Sylvia Nasar, the author of A Beautiful Mind and a former economics correspondent for The New York Times, tells us that she set out to write, not a history of economics, but the story of those thinkers “searching for intellectual tools that could help solve what Keynes called ‘the political problem of mankind: how to combine three things: economic efficiency, social justice and individual liberty’” (xv). She begins her preface by examining the economic and social class of Jane Austen whose “quite impecunious family” had to practice much “vulgar economy.” Nonetheless, even though the Austens were much poorer than the Bennetts of Pride and Prejudice, they were still far better off than 95% of people in England.

Looking at that that other 95%, Nasar emphasizes three things that all students of nineteenth-century culture should know — first, that the typical Englishman and Englishwoman were farm workers living in conditions of near starvation, conditions no better in fact than those of Roman slaves or hunter-gather tribes in hard times; second, that no one thought their condition could be improved; and third, half a century after Austen's death real wages had doubled and leading thinkers began to believe that “the changes were not accidental or a matter of luck, but the effect of human intention, will, and knowledge” (xiii). “The notion that man was a creature of his circumstance, and that those circumstances were not predetermined, immutable, or utterly impervious to human intervention,” she reminds us, “is one of the most radical discoveries of all time” (xiii-xiv). Grand Pursuit therefore tells the stories of economic thinkers who tried to make things better for everyone.

Her Prologue, “Mr. Sentiment versus Scrooge,” opens with a one-sentence paragraph — “It was the worst of times” (3) — after which it convincingly interprets Dickens's A Christmas Carol as a “a riposte to Malthus” (8). Unlike some Victorianists who take Dickens's Philosophy of Noel as a sentimental response to the age's social and political problems, Nasar argues that he was

too much a man of business to imagine that schemes for bettering social conditions could succeed unless they could be paid for. He was a “pure modernist” and “believer in Progress” rather than an opponent of the Industrial Revolution. . . . Dickens never imagined that the world could get along without the calculating science of economics. Instead he hoped to convert political economists as the Ghost of Christmas Future had converted Scrooge. He wanted them to stop treating poverty as a natural phenomenon, assume that ideas and intentions were of no importance, or taking for granted that the interests of different classes were diametrically opposed. [9-10]

The rest of her book examines those, starting with Marx and Engels, who tried to make thing better. After placing their writings in biographical, social, and political contexts, she next takes on Alfred Marshall, someone of whom I had never heard but someone, I now realize, who should be known to all readers of Carlyle, Dickens, Mill, Ruskin, and other Victorians who comment upon the Condition of England. Next come chapters on Beatrice and Sidney Webb, John Maynard Keynes, Joan Robinson, the Americans Irving Fisher, Milton Friedman, and Paul Samuelson, the Austrians Joseph Schumpeter and Friedrich Hayek, and the Indian Amartya Sen. Unlike the chapters on Marx, Engels, and Marshall, those dealing with twentieth-century economists organize themselves around historical events and periods, including World War I and the reparations disaster that followed, the Great Depression, the second world war and global recovery, and the Cold War. Throughout, Nasar, who writes with great clarity, begins with biographical information and then moves on to the rise and development of theories, their reception, and the effect on both their authors and the contemporary world.

For anyone principally interested in Victorian literature and culture the most important figure in this book is Alfred Marshall (1842-1924), the grandson of a butcher and a bankrupt and son of a bank cashier who became a don at St. John's College, Cambridge. Malthus, Marx, Engels, Mill, and all contemporary economists began with the premise that society, the economy, life in general was a zero-sum game, and they had various explanations for their belief: Malthus thought people necessarily propagated geometrically and food supplies and other wealth only arithmetically; Marx as zero-sum equation of labor and capital. As Nasar explains, Marx assumes that “all value, including surplus value, is created by the hours worked by labor. ‘There is not a single atom of its value that does not owe its existence to unpaid labor’” (38), and in Das Kapital he cites John Stuart Mill in support of his claim:

“Tools and materials, like other things, have originally cost nothing but labour ... The labour employed in making the tools and materials being added to the labour afterwards employed in working up the materials by aid of the tools, the sum total gives the whole of the labour employed in the production of the completed commodity ...To replace capital, is to replace nothing but the wages of the labour employed. [Mill, Essays on Some Unsettled Questions of Political Economy (London, 1844)]

Mark Blaug points out the flaw in this argument — a flaw perhaps hard to discern in the 1840s but increasingly clear in later decades, “if only labor hours create value, then installing more efficient machinery, reorganizing the sales force, hiring a more effective CEO, or adopting a better marketing strategy—rather than hiring more production workers — necessarily causes profits to fall. In Marx's scheme, therefore, the only way to keep profits from shrinking is to exploit labor by forcing workers to work more hours without compensating them” (38). According to Marx, therefore, “By asserting that labor was the source of all value, Marx claimed that the owner's income — profit, interest, or managerial salary — was unearned.” So Marxist economics is forced to take the position that no managerial invention or efficiency can produce wealth when it so obviously does and did when Marshall was writing. In the course of his extensive research Marshall did two things Marx never did: inspired by Mayhew and Dickens, he observed many workers at work in many factories, and he visited America. There he observed that the undisputed growth of American productivity

at an unimaginably rapid rate meant that businesses must be doing more, at least in the aggregate, than exploiting Peter to line Paul's pockets or merely repeating the same operations from one year to the next. On his visits to factories, Marshall was especially struck by managers' constant search for small improvements and workers' equally constant search for better opportunities and useful skills. Both seemed obsessed with making the most of the resources at their command.

Naturally, Marshall recognized that companies also exist to generate profits for owners, managerial salaries for executives, and wages for workers. Adam Smith had pointed out that to maximize their own income in the face of competition, firms had to benefit consumers by producing as much and as cheaply as possible. But Marshall introduced the element of time into his analysis. Over time, firms could remain profitable and continue to exist only if they became more and more productive. Survival in the face of competition not only implied incessant adaptation. Competition for the most productive workers meant that, over time, firms had to share gains from productivity improvements. [90; my emphasis]

Marshall further explained that the reason British firms and British workers had such comparatively poor productivity was that they were poorly educated and poorly fed. The cure, according to Marshall, was to raise productivity by educating “the unskilled and inefficient workers out of existence” (88), one result of which would be that any remaining unskilled laborers would also receive higher pay.

The book's remaining chapters — the larger part of the book — present fascinating examinations of the successes and failures of later economists. As someone well out of his depth, I can only attest that I found her arguments consistently clear, well documented, and generous in granting credit to other workers in the history of economics. The only point at which I would however gently criticize this valuable book is for its inadequate treatment of John Ruskin, whom Nasar quotes several times. She describes him only as an "art historian" and does not seem to have encountered the books by Sherburne and Craig, well known to students of Ruskin, that credit him, not Beatrice Webb, with inventing the welfare state. This is a very, very small criticism of a book which all Victorianists should read.

Related Materials


Nasar, Sylvia. Grand Pursuit: The Story of Economic Genius. New York: Simon and Schuster, 2011.

Victorian Web Victorian Ecomomics Victorian History economics

Last modified 10 September 2012