items of display and adornment, this surplus was increasingly and inexorably frittered away on conspicuous consumption. “Having sold their birth-right, not like Esau for a mess of pottage in time of hunger and necessity, but in the wantonness of plenty, for trinkets and baubles, fitter to be the playthings of children than the serious pursuits of men, they became as insignificant as any substantial burgher or tradesman in a city.” Adam Smith, Wealth of Nations [henceforth, WN]: III, 4, 15. His identification of culture and luxury with corruption and decline notwithstanding, Smith may nevertheless be considered as a terminus of the eighteenth-century debate over luxury. To begin with, he was convinced that with the modern institution of the standing army European states had found a means of reconciling political stability with the progress of the arts. For sure, the urbane and polite populations of modern commercial societies lacked the martial virtues of nomadic horsemen and warrior peasants. But Smith was convinced that a professional army fitted with modern weapons was a force of unprecedented military power, and therefore provided a solid defence against any potential predatory incursions. With the rewards of their labour secured by the twin state institutions of a system of justice and a standing army, the populations of modern commercial societies were now secure in their pursuit of opulence and their cultivation of the arts. Smith also shifted the entire focus of social debate by pointing to the crucial importance of capital investment in determining the wealth of nations. Behind much of the force of the debate over luxury stood a conviction that it was the luxury consumption of the rich that provided the poor with what income they had: the equality of the virtuous society that abstains from luxury, Mandeville had warned, is the equality of a primitive or savage society in which all are equally poor. Building upon the distinction between productive and unproductive labour that he found in the writings of the Physiocrats, Smith insisted that the key to future opulence was precisely the diversion of surplus away from luxury consumption. In terms of public interest, a concern with the profligacy of the idle rich was now pushed into the background by a new enthusiasm for the frugality of the industrious middle classes. In the twentieth century the combined moral and economic endorsement of saving and frugality would be challenged by J. M. Keynes, the context of whose thought was an Edwardian revolt against Victorianism and whose somewhat scandalous identification of excess saving as a potential cause of unemployment hinted at Mandevellian paradox. With this new analytical focus upon saving and capital, Smith not only articulated the core of what would become classical political economy, but also, and more generally, ushered social debate into the nineteenth century. But if Smith laid certain foundations of nineteenth-century social debate, it is nevertheless necessary also to rescue him from that century. In mid-century we find Thomas Henry Buckle setting out what would become an enduring idea that Smith had devoted his life to the study of the two sides of human nature. According to Buckle, Smith’s Theory of Moral Sentiments (1759) was an account of the compassionate side of human nature, while the Wealth of Nations (1776) was derived from “principles which the selfish part of human nature exclusively supplied”. Henry Buckle, History of Civilization in England, 3 Vols., London: John W. Parker & Son, 1867 [1857-61], 3: 318. For references to the recent revisionary literature on Smith see my The Intellectual Foundations of Alfred Marshall’s Economic Science, Cambridge: CUP, 2009, chapter one, note 6. In this latter identification of political economy as founded upon selfishness, Buckle was simply reproducing an already established image of Smith as the father of a ‘dismal science’ that reduced humanity to a sordid, soulless and selfish calculating machine. Smith was identified as the founder, in other words, of an industrial mentality to which culture stands as both the antithesis and antidote. Aided by the discovery ? first in 1896 and then in 1958 ? of two different sets of student notes on Smith’s Glasgow lectures on jurisprudence, recent scholarship has now definitively rejected this picture. These student notes show, first of all, that Smith’s treatment of justice was a development of his moral philosophy (the part that dealt with our resentment at the violation of another’s rights), and secondly that his political economy was first developed as the penultimate part of his account of jurisprudence (the part dealing with ‘police’, revenue and arms). Smith’s political economy, in other words, does not stand in a relation of opposition to his moral philosophy; rather, it is derived from his moral philosophy. In fact the relationship between Smith’s political economy and moral philosophy is apparent from a careful reading of the latter alone. Smith’s Theory of Moral Sentiments can be read as an attempt to co-opt yet also refute the insights of Mandeville, who really did believe that humanity was moved only by selfish motivations. Smith adopts Mandeville’s insight that we wish to appear before others as virtuous and meritorious, and also that we will adjust our behaviour in an attempt to gain the approbation of others. But where Mandeville sees the resulting behaviour as simply a simulation of virtue, intended both to disguise and advance our own interests, Smith is convinced that it is a principle of our nature that we seek, not merely to be praised, but also to be praise-worthy. Standing at the heart of Smith’s moral philosophy is the idea of the ‘impartial spectator’, an ideal other constructed in our imagination to function as a disinterested observer who judges our own behaviour; the impartial spectator is, in other words, our conscience. In addition, Smith dismissed Mandeville’s (ultimately Augustinian) identification of self-interest with vice. For Smith, the care of our health, fortune, rank and reputation “is considered as the proper business of that virtue which is commonly called Prudence”. For sure, prudence is relatively low down on the hierarchy of virtues ? it “commands a certain cold esteem, but seems not entitled to any very ardent love or admiration”; nevertheless, for Smith the pursuit of wealth and the pursuit of virtue are not incompatible. Adam Smith, Theory of Moral Sentiments [henceforth TMS], 1976 [1759], IV, I, 5 and IV, I, 14. Smithian political economy, then, investigates the social relations between ‘prudent’ individuals operating in a modern commercial society. The individual as so defined is an abstraction, about whom it is assumed only that he is self-interested. But this is not at all to say that political economy is the study of the selfish side of human nature (as Buckle would have it). Nor is it to say that individuals are, in reality, motivated only by self-interest. It is clear that Smith saw in modern commercial society, in addition to and apart from any utility-based commercial exchanges, a fairly large scope for the play of imaginative sympathy between individuals. Prudence is after all but one of the several virtues recognized and discussed in the Theory of Moral Sentiments. Indeed, just as Smith’s account of the virtue of prudence provides the starting-point for political economy, so his account of the virtue of justice provides the foundation of his theory of jurisprudence. In fact, in no small measure because Smithian political economy arose as a part of Smith’s lectures on jurisprudence, a continual concern with and attention to the relationship between commerce and justice runs throughout the pages of the Wealth of Nations. The nineteenth-century image of Smith’s political economy as amoral and even immoral is simply wrong-headed. From the point of view of his moral philosophy as a whole Smith not only acknowledged the reality of non-self-regarding virtues, but also set out the grounds of a social theory particularly sensitive to what we would today describe as cultural variation. Smith insists that the sympathetic spectator (be he ideal or of flesh and blood) relates the actions he observes to the specific circumstances in which it is performed. At a basic level, then, the very fabric of our moral lives is context dependent. The significance of this comes out very clearly in Smith’s lectures on jurisprudence, where his concern with the feelings of resentment that arise from witnessing injuries to property leads to the development of the famous four-stages theory of history, in which societies are distinguished according to whether subsistence is procured by hunting and gathering, pastoralism, agriculture, or the mercantile activities of a fully commercial society. Now, it will be recalled how, according to Smith, individuals, desiring sympathetic approbation, continually adjust their behaviour as they interact with other members of their society. To this we should add that Smith further holds that moral valuations are themselves adjusted by way of such interaction: we come to know what the moral world is, how we are expected to behave in it, and what we expect from others, by means of our interactions within a particular society. What this means is that, over time, each of these stages of society (and quite possibly myriad social forms within each of them) generates a distinctive moral culture, where culture is now to be understood in its contemporary (anthropological) sense. Fonna Forman-Barzilai, Adam Smith and the Circles of Sympathy: Cosmopolitanism and Moral Theory, Cambridge: CUP, 2009. Having moved beyond the anachronistic and simplistic portraits of Adam Smith that continue to inform both public and academic discussion, we may conclude by identifying the sense in which a division between (what we may call) culture and society does exist in his thought. This task may be approached negatively, by way of a contrast with the conception of sociability developed by the Anglican clergyman and political moralist John ‘Estimate’ Brown (1715-1766). In his Dissertation on … Poetry and Music (1763), Brown argued that the foundation of sociability was shared religious passion and its enthusiastic expression. On Brown and civilization see chapter 3 of Michael Sonnenscher, Sans-Culottes: an eighteenth-century emblem in the French Revolution, Princeton: Princeton University Press, and for the wider eighteenth-century background to Brown’s ‘proto-romanticism’ see Matthew Gelbart, The Invention of ‘Folk Music’ and ‘Art Music’: emerging categories from Ossian to Wagner, Cambridge: CUP, 2007, and the now fairly extensive literature on the epics (wrongly) attributed in the 1760s to the ancient Gaelic bard Ossian. The hymn ? a combination of music, poetry and dance ? was the first art, and Brown looked to Jesuit descriptions of the feasts of North American Indians to argue that sociability had its origin in natural religion and that the first rulers were singers and dancers. Smith stood on the other side of the early modern debate as to the natural or unsocial nature of sociability. For him, the origins of society lay in our need for mutual protection while the transition from one historical stage to another was attributed to the pressures of population upon limited land. This is not at all to say that Smith articulated a kind of proto-Marxist historical determinism. Smith attributed great significance to the role of imagination, and it is clear that in his opinion a variety of divergent cultures may arise out of any one stage of social production. Nevertheless, the contrast remains: where Brown saw culture as the foundation of society, Smith looked in the first instance to needs and indigence. The early modern debate over sociability was, of course, at root an argument about contemporary commercial society. Brown’s eighteenth-century reputation derived from his stern republican tract, Estimate of the Manners and Principles of the Times (1757), in which British decline was connected with the growth of luxury, effeminacy and inequality. Behind such criticism stands the presumption that the strength of a nation rests upon the health of its moral culture. For Smith, by contrast, culture as such “is the ornament which embellishes, not the foundation which supports the building”. “Society”, he writes, “may subsist among different men, as among different merchants, from a sense of its utility, without any mutual love or affection; and though no man in it should owe any obligation, or be bound in gratitude to any other, it may still be upheld by a mercenary exchange of good offices according to an agreed valuation.” Smith, TMS, II, ii, 4, 3 and II, ii, 3, 2. Now, such a commercial society may well generate a variety of cultural ornaments; but to Brown such fine arts, polite manners, and the interplay and exchange of sentiment and opinion remain empty and hollow. Brown was one of the first English language writers to use the new French word ‘civilisation’, and his usage reflected the original French usage ? the opposite of civility and something akin to the German Bildung. See Sonnenscher, Sans-Culottes, p. 191. Brown’s primitivist artistic enthusiasm points to the limitations of Smith’s embrace of culture which, for him, constituted the tasteful dress as opposed to the beating heart of modern commercial society. As we will see in the last part of this essay, Brown’s concerns, or variations upon them, continue to this day to haunt British academic and political discourse. Both Brown and Smith agree that culture binds together the individuals of specific groups, while commercial exchange may occur between complete strangers and rests upon nothing more than mutually coinciding interests. They differ in that Brown, like Marx and a long tradition of the left after him, objects to the very idea of a society founded upon “mercenary exchange”. But if, as in our post-Cold War world we should, we decide to move beyond the politics and theory of totalising oppositions we are quite likely to arrive at something like Smith’s vision of a world increasingly connected by a cosmopolitan or globalising commerce, yet nevertheless characterized by a fair degree of cultural specificity and diversity. And what such a vision presses upon us with some urgency is the question of where in the world we are to locate what Smith would call the virtue of justice. For in a world of local cultures connected by a global commerce, the burning question becomes whether the universally operating rules of the game express cross-cultural agreement or are, and perhaps must be, imposed by one dominant culture upon the others. To this question it may be doubted whether Smith was able to provide any clear answer. Forman-Barzilai (2009) suggests that Smith’s “impulse” is to look to a universal recognition of cruelty to provide the basis for a genuinely global ethics. From Smith’s Moral Philosophy to Marshall’s Economic Science In this second part of the essay I turn from the relationship of Smith’s political economy to his wider moral philosophy to the way in which Alfred Marshall injected a dose of moral culture into the heart of classical political economy. Smith’s overall project of the ‘science of a legislator’, his particular theory of moral sentiments, and the intimate connection that he drew between political economy and jurisprudence had not survived into the nineteenth century. This development occurred already in the Scottish universities where, in the hands of Smith’s successor at Glasgow, Dugald Stewart, the moral voluntarism of Hume and Smith gave way to Thomas Reid’s moral realism, while the teaching of natural law, which had been introduced to counter divine right theories of monarchy in the wake of the Glorious Revolution, now became associated with the new revolutionary politics and was ushered out of the lecture halls accordingly. In England political economy was rapidly reconstituted as an independent science, its very separation from moral philosophy now inviting charges that it was an amoral science. But when a relentlessly moralistic interpretation of economic doctrines began to emerge around mid-century, the grounds of such moralizing were far removed from Smith’s social theory of spectatorial moral sentiments. Where eighteenth-century debates had centred upon ideas of sociability, Victorian moral thought turned on the conception of individual character, which itself rested on contested theories of the human mind. The idea of culture now became bound up with ideas of education and the improvement of character. In the face of a Romantic criticism of political economy as a supposed apology for a selfish and narrowly calculating industrial mentality, Marshall effectively remade the science by replacing ‘economic man’ with ‘cultured’ or ‘educated man’. Classical political economy was not the ideological reflex of the industrial revolution but the product of an intense and prolonged English reaction to the French Revolution. For the literature on the transformation of Smithian into English classical political economy see my Intellectual Foundations, chapter one, note 21. This English science was fashioned out of only the first two of the five books that made up the Wealth of Nations (thereby confining the historical dimension of Smith’s political economy, as well as much else besides, to oblivion), and the doctrines of these two books were now reinterpreted according to a deeply pessimistic conception of human nature. With its emphasis upon man as dissocial, oversexed and lazy, classical political economy mirrored a new Evangelical emphasis upon man as bestial and sinful. Compare Smith’s account of self-interest (which is close to that of Mandeville) in terms of a “desire of bettering our condition” which “comes with us from the womb, and never leaves us till we go into the grave” (WN: II, iii, 28) with Malthus’s castigation of humanity as aflame with sexual passion but otherwise “inert, sluggish, and averse from labour, unless compelled by necessity” (Thomas Malthus, An Essay on the Principle of Population, ed. P. Appleman, London: W.W. Norton, [1798] 1976, p. 120). Doctrinally, Malthus’s anti-utopian argument that population tended to outstrip food supply combined with the idea that returns to agriculture would diminish as less fertile land was brought under cultivation in order to establish a supposedly inexorable tendency toward a ‘stationary-state’ in which capital accumulation ceased and wages fell to subsistence levels. As such, classical political economy provided a secular vision of Evangelical expectations of a catastrophic future in which the sins of both individuals and society would be chastised by divine retribution. Boyd Hilton, The Age of Atonement: the Influence of Evangelicalism on Social and Economic Thought, Oxford: Clarendon Press, 1988. Buckle’s presentation of Smith was the product of a new Victorian optimism that arose after 1848. With social and political revolution seemingly avoided, and the religious obsession with hellfire and original sin now receding, mid-Victorian public moralists began to discuss human goodness and the possibility of moral improvement. Buckle’s declaration that Smith had divided the study of man into a moral theory of human sympathy and a political economy of human selfishness, while quite wrong as an historical portrait of Smith, was nevertheless a fairly close approximation to the orthodoxies of mid-nineteenth-century social philosophy. John Stuart Mill’s Principles of Political Economy (1848) combines a classical presentation of doctrinal pessimism with an optimistic moralizing interpretation of these economic doctrines. For example, reiterating the core theoretical argument that an increase in wages can only be sustained if labour supply is held in check, Mill derives the following moralistic lesson: “Poverty, like most social evils, exists because men follow their brute instincts without due consideration. But society is possible, precisely because man is not necessarily a brute. Civilization in every one of its aspects is a struggle against the animal instincts.” John Stuart Mill, The Collected Works of John Stuart Mill [henceforth CW], 31 Vols. General Editor John M. Robson, Toronto: Routledge, 1965-91, 2, p. 367. Mill here in fact points to two distinct lessons, and in doing so illustrates precisely the way in which his work constitutes a turning-point in the fortunes of Victorian political economy. Looking backward, he echoes the stern warnings of earlier decades that only self-control, strength of character, and abstinence from immediate sensual gratification stand between civilization and barbarism. Looking forward, he promises a golden future generated by continual social progress, if only working class character can be improved. Marshall’s neo-classical economics arose out of an injection of Mill’s vision of moral progress into the heart of Mill’s classical economic doctrines. The discussion of Marshall is drawn from Cook, Intellectual Foundations. The key to this interpretation of the origin of neo-classical economics is to be found in the social and political contexts of Marshall’s early study of Mill’s political economy, which occurred during the late 1860s and early 1870s when the young Marshall was a lecturer in the moral sciences at Cambridge University. At just this time this ancient university was undergoing a thorough reform, the result of which was that a bastion of the English reformation was transformed into a modern institution of research and teaching. This internal reform in part stimulated and in part simply coincided with that general expansion of higher education throughout England that saw the foundation of many of today’s provincial ‘redbrick’ universities. Both reform and expansion of higher education can in turn be related to elite concerns with cultural and political leadership in an age of expanding commerce and political reform. Of particular significance as far as Marshall’s early intellectual preoccupations are concerned was the academic agitation in support of and then subsequent anxiety over the implications of, the 1868 extension of the franchise. Where Mill two decades earlier had worried over how to educate the working classes sufficiently to prevent them from breeding like guinea pigs, Marshall’s generation were now concerned with how to inject sufficient doses of higher education into the working classes to raise them to the level of responsible citizens of a modern democracy. Christopher Harvie, The Lights of Liberalism: University Liberals and the Challenge of Democracy, 1860-1886, London: Allen Lane, 1976. A vision of comprehensive working class education provided the young Marshall with the grounds upon which he reformulated classical political economy as neo-classical economic science. The classical model envisages cycles of industrial production, analogous to agricultural cultivation. Just as the farmer’s harvest provides both the seed for the next year as well as the food for those who will sow and reap it, so the capitalist is understood as setting industrial production in motion by advancing raw materials and wages from a capital fund derived from the sale of last period’s product. The expenses of raw materials being given, the wage rate depends, as Mill put it, “upon the demand and supply of labour; or as it is often expressed, on the proportion between population and capital.” Mill CW, 2, p. 337. Marshall’s early meditations upon higher education led him to undermine and ultimately reformulate this model. His first and fundamental idea, which he subsequently developed in various ways, was that educated labour could be expected to generate that extra revenue that, by way of higher wages, would more than pay for the cost of its education. In his lectures and manuscript notes of the early 1870s we see him developing three key claims: (i) wages are not simply an advance from previous profits, for if he so wishes the capitalist may borrow funds in order to augment the wage bill; (ii) whether or not the capitalist does so depends upon his expectation of the productivity of labour; and (iii) labour productivity depends upon the worker’s level of education. By 1879 and his first book, the Economics of Industry, Marshall had arrived at a clear formulation of what today is known as the ‘marginal productivity theory of distribution’, in which labour (like capital and land) is paid according to its relative efficiency and out of the continuous stream of income (rather than advanced from the profits of the previous period). Marshall articulated an early vision of a ‘classless society’. His reformulation of economic doctrines arose from his conviction that a society of cultured individuals will work differently to a society in which the labouring class are uneducated. Indeed, Marshall insisted that classical assumptions had been applicable earlier in the century and that it was the progress of society that now demanded a reformulated economics. But what exactly is the conception of culture contained within Marshall’s vision of the progress of the working class? Answering this question requires turning to Marshall’s dualistic model of the mind, which he formulated in the late 1860s and early 1870s, during which time he had thought to dedicate his life to the study of psychology rather than political economy. For Marshall’s mechanical psychology see Raffaelli’s entry ‘Ye Machine’ (and references to additional literature therein) in The Elgar Companion to Alfred Marshall, edited by Becattini, Tiziano Raffaelli and Marco Dardi, Edward Elgar: Cheltenham. For Marshall’s dualistic psychology see my Intellectual Foundations. Raffaelli has recently challenged my Hegelian reading of Marshall’s early philosophical studies: see his ‘On Marshall’s presumed idealism’ in the European Journal of the History of Economic Thought, 19: 1, 2012, pp. 99-108, and also my reply in the same issue. In a nutshell, Marshall posited a lower self situated in the brain, which worked as a machine and which, over time, developed fixed routines or habits, and a higher self, which was purely spiritual, and the development of which he conceived of in terms derived from Hegel. This dualistic model allowed Marshall to conceive of culture as both artifice (i.e. the construction of new mechanical mental routines) and the product of a sort of polishing of the mirror of the mind that brings out a hitherto latent spiritual potential. This dualistic psychology provides the key to Marshall’s conviction that culture is at once moral and intellectual and that a liberal education will improve the whole character of man. Today it takes a real effort of historical imagination to enter into this late-Victorian mindset. This is perhaps primarily because the two world wars of the twentieth century have irredeemably sundered the moral and the intellectual components of human character (already in the wake of the First World War, British public figures expressed shock that a nation as scientifically advanced as Germany could have acted in such a beastly manner). One way of approaching this moralistic world we have lost is to note that the public-spirit demanded by democratic political responsibility was posited as a moral step beyond economic self-interest. Thus, an argument often heard in support of the extension of the franchise in the late 1860s was that during the recent American Civil War British cotton workers had demonstrated moral maturity in conducting an opposition to the Confederacy in the face of their own economic interests. The point here is that the transition to democracy could readily be imputed with moral and even spiritual significance and the provision of education identified as a key agent in the continued social salvation of man, or at least of the English working classes. For Marshall, then, a liberal education improved hearts as well as minds and, as such, transformed self-interest into higher, ultimately altruistic motivations. Marshall, who in many ways epitomises the Victorian obsession with progress, cannot be placed in the tradition of ‘Estimate’ Brown. In the eighteenth century, it will be recalled, Brown had painted a picture of a primitive golden age in which culture was the authentic expression of human nature, and then posited modern society as corrupting both culture and human nature. Brown’s true nineteenth-century heirs were critics of political economy like the Oxford art historian John Ruskin and the revolutionary socialist and designer William Morris, who opposed the dehumanisation of modern factory production and sought a return to pre-industrial handicraft production. Whether the lost cultural golden age was painted as a primitive feast or a medieval workshop, in all cases what was celebrated was an unspecialised and so whole humanity and its artistic expressions, both now lost. Note that in Marshall’s mature writing his early emphasis upon formal education is replaced by the idea that the ever-more complex machinery employed within modern industry effectively educates the workers who manage it. In other words, far from condemning modern machine production as inhuman and alienating, as did (among others) Smith, Marx, Ruskin and Morris, Marshall looked to the industrial system to provide an agent of moral education. Thus, for example, describing “a beautiful machine” that made “tiny screws of exquisite form”, Marshall insisted that “the person who minds it must have an intelligence, and an energetic sense of responsibility, which go a long way towards making a fine character” (Alfred Marshall, Principles of Economics, 2 Vols. 9th (Variorum) edition, London: Macmillan, 1961 [1890], I, 257-8). For further discussion see Cook, ‘Poetry, Faith and Chivalry: Alfred Marshall’s Response to Modern Socialism’, History of Economics Review, 2008, 47: 20-38. As a result of some fairly intensive historical reading in the early 1870s Marshall arrived at a quite different philosophy of history. The present age of individualism, he came to believe, had liberated men from a custom-bound slumber in which their actions had been dominated by the mechanical side of their character only, and yet was itself a transitional stage: “gradually we may attain to an order of social life, in which the common good overrules individual caprice, even more than it did in the early ages before the sway of individualism had begun. But unselfishness then will be the offspring of deliberate will… ? a happy contrast to the old order of life, in which individual slavery to custom caused collective slavery and stagnation”. Marshall, Principles, I, 751. For Marshall’s early engagement with historical scholarship and subsequent philosophy of history see Cook, ‘Alfred Marshall’s Essay on the History of Civilization’, Marshall Studies Bulletin, 2005, 9 (http://www.dse.unifi.it/CMpro-v-p-121.html). This historicism is founded upon Marshall’s psychological theory: in the past man was governed by mechanical habit (the social equivalent of which is custom), in the present rational self-interest founded upon what Hegel called ‘subjective freedom’ has become dominant, and the future evolution of the spiritual side of our character will witness the transformation of self-interest into selfless altruism. So in place of the bygone golden ages of Brown, Ruskin and Morris, Marshall posited a golden age to come, and he identified the present as containing a mixture of traditional or customary, self-interested and altruistic motivations. In the eighteenth-century terminology set out in the introduction to this paper, Marshall looked to a future in which natural sociability had eclipsed unsocial sociability, but saw the present as a mixture of both. Today, Marshall’s faith in the future dawn of a new socialist age founded upon a ‘higher’ individualism strikes us as incredible, if not preposterous. Nevertheless, Marshall’s identification of the present as a mixture of different forms of sociability is shot through with possibilities. For while we may pass by his utopian speculations as of historical interest only, his vision of present day economic activity as taking place within and across myriad customary networks inherited from the past provides the grounds for the development of a culturally sensitive economics. In fact, a self-proclaimed Marshallian tradition, in which the conception of cultural variations is integrated within more traditional economic analysis, has today become the hallmark of one of the most intellectually exciting and politically important traditions of economic science to be found in mainland Europe. But the better to appreciate the wider intellectual significance of this currently vibrant European Marshallianism, we would do well to remain momentarily within Britain’s shores in order to take note of how the tradition of Brown, Ruskin and Morris was continued into the twentieth century. As disciplinary specialization became a hallmark of the twentieth-century university, so the cultural critics of economic sociability established themselves, first as economic historians, then within English literature departments, and finally as champions of a new Cultural Studies. From the work of (tellingly) both Engels and Carlyle was fashioned, around the turn of the century, a catastrophic picture of the Industrial Revolution, in which the once traditional and wholesome life of the common people was shown to have been ground under the wheels of industry and torn asunder by the new bourgeois world order. Orthodox political economy from Adam Smith onward was branded as simply an exercise in bourgeois apologetics. Such an account drew upon a deeply conservative nineteenth-century image of the national past, but increasingly came to support the politics of an emerging British left. A relatively late, but nevertheless seminal development in this tradition was the publication in 1958 of Raymond William’s Culture and Society. For Williams, “the idea of culture … came into English thinking in the period which we commonly describe as that of the Industrial Revolution”, while the subsequent “development of the idea of culture has, throughout, been a criticism of what has been called the bourgeois idea of society.” Raymond Williams, Culture and Society 1780-1950, Anchor Books: New York, 1960 [1958], p. v and 347. Donald Winch and Stefan Collini have together demolished the crudities of this binary conception of nineteenth-century English intellectual history (see especially Winch’s Riches and Poverty) and explored the peculiar twentieth-century formation of this tradition in the hands of F. R. Leavis, E. P. Thompson and Raymond Williams (see especially the appendix to Winch’s Wealth and Life: essays on the intellectual history of political economy in Britain, 1848-1914, Cambridge: CUP, 2009, pp. 367-98). Williams thus provided a twentieth-century formulation of the relationship between culture and economy as one of binary opposition. In doing so he went far towards establishing both the politics of the left as a politics of moral righteousness and a received picture of modern intellectual history as essentially ? and as the economic historian and social reformer Arnold Toynbee had already put it in 1884 ? a long-standing and “bitter argument between economists and human beings”. Arnold Toynbee, Lectures on the Industrial Revolution in England; Popular Addresses, Notes and Other Fragments, Cambridge: CUP, 2011 [1884], p. 1. Whether or not the British left has survived the traumas of Thatcher and the back-pedalling of Blair is an open question (what is clear is that with the collapse of socialist ideology and the onset of postmodernism a politics of moral righteousness has given way to a rhetoric of self-righteousness). At the same time, with the passing of the Cold War the relentlessly ideological later twentieth-century reformulations of a supposed nineteenth-century economics of laissez-faire (in which a reading of Marshall at the University of Chicago played an important role) appear increasingly redundant. But while the need to develop anew the politics of social democracy falls outside the scope of the present paper, an eminently fitting final word can be directed toward the present tradition of European Marshallian economics, which has its origins in the 1970s and the pioneering work of the Italian economist and scholar, Giacomo Becattini. Essentially, Becattini has developed into a systematic research tradition Marshall’s insistence upon and various explanations of the key role of cultural diversity within the economic life of the present. As Becattini has recently put it, Marshall’s basic concepts contain an “anthropological purport” that is “more general and more profound than the purport of pure economics”. Thus, for example, the key concept of the ‘industrial district’ represents, on the one hand, “a purely scientific account … of the territorial agglomeration of productive units”, but on the other hand “it is an emblem of a life environment and of a developmental process”. Giacomo Becattini, ‘The industrial district and development economics’, in The Elgar Companion, pp. 664-71, quote on p. 665. See also Becattini’s chapter on ‘Economic nations’ in the same volume. For an insight into the impact of this initially Italian Marshallian revival on wider European economics see the various entries in the 2010 companion volume, The Impact of Alfred Marshall’s Ideas. These cultural environments, or ‘economic nations’, may be thought of as arising, at least in part, from patterns of pre-industrial customs surviving into the present day, establishing different regional identities and fostering bonds of trust within them. Such local nationalities negate any purely cosmopolitan and individualistic account of modern trade and industry and, in general terms, establish the cultural terrain of modern economic life. 11