Marshall's Labor and Wage Theory

Alfred Marshall was an Englishman, who lived from 1842 to 1924). During his somewhat more than 50 years as a university lecturer, professor, and researcher, Marshall produced 82 publications. Three of his most important published contributions to economics--The Economics of Industry (first published in 1879), Principles of Economics (first published in 1890), and Industry and Trade (first published in 1919)--have experienced multiple editions and printings. His fourth great published work on economics--Money, Credit and Commerce--was issued in 1923--one year before his death, and has not experienced multiple editions.

With respect to value, demand, and prices, Marshall (1920, pp. 89-91) introduced the important concept of elasticity of demand--that is, the degree to which changes in price of a given article affect the demand for it. From this single concept, ideas related to imperfect competition, monopolistic competition, oligopoly, and oligopsony, and their potential effects on value, demand, and prices were derived by Marshall, and other economists who followed him.

Soule (1952, pp. 102-103) said of Marshall that he "exercised a dominant influence over British economic thought during his maturity and for some time after his death." With hi

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omists considered price to the adjustment variable, while Marshall (1920, pp. 384-386) considered the adjustment variable to be demand. Classical contended, thus, that the quantity of a good demanded and supplied depended in some way on the price of that good. Marshall (1920, pp. 384-386), by contrast, contended that the price for a good depended in some way on the quantity of that good that was demanded and supplied. According to classical economists, thus, if the market price for the good was established below the equilibrium price, a condition of excess demand would result, and, in turn, additional units of the good would be produced. Conversely, if the market price for the good was established above the equilibrium price, a condition of excess supply would result, and, in turn, prices would be lowered until the market was cleared. The system, with price as the adjustment variable, was, thus, according to classical economists, stable. Marshall (1920, pp. 384-400) contended, however, that the adjustment was not one of price, but, rather, one of quantity supplied. Marshall (1920, pp. 384-400) perceived such a situation in terms wherein, as an example, the quantity of a good supplied was less than the equi
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