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Microeconomics

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Lionel Robbins

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Abstract

Robbins’s treatment of microeconomic issues was never wholly systematised. This reflects his basic approach to his work as an economist — to take, pragmatically, the tools available and to use them to deal with a particular problem. Nevertheless there was an essential unity to his treatment, for underlying it were three elements derived from Austrian economics. Firstly, there was the precept that microeconomic problems must not be treated in a concept divorced from general equilibrium — a partial equilibrium conclusion should be subjected to what might be called in later language ‘general equilibrium sensitivity’ considerations. Secondly, cost reflected, in such a general equilibrium context, opportunity cost. It was not therefore sensible to approach cost schedules as if given and fixed, irrespective of demand changes, or to approach them as if ‘real’ cost meant anything other than foregone satisfactions. Thirdly, because factors always had alternative uses, including own consumption of their services, it was not helpful to reason in terms of an equilibrium model in which factor supplies were fixed.

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Notes and References

  1. (1930a) p. 194.

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  2. Addleson (1984) p. 508 distinguishes between Austrian and Lausanne general equilibrium.

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  3. (1933) p. xv; (1970b) pp. 201–2.

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  4. (1927b) pp. 124–9.

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  5. (1935a) pp. 67–8.

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  6. (1935a) pp. 70–1.

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  7. (1928a).

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  8. (1928a) pp. 395–7.

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  9. O’Brien (1981) p. 44; (1984) pp. 32–3, 46.

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  10. (1934a) p. 16.

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  11. Ibid.

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  12. (1930a). See section 5.2 below.

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  13. (1930a) pp. 207–8.

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  14. (1930a) p. 208.

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  15. (1930a) p. 209.

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  16. (1930a) pp. 212–14.

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  17. Blaug (1962) p. 422. Robbins’s argument concerning business statistics is in (1928a) pp. 390–1.

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  18. (1928a) pp. 393–5. He thus preferred to talk of an equalised reward for a given factor quality rather than assuming that all factors were homogeneous.

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  19. (1934a) pp. 8–9.

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  20. (1933) p. xvn.

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  21. Sraffa (1926).

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  22. (1934a) pp. 6–8.

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  23. (1926a) p. 543.

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  24. (1934a) p. 11.

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  25. Young (1913) pp. 676–86. Young had pointed out the confusion between pecuniary and real diseconomies (and the distinction is one which is relevant to a general equilibrium approach). Edgeworth (1925) in a surprisingly acid review of the second edition of Pigou’s Economics of Welfare(Pigou 1924) had also criticised Pigou’s argument although in a typically allusive and incomplete manner, while Knight (1924b) had pointed out that Pigou’s argument failed to take account of private ownership charges for the use of resources, which would result in rents which would, in turn, prevent over-expansion of increasing cost industries. Pigou in (1924) pp. vi, 194, made some retreat in the face of Young’s critique. See also Robbins (1931e) p. 472.

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  26. (1934a) p. 10.

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  27. (1929a); (1930).

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  28. (1934a) pp. 2–3.

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  29. (1934a) p. 3: Robbins said that the work of Mayer as one of Wieser’s successors had ‘brought home to us all’ the concept of opportunity cost ‘as a unifying principle in the structure of modern analysis’.

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  30. (1935a) p. 35; Weber (1949) pp. 34–5; Weber (1947) pp. 147, 201, 207; Kirzner (1976) pp. 127, 131.

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  31. (1934c); see especially p. 463.

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  32. Robbins (1934a) pp. 2–3; Wieser (1889) pp. 171–3, 176.

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  33. Wicksteed (1910) Book i, ch. ix.

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  34. Wicksteed (1910) p. 732.

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  35. Robbins (1933) p. xv.

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  36. (1930d) pp. 253–4; (1970b) pp. 204–5.

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  37. Note 25 above and Young (1928a) pp. 527, 531.

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  38. (1970b) p. 218; (1934e) pp. xiii–xvi.

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  39. (1970b) p. 218.

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  40. (1976a) pp. 58–62; (1978b).

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  41. (1929a).

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  42. Marshall (1890) vol. i, pp. 822–9; see also vol. ii, pp. 822–7.

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  43. (1929a) p. 25.

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  44. (1934a) pp. 2–6; (1930d) pp. 253–4; see also Hutchison (1979) p. 661; Wicksteed (1910) p. 788.

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  45. (1934a) pp. 2–3.

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  46. (1934a) p. 3; Wicksteed (1910) Book i, ch. ix.

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  47. (1972b) p. 7.

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  48. (1934a) p. 6.

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  49. (1930a) pp. 207–8.

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  50. (1934a) p. 3.

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  51. (1934a) pp. 3–4.

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  52. Knight (1928).

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  53. Robbins (1934a) pp. 4–5.

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  54. (1934a) p. 5.

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  55. In (1933) Robbins had written that ‘The conception of real costs as displaced alternatives is now accepted by the majority of theoretical economists’ (p. xviii). But when he reprinted this in (1970b) he added: ‘I now think this paragraph to be too cocksure’ (1970b) p. 205n. See Buchanan, J. M. (1973) pp. 7–8, 10–13 for further discussion of this point.

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  56. (1934c) pp. 463–5; (1934a) p. 11; (1935a) p. 65; (1972b) pp. 4–5; (1966b) p. 125; see also Wicksteed (1910) p. 767; Kirzner (1976) pp. 127, 131; Weber (1947) p. 147; Wieser (1914) p. 100.

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  57. (1934c) p. 463.

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  58. (1934c) p. 466.

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  59. (1934c) pp. 464–5; (1935a) pp. 67–8; see also Buchanan, J. M. (1973) p. 3.

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  60. (1935a) pp. 76–7.

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  61. (1927b) pp. 107–8 — here Robbins removed the time dimension from ‘diminishing returns’.

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  62. (1934a) pp. 14–15.

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  63. Young (1928a) p. 539.

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  64. Kirzner (1973) p. 31. See also pp. 33–4 for a contrast with Mises. On Robbins’s treatment of competition see Chapter 5 above and Notes 157–60, 171 in particular. See also (1927c). But the matter is not entirely clear-cut. Firstly, entrepreneurial expectations are important in Robbins (1934d). Secondly, there is the question raised by Wiseman (Chapter 3, n. 45 above).

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  65. Cassel (1925); Robbins (1935a) pp. 87–8. On Robbins and Cassel see Chapter 3, section 2 of this book.

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  66. Robbins (1934c) p. 463.

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  67. (1972b) pp. 8, 10.

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  68. (1976a) p. 17.

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  69. Ibid.

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  70. See Robbins (1930d) p. 254.

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  71. A reference to the marginal utility of money in the first edition of ENSES(1932a) p. 82 is replaced in the second edition (1935a) p. 78.

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  72. (1935a) pp. 90–3.

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  73. Cf. Mises (1936) p. 115.

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  74. (1930) p. 255.

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  75. (1928a) pp. 397–8.

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  76. (1935a) pp. 88–9.

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  77. Kirzner (1973) p. 38.

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  78. (1930a) pp. 209–11.

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  79. Buchanan, D. H. (1929) had explained the nature of the confusion clearly.

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  80. This, it would appear from the references cited by Robbins, was arrived at via an attempt to clarify Marshall’s rather evasive discussion of the issue, rather than as a direct result of borrowing from D. H. Buchanan (n. 79 above), though Robbins can hardly have been unaware of Buchanan’s article which appeared in the LSE’s own journal.

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  81. (1930a) pp. 211–14.

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  82. (1930a) p. 212.

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  83. (1930a) p. 213.

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  84. See O’Brien (1975) p. 120.

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  85. Robbins (1930a) p. 213.

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  86. Robbins (1925/6).

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  87. ‘Sidgwicks’s “Principles of Political Economy” though greatly neglected to-day, still provides a more intelligible explanation of the causes governing general wages than is to be found in most modern text-books.’ Robbins (1925/6) p. 91.

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  88. Robbins cites Dalton (1929) and Robertson (1926) — Robbins (1930c) p. 123. The reference to Robertson is not precise: but the relevant material is on p. 13 and is not very fully developed. However Dalton’s account, which clearly forms the starting point for Robbins’s article, and which contains the essential analysis, is admirably explicit. The various editions of Dalton’s work are confused by the inclusion of reprints, but the genuine second edition (1929) contains the relevant material at p. 106.

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  89. Robbins (1929a) p. 25. The reference is to Chapman (1909).

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  90. (1929a) pp. 29–30 citing Marshall (1890); (1978b) p. 9. The latter reference cited Marshall (1892) pp. 362–403 and Pigou (1925) p. 398.

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  91. Robbins (1925/6) pp. 18–19.

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  92. (1930a) pp. 204, 209.

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  93. (1925/6) pp. 61–2; (1929a) p. 30. Robbins was following Marshall here; he later encouraged Hicks in the exploration of the theoretical issues involved, as noted in Chapter 2.

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  94. (1929a).

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  95. (1930c).

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  96. (1929a) pp. 39–40. This is a basic assumption even though it is only spelled out at the end of the article.

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  97. (1929a) pp. 30–3.

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  98. (1929a) pp. 32–3.

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  99. See Bowley (1937) p. 256; O’Brien (1975) pp. 278, 297.

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  100. (1929a) pp. 26–7. This was a central point of Chapman (1909) which, as already noted, Robbins cited.

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  101. (1929a) pp. 28–30, 32–3.

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  102. (1929a) p. 34.

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  103. Ibid.

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  104. (1929a) pp. 34–5.

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  105. (1929a) pp. 36–7.

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  106. (1929a) p. 37.

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  107. (1930c) p. 123. See Note 88 above.

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  108. Knight (1921) pp. 117–18. See also Blaug (1962) pp. 314–16.

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  109. (1930c) pp. 123–4.

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  110. See the discussion in Marshall, R. and Perlman (1972); see also Peston (1981).

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  111. Robbins (1925/6) pp. 28–33.

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  112. (1927b) pp. 120–1.

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  113. (1925/6) p. 22.

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  114. (1925/6) pp. 24–5; for J. S. Mill see O’Brien (1975) p. 223 and n. 62.

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  115. (1974b) p. 15. ‘I would like this lecture to be printed and distributed: I therefore refrain from giving actual examples [of restrictive labour practices] from my own experience in business.’

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  116. (1925/6) pp. 59–61, 68–9.

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  117. (1976a) pp. 58–62; (1978b) pp. 6–7.

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  118. (1925/6) pp. 70–4.

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  119. (1925/6) pp. 51–5.

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  120. (1925/6) pp. 51–2.

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  121. (1925/6) pp. 33–8.

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  122. (1925/6) pp. 51–2.

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  123. (1925/6) pp. 41–51.

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Authors and Affiliations

  1. University of Durham, UK

    D. P. O’Brien (Professor of Economics)

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© 1988 D. P. O’Brien

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O’Brien, D.P. (1988). Microeconomics. In: Lionel Robbins. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09683-1_7

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