The Cambridge Economic Tradition (2003)

Abstract

The starting point must be Alfred Marshall (even though Keynes called Malthus ‘the first of the Cambridge economists’ and Keynes’s successors were increasingly to draw on classical political economy and Marx for inspiration). Marshall though was responsible for the foundation of the Economic Tripos (in 1903) and also, in large measure and at least until very recently, for the approaches to economics in Cambridge even as we know them today. The Marshallian tradition has it that economists should explain how the world works and then, if it does not work well or fairly, do something about it (within well-defined limits). This should be done by theorising, doing applied work and formulating plausible policies. The approach to applied economics emphasises the importance of relevance in economics, incorporating the lessons of history, the institutional context and previous social and political conditions, gathered under the rubric of the ‘rules of the game’. Theory and measurement are interdependent, feeding back and modifying and expanding one another. This tradition has characterised the contributions of the Faculty’s Department of Applied Economics, a research institute which started in 1945 with Richard Stone (one of four Cambridge recipients of the Nobel Prize) as its first Director. Shockingly, it no longer exists, following an internal coup and takeover.

Originally published in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 44–51.