Abstract
Charles Babbage was ahead of his time not only in inventing the Analytical Engine but also because of many of his contributions to economics. He is best known in economics for the so-called Babbage Principle, which provides an explanation for the emergence of large-scale production units characterised by a hierarchy of skills and a corresponding hierarchy of wages. The full importance of other aspects of Babbage’s contributions covering search and other transactions costs, the role of reputation and middlemen, and the relationship between these and forms of industrial organisation came to be appreciated only in the twentieth century. Babbage’s theory of monopoly, according to which monopoly is always temporary and its sustainability requires the charging of the competitive price, also has a distinctly modern ring. As might be expected, Babbage also contributed to our understanding of technological progress. His successes in political economy were not the result of his mathematical prowess but rather the product of his deep knowledge of the manufacturing system.
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Notes
- 1.
The truth of synthetic propositions is determined by how their meaning relates to the world, whereas analytic propositions are true by virtue of their meaning.
- 2.
- 3.
The first version entitled ‘An Essay on the General Principles which Regulate the Application of Machinery to Manufactures and the Mechanical Arts’ was published in 1827 and did not include any material on the domestic and political economy of manufactures. An expanded version, including the economic material, was published in 1829 (see Babbage 1829).
- 4.
Babbage had friends and associates amongst the reform-minded Benthamites. He even sent his children to a school founded on utilitarian principles (Hyman 1982).
- 5.
Incidentally, Babbage noticed that in factories with an extensive division of labour most of the operations were paid by piece work. This is presumably due to the fact that the work itself is more easily measured, although Babbage does not make this point.
- 6.
The length of apprenticeships reflected both the time required for learning and the time required to repay to the master the losses he incurred during the learning process. If the time during which the master made losses fell as a result of specialisation, competition would ensure that the time during which he recouped losses would also fall. The facility of acquiring a skill and the possibility of entering a profitable employment at a young age would encourage entry into the trade with a resulting fall in wages.
- 7.
As Babbage put it: ‘The exact ratio which is more profitable for a factory employing a hundred workmen, may not be quite the best where there are five hundred; and the arrangements of both may probably admit of variations, without materially increasing the cost of their produce’ (ibid.: 212).
- 8.
Babbage regarded his recognition that a cause which at first sight might appear to be insignificant could have important consequences as one of his important insights which he highlighted in the introduction to The Exposition of 1851. He illustrated this point with the example of a workman raising his shovel an inch or two higher than was optimal. In the course of a day, this would produce a very sizeable difference either in fatigue or in the amount of work done (Babbage 1851 [1968]: 3). In Industry and Trade, Marshall commented favourably both on Babbage’s example and his generalisation and credited him with having worked out in ‘a considerable way’ one of the chief ideas of ‘Scientific Management’ (Marshall 1919: 275–280).
- 9.
Babbage had already arrived at this position when he wrote the long article for Encyclopaedia Metropolitana.
References
Cited Works by Charles Babbage
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Babbage, C. (1829). ‘On the General Principles which Regulate the Application of Machinery to Manufacture and the Mechanical Arts’. Introductory Dissertation in E. Smedley, H.J. Rose and H.J. Rose (eds) Encyclopaedia Metropolitana. Volume 8. London: B. Fellowes: 1–84.
Babbage, C. (1830) [1970]. Reflections on the Decline of Science in England and Some of its Causes. New York: Augustus M. Kelly.
Babbage, C. (1832) [1835]. On the Economy of Machinery and Manufactures. Fourth edition. London: Charles Knight.
Babbage, C. (1837) [1838]. Ninth Bridgewater Treatise, A Fragment. Second edition. London: John Murray.
Babbage, C. (1848) [1851]. Thoughts on the Principles of Taxation with Reference to a Property Tax and its Exceptions. Second edition. London: John Murray.
Babbage, C. (1851) [1968]. The Exposition of 1851. London: Frank Cass.
Babbage, C. (1864). A Chapter on Street Nuisances. Second edition. London: John Murray.
Babbage, C. (1864) [1991]. Passages from the Life of a Philosopher. Edited by M. Campbell-Kelly. London: Pickering & Chatto.
Other Cited Works
Braverman, H. (1974). Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century. New York: Monthly Review Press.
Campbell-Kelly, M. (1994). ‘Charles Babbage and the Assurance of Lives’. IEEE Annals of the History of Computing, 16(3): 5–14.
De Marchi, N.B. and R.P. Sturges (1973). ‘Malthus and Ricardo’s Inductivist Critics: Four Letters to William Whewell’. Economica, 40(160): 379–393.
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Romano, R.M. (1982). ‘The Economic Ideas of Charles Babbage’. History of Political Economy, 14(3): 385–404.
Rosenberg, N. (1994). ‘Charles Babbage: Pioneer Economist’. Chapter 2 in Exploring the Black Box: Technology, Economics, and History. Cambridge: Cambridge University Press: 24–46.
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Stigler, G.J. (1991). ‘Charles Babbage (1791 + 200 = 1991)’. Journal of Economic Literature, 29(3): 1,149–1,152.
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Prendergast, R. (2017). Charles Babbage (1791–1871). In: Cord, R. (eds) The Palgrave Companion to Cambridge Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-41233-1_13
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