Abstract
Gerald Frank Shove was a close friend of Keynes and other protagonists in the economic debates in Cambridge during the 1920s and 1930s. Shove’s influence on those debates is not well documented because he published little and had all his notes destroyed after his death. This chapter looks at Shove’s most significant contributions to the debates of the 1930s. Attention is concentrated on the debates over increasing returns and imperfect competition. The final section of the chapter discusses the similarity of Shove’s methodological outlook to that of Keynes.
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Notes
- 1.
A few letters and some of his lecture notes have survived. See Harcourt and Araujo (1995) for a study of some of Shove’s surviving correspondence.
- 2.
Austin Robinson limited himself to pointing out that Shove’s gifts were critical rather than creative and that his pacifist ideas were at odds with the younger generation’s positions in a ‘world that was war-mad’ (Austin Robinson 1977: 28). Kahn wrote: ‘At no time in his life was Shove a ready writer. Although he produced only a few answers in each paper, they were of...outstanding merit ... His fastidious self-criticism explains why he rarely published his results and never wrote a book, but it was generally recognised that behind his greatness as a teacher lay originality as a dauntless thinker’ (Kahn 1987: 327).
- 3.
On Shove’s attitude towards Marshall, see Harcourt (1992).
- 4.
This study concerned the relationship between costs and output. It was never published and the manuscript must have been destroyed after Shove’s death.
- 5.
Robertson (1930: 87), instead, was convinced that it was possible to allow for internal economies without having to abandon the theory of competition. For this purpose, he used the Marshallian notion of the representative firm.
- 6.
Although, in his Symposium article, Shove referred only to labour and land, he was also aware of the specific difficulties related to the measurement of aggregate capital. He dealt explicitly with the problem of the measurement of capital in his review of Hicks’s Theory of Wages (Shove 1933a: 470–471).
- 7.
Internal economies are those advantages that a firm obtains ‘from the efficient organisation of the resources which it employs directly’ (Shove 1930: 101; italics in original). External economies are the advantages that a firm derives from ‘the organisation of those outside resources, not in its own direct employment, whose services or products it uses’ (ibid.: italics in original).
- 8.
Shove also introduced the term ‘economies of rationalisation’ (ibid.: 105; italics in original), that is, increases in efficiency due to a redistribution of resources within the industry made possible by improvements in the degree of knowledge, expertise, and so on.
- 9.
He was aware of this: ‘Mr. Sraffa will say, perhaps, that the equilibrium reached under these conditions is not competitive but monopolistic … Whether a given situation is to be called competitive or monopolistic is, of course, a question of words … We have simply to inquire whether, and if so why, substantial economies of mass production are consistent with the survival of a large number of competing firms. I shall therefore merely observe that if competition implies not only a perfect market but also a complete absence of transport charges, it never exists in practice. We are no longer being asked to explain what happens in the real world but to solve a purely abstract and hypothetical problem’ (ibid.: 108–109).
- 10.
That is to say, an unrealistic situation in which neither transport nor marketing costs are significant.
- 11.
Two years before Shove and Harrod, Young had assigned the time element great importance for the analysis of increasing returns (Young 1928).
- 12.
On Marshall’s notion of competition and its relationship with the Cambridge debate on imperfect competition, see Whitaker (1989: 172–184).
- 13.
‘The chief obstacle against which [firms] have to contend when they want gradually to increase their production does not lie in the cost of production—which, indeed, generally favours them in that direction—but in the difficulty of selling the larger quantity of goods without reducing the price, or without having to face increased marketing expenses. This…is only an aspect of the usual descending demand curve, with the difference that instead of concerning the whole of a commodity…it relates only to the goods produced by a particular firm’ (Sraffa 1926: 543).
- 14.
Harrod, for example, argued that conditions of increasing returns are normal in an industry where the rate of expansion of the optimum plant is higher than the rate of expansion of demand. For a more detailed reconstruction of the 1930s debate on imperfect competition, see Sardoni (1999).
- 15.
The time required for reaching equilibrium was ignored; firms were supposed always to be in equilibrium; the supply of every factor of production to the industry was assumed to be perfectly elastic; there were no economies of large-scale industry. Finally, all firms were assumed to be similar with respect to costs and conditions of demand, even though they were not alike from the viewpoint of buyers (Joan Robinson 1932: 544–545). Imperfections were assumed to derive only from differences in transport costs.
- 16.
‘So long as we are content with a rough and ready indication of the forces at work, we can keep fairly near to the facts: but any attempt to make our treatment exact is apt to lead either to a degree of abstraction which renders the apparatus inapplicable to the actual phenomena we set out to explain or to a degree of complication which makes it cumbrous to use’ (ibid.).
- 17.
For example, the cost at which a firm can provide advertisements, facilities, transport, and so on.
- 18.
Moreover, ‘in this branch of her work the author has not so consistently resisted the temptation to use a “technique” which is admittedly designed “for studying equilibrium positions”…in an attempt to analyse the effects of change’ (ibid.: 659).
- 19.
When Shove considered Robinson’s criticisms of Marshall and Wicksell, he accused her of being careless and unfair in her reading of their works. Shove argued that Robinson attributed to Marshall and Wicksell positions that they never held and, more generally, that her criticism of orthodoxy was driven by her ideological stance rather than by a scholarly attitude towards different theoretical approaches (ibid.: 60).
- 20.
Although Keynes probably had a keener sense than Shove of the limitations of the Marshallian inheritance.
- 21.
Like Marshall, Keynes and Shove always looked with suspicion at excessive formalism in economic analysis, even though their attitude should not be interpreted as a rejection of the use of mathematics in economics. Keynes criticised ‘pseudo-mathematical’ methods of formalising economic analysis rather than the use of mathematics per se (Keynes 1936 [1973]: 298). Shove, although appreciating the merits of the mathematical treatment of some economic problems, stressed the need to apply cautiously the results of formal analysis to the real world. See, for example, his observations on Hicks’s concept of elasticity of substitution and its use in the analysis of real economies (Shove 1933a: 468–469).
References
Cited Works by Gerald Shove
Shove, G.F. (1930). ‘The Representative Firm and Increasing Returns’. In ‘Increasing Returns and the Representative Firm: A Symposium’. Economic Journal, 40(157): 94–116.
Shove, G.F. (1933a). ‘Review of The Theory of Wages, by John R. Hicks’. Economic Journal, 43(171): 460–472.
Shove, G.F. (1933b). ‘The Imperfection of the Market: A Further Note’. Economic Journal, 43(169): 92–93 and 113–124.
Shove, G.F. (1933c). ‘Review of The Economics of Imperfect Competition, by Joan Robinson’. Economic Journal, 43(172): 657–661.
Shove, G.F. (1942). ‘The Place of Marshall’s Principles in the Development of Economic Theory’. Economic Journal, 52(208): 294–329.
Shove, G.F. (1944). ‘Mrs. Robinson on Marxian Economics’. Economic Journal, 54(213): 47–61.
Other Cited Works
Araujo, J.A.T.R. and G.C. Harcourt (1995). ‘Accumulation and the Rate of Profits: Reflections on the Issues Raised in the Correspondence between Maurice Dobb, Joan Robinson and Gerald Shove’. Chapter 7 in G.C. Harcourt, Capitalism, Socialism and Post-Keynesianism: Selected Essays of G.C. Harcourt. Aldershot: Edward Elgar: 79–106.
Harcourt, G.C. (1992). ‘Marshall’s Principles as seen at Cambridge through the Eyes of Gerald Shove, Dennis Robertson and Joan Robinson’. Chapter 13 in C. Sardoni (ed.) On Political Economists and Modern Political Economy: Selected Essays of G.C. Harcourt. London and New York: Routledge: 265–277.
Harrod, R.F. (1930). ‘Notes on Supply’. Economic Journal, 40(158): 232–241.
Harrod, R.F. (1931). ‘The Law of Decreasing Costs’. Economic Journal, 41(164): 566–576.
Kahn, R.F. (1987). ‘Gerald Frank Shove (1887–1947)’. In J. Eatwell, M. Milgate and P. Newman (eds) The New Palgrave: A Dictionary of Economics. Volume 4. London: Macmillan: 327–328.
Kaldor, N. (1935). ‘Market Imperfection and Excess Capacity’. Economica, New Series, 2(5): 33–50.
Keynes, J.M. (1936) [1973]. The General Theory of Employment, Interest and Money. Volume VII of The Collected Writings of John Maynard Keynes. London: Macmillan.
Keynes, J.M. (1973). The General Theory and After. Part II: Defence and Development. Volume XIV of The Collected Writings of John Maynard Keynes. London: Macmillan.
Robertson, D.H. (1930). ‘The Trees of the Forest’. Economic Journal, 40(157): 80–89.
Robinson, J.V. (1932). ‘Imperfect Competition and Falling Supply Price’. Economic Journal, 42(168): 544–554.
Robinson, J.V. (1933). The Economics of Imperfect Competition. London: Macmillan.
Robinson, J.V. (1942). An Essay on Marxian Economics. London: Macmillan.
Robinson, E.A.G. (1977). ‘Keynes and his Cambridge Colleagues’. Chapter 3 in D. Patinkin and J.C. Leith (eds) Keynes, Cambridge and The General Theory. London: Macmillan: 25–38.
Sardoni, C. (1999). ‘The Debate on Excess Capacity in the 1930s’. Chapter 14 in C. Sardoni and P. Kriesler (eds) Keynes, Post-Keynesianism and Political Economy. Volume 3 of Essays in Honour of Geoff Harcourt. London and New York: Routledge: 259–283.
Sraffa, P. (1926). ‘The Laws of Return under Competitive Conditions’. Economic Journal, 36(144): 535–550.
Whitaker, J. (1989). ‘The Cambridge Background to Imperfect Competition’. Chapter 3 in G. Feiwel (ed.) The Economics of Imperfect Competition and Beyond. London: Macmillan: 169–196.
Young, A.A. (1928). ‘Increasing Returns and Economic Progress’. Economic Journal, 38(152): 527–542.
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Sardoni, C. (2017). Gerald Frank Shove (1887–1947). In: Cord, R. (eds) The Palgrave Companion to Cambridge Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-41233-1_24
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