Alfred Marshall's Mecca: Reconciling the Theories of Value and Development

John Metcalfe

The Economic Record, 2007, vol. 83, issue s1, S1-S22

Abstract: The purpose of this paper is to explore the evolutionary nature and content of Marshall's theory of value and the relation it bears to his theory of growth and development. In Marshall's work the two theories are inextricably linked, and the subsequent attempt to separate them has not only marginalised Marshall's rich analysis but also made it impossible to appreciate the role he gave to innovation, and its corollary the growth of knowledge and organisation, in the workings of a market economy. At its core is the relation between the growth of firms and the growth of markets, but this is not steady‐state growth theory; rather, it is the different, mutually determined and ever changing growth rates of different groups of firms that is at the centre of attention. Quite how variation is linked to progress is the central topic of this essay, and the elucidation of its central role necessarily means that we must resurrect the representative firm. We conclude that Marshall was correct in stating that ‘the tendency to variation is a chief source of progress’ (Principles, V, 4, p. 355). We develop a set of evolutionary tools to show how and why this is so. But evolution is more than variation; it requires the organisation of firms and the market process to generate that correlation between differential knowledge and economic advance. Most importantly of all, the concept of a representative firm is re‐established as an indispensable element in a Marshallian evolutionary analysis.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://doi.org/10.1111/j.1475-4932.2007.00411.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecorec:v:83:y:2007:i:s1:p:s1-s22

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0013-0249

Access Statistics for this article

The Economic Record is currently edited by Paul Miller, Glenn Otto and Martin Richardson

More articles in The Economic Record from The Economic Society of Australia Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().