﻿ Alfred Marshall: The Concise Encyclopedia of Economics | Library of Economics and Liberty

Alfred Marshall

(1842-1924 )

To Marshall also goes credit for the concept of price elasticity of demand, which quantifies buyers’ sensitivity to price (see demand).


Wanting to understand how markets adjust to changes in supply or demand over time, Marshall introduced the idea of three periods. First is the market period, the amount of time for which the stock of a commodity is fixed. Second, the short period is the time in which the supply can be increased by adding labor and other inputs but not by adding capital (Marshall’s term was “appliances”). Third, the long period is the amount of time taken for capital (“appliances”) to be increased.

To make economics dynamic rather than static, Marshall used the tools of classical mechanics, including the concept of optimization. With these tools he, like neoclassical economists who have followed in his footsteps, took as givens technology, market institutions, and people’s preferences. But Marshall was not satisfied with his approach. He once wrote that “the Mecca of the economist lies in economic biology rather than in economic dynamics.” In other words, Marshall was arguing that the economy is an evolutionary process in which technology, market institutions, and people’s preferences evolve along with people’s behavior.

Marshall rarely attempted a statement or took a position without expressing countless qualifications, exceptions, and footnotes. He showed himself to be an astute mathematician—he studied math at St. John’s College, Cambridge—but limited his quantitative expressions so that he might appeal to the layman.

Marshall was born into a middle-class family in London and raised to enter the clergy. He defied his parents’ wishes and instead became an academic in mathematics and economics.

Selected Works

1890. Principles of Economics. Vol. 1. London: Macmillan.
1920. Principles of Economics. 8th ed. London: Macmillan. Available online at: http://www.econlib.org/library/Marshall/marP.html

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