Jon’s Blog

Summary- Arthur Pigou

Arthur Pigou enjoyed a very decorated academic career, studying alongside great minds such as Winston Churchill. As a student he received awards in many fields including the Chancellor’s medal for English and the Cobden Prize for his study of agricultural prices over time. Once he began teaching in 1901, however, he stuck mostly to the field of economics. While his knowledge of the subject was vast, his main interests were in the history of the labor movement, tariff reform, and Marshallian economics (which he called advanced economic theory). His works in these fields included The Principles and Methods of Industrial Peace and The Riddle of the Tariff. In his advanced economic theory lectures, Pigou offered a very structured presentation of Alfred Marshall’s ideas which he did not change or alter to his preference throughout the years in respect to his mentor.

When Marshall resigned as the Professor of Political Economy at Cambridge in 1908, Pigou was not very high up on the list of potential predecessors. However, with the help of Marshall’s personal recommendation Pigou was offered the job, which he held for thirty-five years thereafter. It was around this time that Pigou was finishing up his most notable work. Originally titled Wealth and Welfare, it was later named The Economics of Welfare (1920) after he re-wrote it following the war. The book as so big two sections, Industrial Fluctuations (1927) and A Study in Public Finance (1928), were taken off and published as separate titles.

Pigou also developed a semi-feud with economist John Maynard Keynes, sparked by differing views of unemployment. The feud was not bitter, however, as the two were both colleagues and friends for over twenty-five years, sharing a great mutual respect. In 1913, Pigou produced The Theory of Unemployment which setup the classical marginal productivity theory and attributed unemployment to trade union intransigence and minimum wage laws. At the same time, Keynes was developing his work, General Theory, and needed a theory to dispute while establishing his new ideas of what really caused unemployment. The Theory of Unemployment served that purpose. In two later works, Employment and Equilibrium and A Retrospective View, Pigou admitted his judgment of Keyes may have been harsh, and conceded that short run equilibrium with a high level of unemployment was a possibility.

In the grand scheme of things, Arthur Pigou did not create or discover anything revolutionary. He did not change a school of thought or provide a great fundamental theory. However, he did provide solid work in field of economics for over fifty years. He presented ideas in a more systematic way than ever before, and shifted people to this more orderly thinking. The article was a decent read, but added a little too much fluff about his personal life that could have been omitted. It does, however, provide a nice overview of Pigou for anyone who needs a quick, condensed summary of the economist or his works.