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Paper under submission: please do not quote

Alfred Marshall and François Perroux: the neglected liaison1

“Alfred Marshall, une fois encore, nous met dans la bonne voie....” (Perroux, 1967: 138) 1. Introduction François Perroux is recognized to have been one of “France’s most distinguished economists” and one of the “world’s most prolific” ones (Wolf 1958: 1016; Robbins 1990: 144). He was professor of Political Economy at the University of Lion (1928-1937), of Paris (1935-1955), at the College of France (1955-1974), founder (1944) of the Institut de Sciences Économiques Appliquées (ISEA) soon transformed in the Institut de Sciences Mathématiques et Economiques Apliquées (ISMEA). He was very well known internationally and held several public and academic appointments. The richness of Perroux’s theories and economic reflections has allowed the literature to underline his bonds with several different economists, particularly Marx, Schumpeter, Mises, Chamberlin, Harrod, Kaldor, Leontief and Keynes. Among the authors mentioned in the literature on Perroux an economist is however conspicuous by his absence: Alfred Marshall. Only recently two French scholars have underlined the existence of a possible connection between Marshall and Perroux: Michel Quéré (2010) who stresses the fact that Perroux recognizes Marshall as the crucial pioneer for the concept of external economies; and Bernard Gerbier (2006a) who underlines the resemblance between Marshall’s concept of “economic chivalry” and Perroux’s idea of “économie du don”. However, the relations between the two economists are more numerous and run more deeply. Their liaisons are far from being accidental. Two aspects are worthy of mention. First, Perroux was a careful reader of Marshall: he quotes and refers to Marshall in several parts of his writings and among his manifold manuscripts2 there are many notes taken from Marshall’s books and articles. Second and more important aspect, notwithstanding they belong to very different historical, social, and cultural milieus, they have indeed a part of common ground in terms of philosophical, economic, and political readings that clearly affected their perspectives and approaches.

1 This paper belongs to a wider project that has received funding from the Associate Research Directors Programme of the Fondation Maison des Sciences de l'Homme, Paris. 2 Perroux’s archive is held at IMEC (Institut Mémoires de l’Èdition Contemporaine), Abbaye d’Ardenne, Caen, Normandy.

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Main aim of this paper is to inquiry into the several similar aspects that characterize both Marshall’s and Perroux’s economic and social reflections, stressing their affinities and recalling their common roots. The paper is structured as follows: section 2 is on Marshall’s and Perroux’s conception of economic science (2.1) and particularly on their methodological approach (2.2); section 3 focuses on the way in which the two economists deal with the complexity of real world with particular attention given to organizations in time and space (3.1), industries, firms and nations as matter of power (3.2), the relation between competition and cooperation (3.3), economic progress and the role of state (3.4); finally section 4 draws some concluding remarks. 2. Aims and means of Economics

2.1. Economics as social (human) science

A first element of resemblance between Marshall and Perroux concerns their conception of economics as a social and human science. They both refuse to fully rely on a pure abstract science, considered as essential but of small utility by itself (Marshall, 1920) or potentially useful but dangerous when completely detached from real aspects (Perroux, 1943). Moreover economics cannot be just “pure” in so far as its main subject matter cannot be isolated and it is imbued with and influenced by a large number of factors that have to be taken into account. According to Perroux, economics is intrinsically a social science because it deals with man (“l’homme”), to be definitively distinguished from the abstract simplified agent of the neoclassical approach. His criticism of the homo œconomicus or, as he calls it, l’homme-robot is widespread in all his writings and it is the starting point for his “projet humain” which aims at going beyond the mechanistic approach of equilibrium analysis where man is almost banished3. In Perroux’s view, each individual cannot be simply considered as an isolated atomistic agent, which obeys to its egoistic needs and aims at maximizing its utility and satisfaction, rigorously expressed in money terms in the neoclassical analysis (1961: 83). Individuals cannot be simply reduced to an economic dimension as “economic agents” but they must be considered in their multifarious and heterogeneous aspects and expressions. Indeed, besides their merely egoistic motives very often they have and follow altruistic (“allocentric”) purposes that are neglected in the traditional economic analysis. Moreover, they do not act only in the market but belong to a far more complex milieu in which different dimensions come into play (economic, social, political, cultural, ethical and so forth). This is the reason why Perroux aims at founding an economic science deeply based on man4 or as he calls it an “économie humaine” of which market economics is only a part (1961: 399). It is this same kind of awareness and motivation that have led Alfred Marshall to found the Cambridge School of Economics where “economics” had to be taken as the science which is “on the one side a study of wealth; and on the other, and more important side, a part of the study of man” (1920:1); and man to be considered was not “an abstract

3 “L’unité de mon propos m’est strictement dictée par un changement majeur qui s’est opéré dans l’action et la pensée économiques: le projet humain l’emporte sur l’équilibre mécaniciste d’où l’homme est à peu près banni” (1991: 20). 4 “Le moment est vennu d’instaurer une économie de l’homme” (quoted in Perrault 2014a: 112).

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economic man; but a man of flesh and blood”5 (1920: 26-7). Economics is the branch of social sciences that concerns those aspects mainly connected with the business part of human life that unavoidably involves the desire for a material reward expressed in amount of money. However in Marshall’s view, “man’s conduct in the business part of life” is largely influenced also by “his personal affections, by his conceptions of duty and his reverence for high ideals” (1920: 14). Moreover, if the quantifiable money motive makes economics more exact than any other branch of social sciences, still it remains far less exact than physical sciences in so far as it “deals with the ever changing and subtle forces of human nature” (1920: 14). Economics studies the actions of individuals “in relation to social rather than individual life” (1920: 25) and it is concerned with individuals “chiefly as members of the social organism... and not as an isolated atom” (1920: 25). Economics, for Marshall, “is ... taken to mean a study of the economic aspects and conditions of man’s political, social and private life; but more especially of his social life” (1920: 42). These words sound very close to Perroux’s definition of man, as social and socialized individual6. The term “sociology” is due to the French philosopher Auguste Comte, who – through his law of three stages – inquired into the human and societal development. Comte and his school were very influential in France, where they played the same crucial role that Institutionalism had in America but their impact largely surpassed the borders of their own country (Marchal 1952, vol. I: 145). Perroux particularly recalls the importance of Comte’s idea of progress as development (1983: 4) and the significance of his repeal to its spiritual dimension (1982: 446). Comte had an important influence in England too, where he raised large attention and produced passionate debates7. Comte was very well known by Marshall who appreciated his contribution for “the clearness and vigour with which he showed how complex social phenomena are, how intricately interwoven with one another, and withal how changeful” (Marshall 1925: 163). However, he did not share Comte’s suggestion that economists should “abandon their distinctive role and .. devote themselves to the general advancement of a unified and all embracing social science” (Marshall, 1920: 770). Marshall recognizes that a unified social science would be desirable but he thinks it is unattainable and that it is necessary some degree of specialization. However, along with Comte, he stresses the evils of extreme specialization and warns that it is the duty of “those who are giving their chief work to a limited field, to keep up close and constant correspondence with those who are engaged in neighbouring fields. Specialists who never look beyond their own domain are apt to see things out of true proportion; much of the knowledge they get together is of comparatively little use ....” (1920: 770). These words echo those expressed by Perroux – who describes as “too severe” Comte’s criticism of Political Economy (Perroux, 1954a: 77; see also 1956b) – when, with regard to geography (Couzon 2003), he stresses the need of both an autonomous domain and method and a continuous collaboration between the two disciplines8. This opinion embraces also other fields for which Perroux emphasises the importance of their reciprocal exchange and cooperation but also the need to preserve

5 According to Perroux, besides Marshall, the Classical economists as well had the merit to consider, in their analysis, a man of “flesh and bone” (“des hommes de chair et d’os” (1943: 9). 6 “L’individu, radicalement autre qu’un objet inerte, est social et socialisé” (1984: 109). 7 The most representative is certainly that between Comte himself and J.S.Mill. 8 “Fécond aussi en ce que la distinction ouvre une collaboration entre deux disciplines qui peuvent etre réciproquement des auxiliaires l’une pour l’autre, à condition de ne jamais confondre leurs domaines et de ne jamais opposer leurs méthodes” (1954a: 348).

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their own autonomy. Accordingly, he values as fruitful the “alliance” between economics and biology9 (1991) and as “absolutely unavoidable” that between economics and sociology, especially on topics as evolution, development and progress (1958).

2.2. The pursuit of a proper methodological approach

The idea of economics as social science unavoidably affects the methodological approach, both in Marshall and Perroux. Here we find several elements, which strongly tie the two economists. First, they both give relevance to a necessary balance between induction and deduction. In his criticism of the neoclassical approach, especially in its general equilibrium version, Perroux underlines the insufficiency of the hypotheses and axioms adopted. What sounds particularly inadequate is the idea of pure concurrence and exchange represented by a number of equations that express the laws of classical mechanics in a static abstract framework (1973a: 45). Economics cannot be, for Perroux, just a deductive abstract science based on hypothetical relations: it is a social science, which inevitably requires also an inductive analysis. Economic studies are therefore the outcome of a necessary compromise between empirical and analytical approaches10. Accordingly, as noted (Perrault 2014b), Perroux follows the synthesis between inductive and deductive methods suggested by the Austrian11 economist Böhm Bawerk12. Recalling Schmöller13, Marshall follows the very same approach and in the first two editions of Principles he explicitly stresses: “induction and deduction go hand in hand. The progress of economic reasoning depends on the study of economic facts, and on the other hand, that study itself requires to be guided and directed by the scientific knowledge

9 See section 2.2. 10 “Les recherches d’économie...ménagent une tension permanent entre l’observation empirique et l’appareil analytique, qui dissipe tout illusion sur la généralité des propositions considérées provisoirement comme le plus cohérentes et les mieux vérifiées” (1961: 530). 11 In the literature, Perroux’s connection with the Austrian School, particularly with Mises and Schumpeter, is largely underlined (Blaug 1966; Guillen Romo 2010; Harrison 1992; Perrault 2014b; Uri 1987; 2014). It is true that Perroux – thanks to a fellowship of the Rockefeller Foundation – went to Austria to meet the representatives of the School and that he himself “would be tempted to date [his] birth certificate as an economist ‘Vienna 1934’ ” (1980: 147). He also wrote the Preface to the French edition of Mises’ book on Socialism (1938d) and a long and rich introduction to Schumpeter’s volume on Economic development (1935), with which he actually introduced the Austrian author in France. Numerous are then the references to their contributions in his writings. It is nonetheless true that in many parts, Perroux is more critical than approving of the Austrians’ perspective. With regard to Mises, Menger, Böhm Bawerk and others (on Schumpeter, see note 25) he critically underscores, for instance, how their theories are based on a “pure logic of choice” from which real men are removed (“L’homme total et vivant s’est retiré de la science économique”, 1943: 10). Mises is then mentioned among the “liberals” who still linger on the error of confounding labour with a simple merchandise (1943: 24-25). Marshall, on his side, increasingly criticized many exponents of the School, particularly Böhm Bawerk, Wieser and Menger, for their critical attitude towards the previous economists (Marshall 1920: 82) and especially for their theory of value (Groenewegen 1995: 446-8; 777-8). 12 In 1972, Perroux has presented a speech titled “Match oder oekonomische Gesetzmäsiigkeit”, clearly inspired to Böhm-Bawerk’s “Match oder oekonomische Gesetz” (1914). See on this Perrault 2014b and Uri 1987. 13 Notwithstanding Marshall’s alleged hostility to Historical School, he has several affinities with it, particularly evident in Industry and Trade (Groenewegen 1995: 707) and Principles where he notes: “they have made careful and profound analyses which add much to our knowledge” (1920: 768). Perroux praises the representatives of the Historical School for the attention given to the succession of different phases or periods in economic life, which finally allowed them to embark on a “dynamic line of research” (19935: 56), and for their important hints related to the concept of “structure” (1961: 558).

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which is the outcome and abstract of a previous study of facts (1961, vol. II: 768). This view explains the importance given by Marshall to applied economics and statistical methodology that largely characterize the so-called Cambridge School14. And it is the same view which accounts for the establishment by Perroux of ISEA, the Institute of Applied Economics (“Institut de Science économique appliqué”) in 194415 , soon transformed into the actual ISMEA, Institute of Mathematical Sciences and Applied Economics (“Institut des Sciences Mathématiques et Economiques Appliquées”). Second, although they both consider mathematics an important tool for economic analysis, nevertheless they clearly circumscribed its usefulness. According to Marshall, a good training in mathematics is useful “by giving command over a marvellous terse and exact language for expressing clearly some general relations and some short processes of economic reasoning” (1920: 781). However, as he admonishes, it can be useful only in the first steps of the analysis, when the matter and the relations studied are simplified; as he underlines: “while a mathematical illustration of the mode of action of a definite set of causes may be complete in itself, and strictly accurate within its clearly defined limits, it is otherwise with any attempt to grasp the whole of a complex problem of real life, or even any considerable part of it, in a series of equations” (1920: 850). By means of mathematics we can represent “an edifice of pure crystal” that, however useful in throwing some lights on real problems, is limited in its scope16. The “toyshop”, as he calls it, made of curves, diagrams, and analytical relations is part of his box of tools but its scope is limited by definition. Perroux certainly did not dislike the analytical apparatus given by the marginalist revolution (1961: 173) and the use of mathematics but he clearly recognizes its limited scope17. Mathematical tools are very useful when dealing with uniformities (1952a in Perrault 2014b) but unable to embrace all the complex facets of real world. For him, as for Marshall, economics could not be reduced to a system of equations, unless one is willing to loose many important aspects of the real world: “Those who have obstinately attempted to homogeneize the economic and the social world with a view to controlling its development by applying simple or sophisticated mathematical formulae have failed, principally because that world is intrinsically heterogeneous”

14 However Marshall becomes deeply critical when applied and statistical research is done with a too large use of mathematics. As clarified to Bowley: “Adelphi Terrace [LSE] is doing wonderfully good work: but it has the defects of its difficulties. It must strike the public imagination; & therefore it cannot afford to be quite frank in explaining how very difficult economic problems are; how untrustworthy is the knowledge that can be got by slight study; how many years a man must work at science before it will teach him to speak as wisely in difficult social problems as he could have done by mere instinct, if he had spent the time in a level headed observation of life, instead of in formal study.....the School tends to emphasize the mechanical methods of investigation: ie those in which highly specialized calculating machines ....can be set to tunes based on formulae (often mathematical formulae) & to grind out results wh are officially pure & above reproach. ....you were made for better things” (3 march 1901, Whitaker II 305-6). 15 J.M.Keynes “was one of the first protectors” (Perroux 1980: 151) of ISEA, together with Gaëtan Pirou and Charles Rist (Perrault 2014b: 83). 16 This point, often stressed by Marshall, is further made clear in a letter written to Bowley (26 February 1906) where he writes: “I know I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules: (1) Use mathematics as a shorthand language, rather than an engine of inquiry (2) Keep to them till you have done (3) Translate into English (4) Then illustrate by examples that are important in real life (5) Burn the mathematics (6) If you can’t succeed in 4, burn 3” (Whitaker 1996, III, 130). 17 In the Introduction to Schumpeter’s volume, Perroux mentions Marshall among the authors that, rightly, do not have ‘the superstition’ of mathematics (1935: 17).

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(1983: 25)18. Third, they both have a similar attitude towards the use of the concept of equilibrium. In stressing the complexity of elements and relations and the difficulty of dealing with it, Marshall has chosen the partial equilibrium analysis whereas Perroux thought that the general equilibrium approach, with some due and necessary changes, was the right path to follow. However, Perroux himself recognizes the utility of Marshall’s partial analysis and cœteris paribus clause (see for instance 1961: 284; 1991: 37)19, without forgetting its limits20. Marshall, for his part, was deeply aware of the shortcomings of his partial approach, which compelled to largely simplify the analysis. And, on the other hand, in a letter to J.B.Clark (24 March 1908), he recognizes: “My whole life has been and will be given to presenting in realistic form as much as I can of my note XXI” (Pigou 1925: 417), where he mathematically develops a general equilibrium approach. Both Marshall and Perroux find, therefore, necessary a comprehensive (general) approach, which allows considering the manifold composite interrelations that characterize real world; however such an approach cannot be expressed by a series of equations and based on highly simplified assumptions, as in the Walrasian-Paretian system. According to Perroux, general equilibrium theory is not to be considered the simplification but the opposite of reality; even modifying and complicating progressively the model, it is impossible to find any connection with reality: it is, for him, necessary to chose another model21. In his view, general equilibrium analysis is simply a “gymnastic” in so far as it reduces human actions to mechanized automatic forces22. Marshall’s opinion runs on very similar lines: he refuses to use the general equilibrium approach showing, in his mathematical notes XIV and especially XXI of Principles, that to build a general equilibrium framework is just a theoretical exercise23 but useless indeed to understand the real world. In his last letter to

18 Or again: “C’est depuis que notre profession a reçu la grâce de mathématiques simples qu’elle l’a payée, dans les plus mauvais cas, par une certaine inattention à l’essentiel, s’il n’est pas immédiatement mathématisable” (1984: 110). 19 As he notes approvingly, Marshall did not build a general static system but he simply used a static method without doing any violence to reality; accordingly, his method of logical simplification and temporary abstraction denies that static state is the essential minimum and moreover the normal content of economic processes. Statics, in the limited use he made, is just a fiction and a tool of analysis (“Marshall ne construira donc pas un système général de statique. Il se bornera à employer ce que l'on nomme improprement selon lui la méthode statique, sans faire violence à la réalité. Il considérera tel phénomène économique isolé en supposant que le réseau d'autres phénomènes dans lequel il s'insère reste constant, en admettant par hypothèse que toutes les autres conditions restent égales et en essayant ensuite progressivement de déterminer dans quel sens jouent leurs modifications et si elles tendent ou non à s'équilibrer. Ce procédé de simplification logique et d'abstraction temporaire, conçue comme le point de départ d'une étude à base d'abstraction décroissante, nie que l'état statique représente le minimum essentiel, ni à plus forte raison le contenu normal du processus économique. La statique, dans la mesure limitée où il en est fait emploi, est une «fiction » , un instrument d'analyse”, 1935: 43). 20 In A new Concept of Development he writes: “Alfred Marshall ...placed emphasis on partial equilibrium analysis, which, had it been allowed to go beyond a narrow conception of market forces, should have led on to an analysis of structured sectors an the relationships between them” (1983: 61). 21 “La théorie de l’équilibre général n’est pas la simplification de la vie économique observable: elle en est le contrepied: on ne retrouve pas la réalité en modifiant peu à peu l’équilibre général, en compliquant progressivement le modèle: pour trouver la réalité, il faut choisir un autre modèle” (1991: 34). 22 “L’équilibre général est une gymnastique de l’esprit qui réduit des actes d’hommes à des forces mécaniquement organisées, et qui, dans ces conditions, engendrent inévitablement le résultat assigné” (1991: 34). 23 He writes: “Thus, however complex the problem may become, we can see that it is theoretically determinate, because the number of unknowns is always exactly equal to the number of the equations which we obtain” (1920: 856).

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Walras, Marshall remarks: “I have not myself retired from the conclusion that I think I communicated to you some time ago, viz that the right place for mathematics in a treatise on Economics is the background.....” (19 September 1889, in Whitaker 1996, I: 300-301); especially because as he affirms: “much of pure theory seems to me to be elegant toying”24 (letter to Hewins 29 may 1900, Whitaker 1996, II: 280). Finally, the relevance given to the complexity of human nature and life, that makes inappropriate a rigorous analysis based on mathematical relations, leads the two economists to be fascinated by biology: change and evolution characterize life, human nature and its activities; any society grows in terms of complexity as any other living organism (Marshall [1890] 1920; Perroux 1983). According to Marshall “the Mecca of the economist lies in economic biology” because “economics, like biology, deals with a matter, of which the inner nature and constitution, as well as the outer form, are constantly changing” (1920, xiv and 772). At the beginning of his tick introduction to the French translation of Schumpeter’s Theory of Economic Evolution, Perroux stresses the importance of “Marshall’s Mecca” in order to develop a proper dynamic analysis25 (1935: 9). For Perroux, biology helps understanding that man is (and must be considered as) an open system and individualism is unacceptable whenever one wants to inquiry into the evolving real world26. Both Marshall and Perroux emphasize the importance of biology in so far as it focuses on life, change and evolution27. However, for both, biology must be taken separated and distinguished from economics. According to Perroux, biology is a helpful tool to overcome the limits of standard economic analysis28 but it cannot substitute it (1991: 511) and must be taken only as a suggestion (1943: 19). Organic analogies, in particular, may be of great utility when directed against mechanical conceptions, as Marshall did (Perroux, 1943: 1829), but otherwise they may become useless or even wrong (Perroux, ibidem; on this Guitton, 1951: 77-80). Marshall as well warns against a too strong enthusiasm for

24 This concept is replied several times in his correspondence. In a letter to Bowley for instance he admits: “I regard the method of Least Squares as involving an assumption with regard to symmetry that vitiates all its implications to economic problems with which I am acquainted. In every case that I have considered at all carefully, I think harm has been done by treating the results as ‘economic’. I regard them as mathematical toys” (21 February 1901, Whitaker 1996, II: 301). 25 Literature often stresses the link between Perroux and Schumpeter (Marchal 1953; Destanne de Bernis, 1966; Uri 1987; Cohen 2006). It is true that Schumpeter is one of Perroux’s main references (1980) whom he defined his “master and dear friend” (1950a: 69). However, along with the praises of Schumpeter’s contribution, Perroux underlines its several weak or doubtful aspects. He criticizes Schumpeter’s concept of dynamics, deeply imbued into a static framework, and the lack of a clear distinction between statics and dynamics (1935; 1950a); so far, Schumpeter’s model is just an “economic circuit without growth” (1949: 38); moreover, his hints about dynamics are based only on the concept of innovation (1961a: 36) which relies too heavily on the sole role recognized to innovator entrepreneurs, out of any historical and institutional frameworks (1966: 244-246; 1961: 149); (See on this Dehem 1966). 26 “La biologie contemporaine enseigne que l’homme est un système ouvert: il reçoit et émet des forces et des effets: c’est la condition fondamentale qui joue contre l’isolement économique des individus imaginé par un certain néoclassicisme. Aussi bien est-il légitime d’admettre que les groupes sociaux sont des systèmes ouverts, dans une société qui elle-même est un système ouvert.... ” (1984: 110). 27 They both recall the important contributions – notwithstanding their evident limits – given to biological perspective by Comte, Darwin and particularly Spencer (Marshall, 1920: ix; Appendix C; Whitaker 1996, II: 385; Perroux 1943: 16; 1983: 3-4). 28 “La biologie ....[aide] ..au dèpaysement nécessarie et à l’offensive contre quelques lenteurs de l’économie standard” (1991: 511). 29 “La description de l’acte économique à l’aide de catégories empruntées aux sciences de la vie organique a été maniée avec délicatesse et précisément dressée contre le vue mécanistes par Marshall....” (1943: 18).

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the use of biology in economic matters30. Moreover, both the authors express a serious worry for possible extreme interpretations of some biological reasoning, as those developed by the Carrel Foundation (Perroux31) or some eugenic theorists (Marshall32). The most important aspect that biology enables to underline is that any system (natural, human, economic, political and so forth) evolves and changes over time. Both Marshall and Perroux consider time a crucial element that should not be neglected in the economic analysis. For Marshall, “The element of time is a chief cause of ... difficulties in economic investigations” (1920: 366). As it is well known, he tries to introduce this element by means of his time period analysis developed in Principles of Economics (Caldari 2017). However, he himself recognizes that this approach is just a simplification: “for the element of Time….is itself absolutely continuous...[and] nature knows no absolute partition of time into long periods and short...” (1920: vii). Moreover, Marshall is aware of the difficulty to enter into the analytical framework the main characteristic aspect of time: its irreversibility. For this reason he recognizes that that “theory is out of touch with real conditions of life” (1920: 807). Coming to Perroux, for him, one of the most grievous limits of the neoclassical approach is its timeless dimension: in the real world any process necessarily develops over time (“déroule nécessairement dans le temps” (1961: 99) and time – he continuously reminds – is something essentially irreversible (1942a; 1961; 1973a; 1975; 1991). In this regard, he underlines the important contribution given by Marshall, who “opened the way to modern analysis” (1935: 33): a way which Perroux largely dwells upon (1935; 1961; 1975; 1982) and that, for him, was not actually followed by the two most important Marshall’s pupils, A.C.Pigou and J.M.Keynes, whose analyses remained, on the contrary, mainly timeless. Pigou’s welfare economics developed into a static framework that is unable to comprehend growth and development (1961: 31) and moreover its conclusions in terms of economic policy “have not stood ... to historical experience” (1980: 161). As for Keynes, even if Perroux recognizes that General Theory is of an “indisputable originality” (1950a: 3), nonetheless it has, in his view, several “disputable” points: its mechanistic approach, the use of global quantities, the treatment of labour and unemployment, the utilization of a general level of wages and so forth (1950a; 1951). However, the most criticized aspect is the timeless nature of Keynes’

30 “The growing prominence of what has been called the biological view of the science has tended to throw the notions of economic law and measurement into the background; as though such notions were too hard and rigid to be applied to the living and ever changing economic organism. But biology itself teaches us that the vertebrate organisms are the most highly developed. The modern economic organism is vertebrate; and the science, which deals with it should not be invertebrate. It should have delicacy and sensitiveness of touch which are required for enabling it to adapt itself closely to the real phenomena of the world; but none the less must it have a firm backbone of careful reasoning and analysis” (1920: 769). 31 As postscript of his Science de l’homme et science économique (1943) where he stresses the important contribution given by Alexis Carrel to the definition of Science de l’Homme, Perroux writes the following note for the reader: “Je dois appeler l’attention du lecteur sur la portée inexacte que j’accordais avec une bonne foi un peu naïve, à l’époque où fût prononcée cette conférence, aux énoncés de M.Carrel. N’étant pas formé aux disciplines biologiques et trompé par des affirmations massives et indémontrêes faites au nom de la Science, j’avais accordé à ‘l’Homme, cet inconnu” un crédit que les spécialistes jugent sévêrement. Il me faut donc, à mon grand regret, prévenir le public non initié contre un erreur dont je fus, pour un temps, la victime, et n’entends plus être le propagandiste. L’idée et les destinées de la Science de l’Homme ne sont heureusement pas liées à certain de leurs interprétations”. 32 Marshall was critical of the radical version of Eugenics. One of his rare involvements in public debates regarded indeed a study by Karl Pearson for Galton Laboratories in 1910 on the influence of parental alcoholism. (see on this Correspondence in Whitaker 1996, III: 250-81; Groenewegen 1995: 479-485; Soffer 1978: 90-95).

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approach (1950a: 9)33, which actually hinders the author to be fully aware of (and eventually to further develop) the important hint hidden in his theory: the growth harmonized by deliberate politics (1950a: 4). It remains, in Keynes, only an “intuition” without further developments (1950a: 68) 34.

3. Bringing the real world into the foreground

3.1. Organizations between time and space

As it is well known, it is with Marshall and with his careful study of industrial organization that started the branch of industrial economics (Raffelli et al., 2006: 371-417). Marshall takes Smith’s insights on the importance of the division of labour and develops a concept of organization, which is however much wider and involves every aspect of reality. Organization is therefore referred to not only a “single business” but also to “various businesses in the same trade, “various trades relatively to one another” and “the State providing security for all and help for many” (1920: 139). Every organism or system (be it a firm, a group of firms, an individual, groups of individual, a society or a nation) is characterized by a specific organization. His idea of organization derives from biology and it is also rooted into his early philosophical and psychological studies. Following Herbert Spencer’s35 idea of evolution, Marshall stresses the importance of the division of labour or functions for the development of any organism. On the basis of his early philosophical studies (most notably “Ye Machine”), Marshall emphasizes the importance for any organism to have a certain degree of rigidity and plasticity, routine and change (Raffaelli 1994, 2003). The relation between order and change is applied to almost any aspect of his reflections (Caldari 2015): a certain degree of “order” is considered necessary for the survival of any organism. The Marshallian ‘order’ is composed by a set of structured rules or customs: a long-lasting organization of parts which guarantees the persisting of the system; however, and this is crucial, the system

33 This criticism recurs often in Perroux’s writings and reflections. In the course on ‘History of Contemporary Economic Doctrines’ held in 1947 at “l’Institut d’Etudes Politiques” of Paris, for instance, Perroux warns against Keynes’ insufficient precision of the determination of time periods within which he develops his raisoning (“l’insufficient riguer que [Keynes] montre dans la détermination des péroides sur lesquelles il raisonne”, quoted in Arena and Maricic, 1988: 18). 34 Keynes’ timeless framework is indeed widely criticized in France since the early diffusion of the General Theory (Arena and Maricic, 1988; Arena and Schmidt 1999), which actually for several reasons (Rosanvallon 1989) takes place rather slowly. Until post World War II (after the war Keynes became particularly popular in non-academic milieus: see on this Rosanvallon 1989; Arena 2000), General Theory was mainly object of a severe criticism for its treatment of time, which French economists developed in different ways (see on this the rich and detailed account in Arena and Mariric 1988). Perroux grounds his critique on the unavoidable need to take into account economic phenomena in their (time and space) development and to contribute to a proper and dynamic theory of progress (see on this Guillen Romo 2010). According to Perroux, Keynes’ neglect of time and equilibrium framework affected and therefore limited many of the – however “undeniable” – contributions of post Keynesians’ theories of balanced growth (1983: 66). Perroux was for long time in close contact with several exponents of the London School of Economics and the Cambridge School. Among them: he largely appreciated Harrod’s contribution and interpretation of the Keynesian theory (Perroux, 1950: 58; Arena 2000: 995) and shared the meaning of his motto “money is power” (1982: 42); but he was critical of the Harrod (and Domar) model because unable to overcome the contrast between development and equilibrium (1958). He was then in close relation with J.Robinson: she was guest of ISEA since 1945 and invited Perroux to Cambridge and they had a rich correspondence. Perroux acknowledged her contribution and critique of the neoclassical approach (1984) but he criticized her concept of industry as production unity that was considered rather unhelpful (1971). 35 Accordingly, evolution implies a process of increased differentiation and integration, increased complexity and adaption to and of the external environment.

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itself must be free to change in order to adapt to the changing circumstances that may take place in the outside environment. In criticizing Comte’s division of the study of humanity into two parts “the Statical which deals with Structure and the laws of Order; and the Dynamical, which deals with the laws of actual development and Progress”, Marshall notes that such a distinction is difficult to draw because any “existing structure and order are the outcome of the progress of the past” (preface V ed., in Guillebaud, 1961: 48). According to Marshall, statics may be of some utility only as starting point of economic analysis (1898: 39) but it is absolutely unfit for any other use. As well clarified in a letter to Clark, he maintains: “I cannot conceive of any Static State, which resembles the real world closely enough to form a subject of profitable study. ... I could no more write one book about the statical state and another about the dynamical state than I could write one book about a yacht moving three miles an hour through the water which was running against it and another about a yacht moving through still water at five miles an hour” (Whitaker, 1996, II: 419). The content of this letter – “trop peu connue en France”, according to Perroux (“too little known”, 1935: 42) – is clearly endorsed by him36, who stresses that statics “remains a good intellectual tool”, very useful in several, important but preliminary contexts (1949: 48). In order to understand the real world, it is necessary to employ a dynamic approach, which becomes, in Perroux, a ‘dynamics of inequality’ (Marchal 1953: 157-159). According to Perroux, organization is one of the most distinctive traits of human reality at any level (family, firm, industry, village, country, world) (1943). For a given time, it is representative of a certain social data (1942a: 68) and may result in different outcomes: society, association, or community. In emphasizing how an organization truly coherent with human nature must rely on the existence of a community37, Perroux adopts a historical-evolutionary perspective: every social-human organization develops and changes over time in a continuous process of exchange with the surrounding milieu, similarly38 to natural organisms. A further refinement of this conception is given by the introduction of the term “structure”39: accordingly, any economic system is a complex structure (“unités complexes” or “macro-unités”) made of several substructures (micro-unitées). Furthermore, any economic system is imbued into different social, political, cultural structures that in turn are composed by several different substructures. In order to understand how a structure functions, it is necessary to seize its deep nature, or, in Perroux’s words, its “organization”40. Every structure is to be considered not as a closed system but as an open organism continuously exchanging with its surrounding. Every structure changes and evolves as part of an environment that is both rigid and plastic (1961a: 257-8) but some structures (“unités actives”) are more likely than others (“unités passives”) to affect and modify (partly at least) the external environment41. Moreover,

36 Perroux largely praises Marshall’s limited and side use of statics (“[son] usage limité et, pour ainsi dire, latéral de la notion de statique”, 1935: 38; see also pp. 42-43). 37 See below, section 3.3. 38 But still very different, because far more complex. See section above. 39 The approach to social sciences, known as Structuralism – of which Herbert Spencer is considered one of the founders – develops between the ‘50s and ‘60s and spreads particularly in France (Marchal 1953; Arena 2000). Perroux was one of its main representatives (Bastide 1962) and through the use of the concept of “structure”, he focuses on the features of his dynamics of inequality and power (1959; 1961a; 1982; 1983). 40 “La structure d’un ensemble rend intellegible son fonctionnement: la structure d’un gran ensemble ne se comprend pas que par l’organisation que la caractérise” (1975, 303). 41 See also 1991: 532-3. We find here a clear echo of Spencer’s theory (see note 35).

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any structure is characterized by a composite mixture of steadiness and capability to change and adaption42. In Perroux’s structure, as in Marshall’s organization, a too high degree of rigidity and inflexibility is greatly damaging (1961a: 396) and a limit to progress (1961a: 450). For these very reasons, however important and vital, change and evolution must proceed slowly. This is absolutely true for Marshall – “Natura non facit Saltum” he warns – and often it is considered completely necessary, as in the case of institutions: “though institutions may be changed rapidly; yet if they are to endure they must be appropriate to man: they cannot retain their stability if they change very much faster than he does. Thus progress itself increases the urgency of the warning that in the economic world, Natura non facit saltum. Progress must be slow….” (1920: 249). Perroux shares the same view. Evolution must undoubtedly be slow, he maintains without any hesitation43 For him, as for Marshall, institutions are long-lasting settings of action, long-lasting rules of the social system, and collective habits44: they necessarily change more slowly (1991: 48; 1967: 106, 110) than other elements45 (Le Goff 2014a: 277). In one of the definitions given to “structure”, Perroux describes it as an economic set that is localized in time and space (quoted by Marchal in Bastide 1962). As we have seen, time dimension is an essential landmark in Perroux’s approach but an analogous role is definitively played by space. Both of them compose the framework within which a proper economic analysis is to be developed. Perroux distinguishes between geographical and economic spaces: the former indicates a strictly geographical or political space, as a national territory (Crouzon 2003); the latter is more general, physically abstract, without geographical borders, in which any economic activity may take place, as the market (Zimmerman 2008). Perroux focuses mainly on economic spaces considered the proper field of economics (1961a: 127). Geographical localization is of course important for the presence of natural or energetic resources (1991: 226) and for certain kinds of activity (1961a: 152); however – especially in the increasingly globalized world favoured by the development of means of transport and communication – it plays a limited role for all the activities that characterize modern firms (1991: 227). The distinction between the strictly geographical and the economic spaces46 may be summarized in terms of absence (the former) or presence (the latter) of human activities. The same distinction is present in Marshall47, as Perroux rightly underscores (1954a: 427), and allows him to develop a socio-historical analysis of geographical space. It was the French Émile Levasseur who coined the term “economic geography” (Robic, 1992) to stress the importance to take simultaneously into account the role of nature and the role of man (Levasseur 1872: 21; see Clerc 2007). Marshall, who, especially in Principles and Industry and Trade, often refers to Levasseur48 to emphasize human

42 “Toute unité économique..agit dans un environment plastique. Elle cherche à atteindre ses propres buts en s’adaptant à l’environment rigide et en modifiant l’environment plastique” (1961a: 258). 43 “L’évolution ne peut être que lente, sans doute marquée d’hésitation” (1984: 111). 44 “Les institutions sont des cadres durables d’action, des règles durables du jeu social et des habitudes collective” (1960: 118). 45 “Leur changement est plus lent que d’autres variables économiques...[comment] les cotations d’un titre en bourse....” (1960: 119). 46 Perroux distinguishes economic space as content of plan; field of forces and homogeneous whole (1950b; 1961a; 1975). 47 See in particular his concept of “Economic Nations” (Becattini 2006). 48 In Marshall’s personal library, there are several Levasseur’s books and articles collected in his Bound volumes (Caldari 2000 and 2003). Perroux acknowledges Levasseur’s contribution in many writings and

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presence and activity in different geographical contexts, largely embraces his suggestion49 . According to Marshall geographical localization is important but insufficient to explain real economic phenomena: it is true – he writes – that at early stages of development localization has been caused by “physical conditions; such as the character of the climate and the soil, the existence of mines and quarries in the neighbourhood, or within easy access by land or water (1920: 268). However in the changing world “modern forces “ come into play and modify the geographical distribution of industries (1920: 277). Among these modern forces we find “every cheapening of the means of communication, every new facility for the free interchange of ideas between distant places [that] alters the action of the forces which tend to localize industries” (1920: 273). Marshall’s ‘modern forces’ are the same forces that characterize Perroux’s ‘economic spaces’ but there is a difference: whereas Marshall focuses on a possible exception to this general trend, analysing the phenomenon of industrial districts (1919; 1920; see on this Belussi and Caldari 2009), Perroux reflects on the likely and actual consequences of this process, developing his theory of poles of development (1961a; see Bocage 1985). Notwithstanding their differences, the two analyses have however an important common trait: the interplay of time and space in which human activities take place and develop. The consideration of the relation between any organization and its surrounding environment leads to the attention for the so-called externalities and external economies. The concept of external economies is due to Marshall, whereas one of the forefathers of the concept of externality is considered his pupil Pigou (Caldari and Masini 2011). Although different in their meanings, both these concepts – external economies and externalities – stress the importance of the unavoidable connection between a subject (individual, firm) and its milieu. Generally speaking, this connection implies involuntary side effects induced by any action. Perroux refers and uses both the concepts of external economies à la Marshall (1949: 197; 1961a: 340; 426; 509; 543) and of externality à la Pigou (1949: 197; 1982: 158)50 often stressing the important contribution given by the two Cambridge economists.

3.2. Industries, firms, and nations: a matter of power.

The reference to a time-space framework unavoidably removes economic analysis from perfect competition approach and its main assumptions. Perroux’s criticism of perfect competition is more widespread and runs far deeper than Marshall’s. Nonetheless Marshall distances his analysis from that approach and stresses its evident limits in a

in the inaugural Lecture at College de France he depicts him as the historian, statistician, and geographer who with a wide perspective and erudition has promoted the important connection between economics and history (1956a: 6-7). 49 Although for him economics and geography remained something apart, like in Perroux (see above), we find here again the idea of economics – social science – has to cooperate with other disciples but remains distinct from them: “It is becoming the fashion to allot a large place to geography in modern economic thought. That may be carried too far. But much may be gained by a broad, general study of the economic influences which mountains and watersheds, roads, railroads, rivers and seas exert on life and work; and the geographical distribution of the resources and methods of agriculture, mining, manufactures, and transport. This would prepare the way for an analysis of the interactions of the material and the human elements in the prosperity of cities, of industrial districts and of nations” (Marshall, 1902, p.174). 50 In Unités Actives et Mathématiques Nouvelles, Perroux indeed utilizes the term externality with the Marshallian meaning of external economies (1975: 365).

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number of passages that were largely referred to and quoted by Perroux (1926: 311; 1935: 33; 1945: 24; 1948: 71; 1961a: 337-38; 1983: 135). Perfect competition is for Marshall only a theoretical device, an ideal representation of reality with a limited utility (Marshall, 1920: 782) for the economist who has – and should have, as Marshall believed – the task of studying and inquiring into the real world and into the real man as part of the real world. Accordingly, when dealing with the working of the market, Marshall often underlines how it is far from being perfect (1920: 143; 341) and stresses the fact that rather often there may be combinations in the form of cartels or trusts (1920: 304, 493); that often firms do not want to spoil the market, implying the possibility of a price strategy (1920: 141; 360, 458); that one of the main problem is given by limited knowledge (1920: 347) and much importance is therefore to be given to the ways to develop it (1920, Book IV). He also refers to special “niche” markets, going far from the ideal of homogeneity of goods; to the problem of instability of employment (1920: 687-8) and unemployment (1920: 710), moving far from another assumption of perfect competition that is full employment of productive factors. Last, but not least, he refers to the possibility for a firm to reach increasing returns to scale. All these elements are at the core of the analysis developed by Perroux in his several writings51. For him, perfect competition is based upon false assumptions (“mensonges”) like homogeneity, atomism, harmony of interests, pure utilitarianism and moreover it neglects two fundamental factors: power and gift. As stressed by Perroux, power52 pervades any social field: religious, intellectual, political, and economic. It is the most characteristic trait of any human action and it is at the very heart of any economic act: the achievement of a greater wealth is indeed very often just a means to acquire more power. Once part of the economic reflections53, power is completely neglected in the neoclassical theory in so far as it is focused on a very simplified market theory (1960: 20) based on the concept of homo œconomicus; but it cannot be neglected when individuals, as social agents acting in a complex milieu, are taken into consideration. Power results in some degree of constraint exerted or undergone, both in the private and in the public fields. It implies the denial of homogeneity among agents and goes together with the refusal of atomism. Economic agents are not simple isolated “atoms” but are parts of one or multiple collective groups; they (individuals, firms, nations) are not independent from but interrelated to each other54. According to Perroux, “An economy...is conceivable only in terms of a rank-ordered distribution of social roles and inequality in the size and the relative power of the units composing it. Any economic complex must therefore be considered to be composed of the Great and the Small, the Strong and the Weak...” (1983: 72). It is then possible to distinguish

51 He acknowledged the importance of Chamberlin’s Monopolistic Competition which greatly contributed to economics by giving the necessary tools to integrate into a rigorous and realistic theory important elements as economic inequality, economic power, irreversible influences that are completely excluded from the perfect competition analysis (1953: xiv). It may be worth noting that Chamberlin – “a frequent guest and a permanent associate of the ISMEA” (Perroux, 1980: 152) – often refers to Marshall in his lectures and writings, stressing how far he was from perfect competition assumptions and the utility of his partial equilibrium approach (1961). 52 For the role of gift see section 3.3. 53 Perroux reminds particularly the works of the Classical economists and Marx. 54 “Les agents …n’ont pas de systèmes de références indépendants les uns des autres: ils peuvent au contraire s’entre-influences; ils peuvent exercer les uns sur les autres un pouvoir; en outre ils appartiennent à un groupe et même à plusieurs groups dans une société considérée: ils ne peuvent pas être considérés comme isolés les uns des autres” (1991: 41).

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between active and passive unities on the basis of the power of the former to influence, control, or direct the latter: active unities embody a degree of power, which enables them to exert some form of force and influence (constraint) on passive unities, that is, to have some domination effect (1961a; 1973a). Domination effect is based on a certain degree of power and involves always an asymmetric and irreversible influence (1961a: 35): it is linked to any “monopolistic” situation that can be attributed to firms, markets, national economies and so forth (1961a: 52); it is present inside each firm (in the relationship between entrepreneur and labourers), among firms, that are the only unities (“micro-unities”) taken into consideration in the neoclassical approach, and moreover among macro-unities55. When dealing with power, Perroux recalls the concept of “will of power” in Nietzsche and libido dominandi of the scholasticism (1961a: 84-85) but refers more largely to the contribution of Bertrand Russell (Chassoagnon 2015) and to his concept of “power and glory”56 (1973a: 60). It is interesting to note that Russell was among the “crops of students” Marshall had in the 1890s (Groenewegen 1995: 322) and that several Marshallian aspects are part of his background and reasoning (King 2005). It is then not surprising to find Marshall quoted among the first economists (Bocage 1977) who give emphasis to the role of power. For him, nations at international level have and express different degrees of power (1919: 2; 159), whereas an industry may be under the control of a powerful trade union (1919: 418). Moreover, competition is not among small homogeneous firms but it takes place among firms different and more or less powerful (1920: 590; 596; 605-6; 1919: 59; 63; 155; 168: 277; 305; 428) that can play a role of leadership (1919: 26) and have a domination effect (1919: 174; 433; 440-1; 471; 527; 542; 569) over the weaker rivals (1919: 244; 522; 537). Marshall’s emphasis on dominant economies and unities is well known by Perroux who stresses his precious contribution in several writings (1954a: 92; 1961a: 514; 1983: 135) and lectures57. Perroux often refers to another important contribution of Russell, that of groups of groups (“regions of nations”) (1964: 25; 1973a: 37; 1982: 35; 401). The term “nations within nations” is often used by Marshall58, who dedicates particular attention to “groups” since his very early career until his late writings. According to him, each group forms a kind of “nation”, with the same interests or occupations, because, as he notes, it is very common for instance that “the masters and the workmen of a particular trade in any district regard themselves as, for many purposes, separate nations” (Whitaker 1975, II: 124). Each individual belongs at the same time to different communities or groups (“social and economic strata”, as he often calls them: family, co-workers, friends, trade unions, associations and so on) and follows different duties and needs. Each part is strictly connected with the others, each level is interwoven with several other planes59. Moreover,

55 Whereas the micro-unity or simple unity is submitted only to one power, that has to face the limits imposed by the surrounding environment, macro-unity or complex unity is formed by a ruling unity and several partially subordinated unities (1982: 354). As underlined by Perroux, the concept of macro-unities has some connection with that of team as elaborated by Jacob Marshak and Roy Radner in Economic Theory of teams (Cowles Foundation monograph, 1972). 56 Power. A New Social Analysis, 1949. 57 As for instance in the course on economic progres held at the Collège de France in 1955-56 (IMEC Archive). 58 Among the several notes written for his last book on Progress there are many sections with the title “nations within nations” (Caldari and Nishizawa 2011 and 2014). 59 The Marshallian motto “the One in the Many the Many in the One” well synthetizes this idea of complexity (Caldari 2015), that is easily discernable also in Perroux (for instance when he underlines that

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Marshall took into consideration the interaction between different groups (Caldari and Mistri 2006; Caldari 2006a) as expressions of different degrees of powers. He stresses very often the problem of labour’s disadvantage in bargaining with entrepreneurs, especially for the lowest degrees of labour and unskilled workers (1920: Book VI, chapter IV) 60. A problem of imbalance of power is indeed underlined also for industry, between small and large businesses or between individuals firms and trusts or cartels. Groups, as an economic and social reality to deal with, are largely present in all Perroux’s writings61.

They are an unavoidable part of reality (1942a), expression of different interests and degrees of power (1961; 1991), a natural outcome of any socializing process (1963a) which involves human activities (1982).

3.3. Beyond competition: the role of cooperation

Given the various exceptions to perfect competition assumptions, nothing guarantees its advantageous working and outcome. The real play of competition implies a number of power inequalities, which deeply affects the assumed virtues of the market based on the rules of perfect competition. This shortcoming can be overcome, partly at least, by means of two strictly connected main remedies: one is related to the nature of man, the other implies state intervention. Let us now focus on the first one. As we have seen, both Marshall and Perroux, against the idea of homo œconomicus, refer to a real man in its manifold nature: individuals behave not only according to their purely egoistic motives but also, and moreover, following other motivations and inclinations that are detached from the strictly economic gaining. Individuals are composed of a mixture of egoism and unselfishness, which explains their socializing nature. This kind of considerations brought Marshall to develop his concept of economic chivalry, which “includes public spirit, as chivalry in war includes unselfish loyalty to the cause of the prince, or of a country, or of crusade. But .. also a delight in doing noble and difficult things because they are noble and difficult.....It includes a scorn for cheap victories, and a delight in succouring those who need a helping hand. It does not disdain the gains to be won on the way, but it has the fine pride of the warrior who esteems the spoils of a well-fought battle, or the prizes of a tournament, mainly for the sake of the achievement to which they testify, and only in the second degree for the value at which they are appraised

each institution is a composition of plural, different, and sometimes opposite perspectives – “the many”- which are summarized in the same institution – “the one” (1961a: 401). 60 In his early writings, Marshall tries to solve the problem of the labour market analytically: in the essays On Wages (1869-70) and in The Pure Theory of Foreign Trade (1876-77) Marshall deals with the problem of the relation trade unions – associations of employers by using the tool “non competing groups”, used also by J.S.Mill (1848) Cleffie Leslie (1868), and Cairnes (1874). If the society is considered in its several groups, competition can freely work inside each group but not among different groups. That is why Marshall, for the latter kinds of exchanges, tries to apply the method of reciprocal demand used for trade between different countries (Caldari and Mistri 2006). At the end Marshall was deeply disappointed by the results of this method and did not use it anymore for that question. Perroux, for his part, considers Cairnes’ non competing groups “a useful concept to deal with the transmission of information” (1961a: 367) and corroborates the similarity between “syndicates of labourers”, “syndicates of firms” and “syndicates of nations” (1982: 40-41). 61 This is true since his early writings, where Perroux contrasts the concept of “group” to the Marxian notion of “class” (see particularly 1938e). Perroux’s reflections on capitalism, its functioning and its shortcomings, are deeply grounded on a careful reading of Marx and Marxian texts (especially when he was in Lyon: see 1926; 1928a; 1928b) that he critically recasted and personally interpreted in several writings (see particularly his preface to Marx’s works, 1963). On Perroux (critical) reader of Marx and Marxians: Chambre 1978; Dufourt 2009; Savall 2005; Villanueva 1994.

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in the money of the market” (1907, in Pigou 1925: 330-331). This quotation is interesting because it emphasizes a similarity between war and competition where power (either military or economic) plays a crucial role: chivalry in economic competition, like in war, may allow to temper and balance some possible negative effects of power inequalities. Marshall’s economic chivalry is at the basis of Perroux’s “économie du don” (Gerbier 2006a: 534-35). According to Perroux, Marshall62 has highlighted an essential part of man 63 and three important components of a chivalrous spirit: noble behaviour; capacity of leadership; importance given to service rather than personal gain. As stressed by Perroux, “le don” (gift) – i.e. conveyance without apparent return (“transfert sans contrepartie”) – is an important typical human motivation even for economic actions. It characterizes any individual and, moreover, it necessarily underpins any community of individuals (1961a: 337-8). Altruism and generosity go together with the desire of power and aggressiveness: any economic act is indeed constituted of a double component: conflict and cooperation (1960: 114). Economic competition is in fact deeply rooted into cooperation in so far as competition is a means to a common endeavour (1961a: 341) and necessarily requires some agreed upon and shared rules of the game (1961a: 342). Competition and cooperation are, in Perroux, strictly interwoven (Destanne de Bernis, 1978). But the same is true for Marshall who considers cooperation as a means to lessen the asperities of untamed competition that has become increasingly necessary64. According to Marshall, “Economic chivalry on the part of the individual would stimulate and be stimulated by a similar chivalry on the part of the community as a whole” (1907, in Pigou 1925: 344). This is the reason why a chivalrous spirit is considered as an unavoidable requisite for cooperation (Gerbier 2006b). Marshall gives particular attention to cooperation since his early career: it is during his travel to America, in 1875, that he learns the “full power of the Cooperative spirit” and the strength of the “grand Cooperative Faith” (1875 in Whitaker 1975, II, 369): “a belief in the beauty and the nobility, the strength and efficiency, of collective action...” (1889: 229). It is what Marshall calls “true socialism” whose features are largely mentioned and shared by Perroux, especially for its beneficial effects on free enterprise (Marshall 1907 in Pigou 1925: 346; Perroux 1961a: 337-8). Cooperation and cooperative principles are at the core of the reflections of many socialists of the French tradition, particularly the Associative, Utopian and the Christian (or Catholic) socialists: H.Saint-Simon, C.Fourier, Luis Blanc, J.Proudhon, C.Gide, M. Chevalier and others. Notwithstanding the important differences of approaches, views, and aims among them (Gide and Rist 1948) it is possible to discern a common trait in their blame for the detrimental effects of capitalism on people and society. Cooperation

62 Who was, for Perroux – “aware of the deflexions which market society forces even on powerful currents in men’s souls and eager to transmute factious benevolence into effective benevolence: passionate about a spiritual reform that would liberate the society of noble men, now ready to break through the cocoon of storekeeper-society” (1954b: 16). 63 For this “essential aspect of man”, Perroux (1961a, 338) refers also to J.S.Mill (see also 1960: 28-31; 39-40), who deeply inspired Marshall (Groenewegen 1995; Raffaelli 2003; see also note below), and to his chapter on stationary state, where progress is conceived as human betterment (Caldari and Masini 2008). See section 3.4. 64 “Hope and ambition, and some scope for the play of free competition, are conditions – necessary conditions as far as we can tell – of human progress. But the great evil of our present system, which is one chief aim of cooperation – as I take it – to remove, lies in the fact that the hope and ambition by which men’s exertions are stimulated have in them too much that is selfish and too little that is unselfish” (1889: 238).

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or association65 among men is generally considered as a means to overcome part of those effects and to affirm the centrality of human above strictly material needs. It is interesting to note that those authors affected, directly or indirectly, both Marshall66 and Perroux67. Marshall’s “tendency to socialism” (McWilliams-Tullberg, 1975) is well-known; his deep and long-lasting interest into socialist issues is testified by the large number of articles and books that are part of his personal library and referred to in his writings (Groenewegen 1995); he was involved with several groups like the Co-operative Movement, the Charity Organization Society, the Christian socialists, trade unions and other associations; he defines himself as “a socialist” who “endeavours to promote the social amelioration of the people” (1907 in Pigou 1925: 334) and in the Preface to Industry and Trade he admits that he “remained under the conviction that the suggestions, which are associated with the word ‘socialism’ were the most important subject of study, if not in the world, yet at all events for me” (1919: vii). Marshall’s “flirtations with socialism” (Groenewegen 1995, 573) begin during his early economic apprenticeship and lasts till his late age. Great admirer during his youth of Saint-Simon and Fourier for the emphasis given to the possibility of human improvement (Groenewegen 1995: 609), Marshall assumed a “utopian perspective” increasingly evident in his late writings68. He however discharged any suggestion of socialistic scheme “yet advanced” because “far out of touch with realities” (1919: vii) and inadequate “for the maintenance of high enterprise, and individual strength of character” (1929: viii). Marshall’s socialism is indeed more close to the principles of Christian Socialism69, with a “religious emphasis 65 On their distinction see Gide and Rist, 1954: 242-3. 66 Marshall’s admiration for the French socialists is well documented (McWilliams-Tullberg 1975; Groenewegen 1995) and confirmed in his writings where, as in Principles for his chapter on progress he refers to their “noble character and vivid poetic imagination” (1920: 844) and stresses their “many of the most valuable ...suggestions ..” (1920: 766). In his Inaugural Lecture as Professor in Cambridge (1885) he praises their knowledge “about the hidden springs of human action of which the economists took no account” (in Pigou 1925: 156) and among his notes for a lecture course given in 1886 on “Socialism and the functions of government” there are several quotations from Fourier, Saint-Simon, Louis Blanc and others (McWilliams Tullberg 2006: 519). Marshall’s acquaintance with French socialists derives from both primary (particularly Louis Blanc, Chevalier, Fourier, Gide, Le Play, Proudhon) and secondary sources (mainly J.S.Mill, Ludlow and Maurice). Mill, “largely influenced by French ideas” (Gide and Rist, 1948: 372) was particularly “under the influence of the Saint-Simonians” (Gide and Rist, 1948: 376); the Christian socialists Ludlow and Maurice too were strongly Saint-Simonians, particularly close to Chevalier. 67 Saint-Simon’s important influence on Perroux is largely documented in the literature (Cormerais 2014; Le Guennec 1964; Perrault 2014a; Walch 1969; Uri 1987) but it is moreover testified by Perroux himself who in several writings relies on Saint-Simon to emphasize the importance of morality, culture and education (1973); the features of industrialization (1964; 1970; 1982), the crucial role of men (1943; 1954) and the contents of true progress (1963b; 1967). References are then made to Chevalier, for the emphasis given to the creative intervention of state (1956a: 6; 1964: 21, 24-25), to Proudhon, for the importance of social groups (1942a: 96) and their necessary interaction with the state (1938a: 296; 322), and to Le Play for the significant role of family (1942a: 14-15). 68 Various references to Utopia and ideals are particularly made in his late notes on progress (Caldari and Nishizawa 2011 and 2014; Dardi 2010; Groenewegen 1995). 69 Marshall was deeply involved with the Christian Socialists (Caldari and Nishizawa 2011) and he was particularly “enthusiastic” (Groenewegen 1995: 246), “friendly and sympathetic” (Groenwegen 1996: 86) with Ludlow, who was educated in France and spent long time in Paris where he was in direct contact with the socialists (Woodworth 1903). Maurice’s Christian socialist principles (especially the emphasis on cooperation and the attention given to the working classes) were highly instructive for Marshall (Groenwegen 1995: 144). Their motto was “our great desire is to Christianise socialism” (Woodworth 1903: 16) focusing on the betterment of individuals and their character, an idea which Marshall clearly shared and that explains “those ‘pious and prim moralising’ which may seem out of place in a treatise like the Principles” (Whitaker, 1975, I: 112). Another important influence is due to the Catholic Le Play, whose

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on morals, community and duty”70; notwithstanding his loss of religious faith, “Marshall never rejected religion as social and moral instruction” (Groenewegen 1995: 117)71. In the spirit of the Christian socialists, cooperation is considered a general principle, which characterizes an important part of human activities and gives voice to an important part of human nature: its socializing inclination. As for Perroux, “missionary of a realistic utopia” (Perrault 2014b), with a deeply-rooted catholic education, he was involved with social Catholics since the early 30s72, and embraced the Saint-Simonian principles of the “new Christianity” (1970: 17), which “has Moral as fundamental object” (1825 in Gurvitch 1965: 131) and considers impossible to “have a society without common morals” (Perroux 1973b: 217). Perroux praises Marshall’s conception of “true socialism” (“le socialisme essentiel et véritable”), taken as general principle of morality, sense of community and sacrifice for the common good (1961: 337-38)73. These principles are infused into the general concept of community (“Communauté”) as an organic and spontaneous whole, created by history, which implies a common life and an unavoidable social dimension (1942a: 72-75). Between the ‘30s and the ‘40s against the Socialism as experienced in Russia and based on a bureaucratic planning, critical of capitalism based on integral and wild liberalism, Perroux strongly promotes a third way based on “labour community” (“Communauté de travail”; 1938a, 1938b, 1938c; 1942a; 1942c)74. In the following years, “community” is increasingly

“monumental” work is often recalled (1920): the relevance given by Marshall to the role of family in a truly progressive society sounds indeed very close to Le Play’s perspective. 70 This was the underlying principle of the Cambridge Ethical School, with which Marshall was involved “for the whole of its existence” (Groenewegen, 1995: 448); 71 In Principles he maintains: “The elevation of the ideals of life on which this depends, is due on the one side to political and economic causes, and on the other to personal and religious influences; among which the influence of the mother in early childhood is supreme” (1920: 198), stressing that “the progress of industry depends” on “the religious, the moral, the intellectual and the artistic faculties” (1920: 247). For other interesting insights see his rich correspondence with Bishop B.F. Westcott (Whitaker 1996, II and III). 72 He was engaged into the Catholic movement Jeune Droite (Perrault 2014b) and actively participated into the debates of the so-called “non-conformistes des années 30”, that strongly characterized French intellectual and political milieus in those years (Del Bayle 1969) and gathered together the ideas of French socialism and social Catholicism (Alcouffe 2008). He was close to Emmanuel Mounier, very much influenced by Proudhon (Le Goff 2014a; Rendtorff 2014), founder of the revue Esprit in1932 (to which Perroux collaborated) and father of the so-called Communitarian Personalism, which was deeply inspired by Maritain’s “Humanisme intégral” (Dreyfuss 1988; see also Da Silva 2014). Mounier aimed at founding a new civilization based on persons considered as part and foundation of any community. Such a civilization required a moral and spiritual transformation of individuals, mainly based on Catholic principles (Le Goff 2014a). Perroux was then in close contact with father Lebret (Puel 2014), largely inspired by Le Play (Pelletier 1996) and advocate of a human economy based on individuals and their community (Lebret and Célestin 1950). In 1942, Perroux founds with Lebret the association and the revue ‘Èconomie et Humanisme’ which were “firmly personalist and communitarian” (Lebret and Célestin 1950: 568); among the people involved in Èconomie et Humanisme a significant role was played by Desroche, deeply influenced by Saint-Simon, Fourier and Owen and advocate of a homo cooperativus (Clément et al 2014). On the relation between Lebret, Desroche, Mounier and Perroux see Toupin-Guyot 2014. 73 According to Perroux, socialism and christianism may reach some common aims if they renounce to their extreme positions: if socialism denies the centrality of earth happiness and temporal power; and christianism refuses to comply only with the rich and powerful class of people. Only in this way – ignored by most socialist heads but very well-known by any humble priest of the countryside (“Tout cela, des chefs socialistes l’ignorent ou feigent de l’ignorer. Mais le plus humble curé de campagne le sait”, 1938a: 316) – christianism may be socialised and socialism christianized (1938a: 313-316). 74 The search of an alternative between pure liberalism and marxism characterized the activities of many non conformists of the 30s (Alcouffe 2008). Perroux, particularly involved with the topics of community

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considered according to the wider meaning of a cooperation among nations with the social aim to face the problems of underdevelopment, inequalities, war and so on. Its foundation remains indeed the same: a community of men with the common aim of true progress beyond the strictly economic aspect (1954a: 630).

3.4. Beyond growth: progress and the role of state

Unsatisfied with the idea of static equilibrium and along with their attention to irreversible time, both Marshall and Perroux give extreme relevance to economic development in their writings. Interestingly, they both distinguish economic growth, with a strictly material trait, from economic development and progress that imply a wider set of conditions. Even more interestingly, their reflections and conclusions on progress are largely matching. The achievement of a progressive society, which could overcome the problems of pauperism, deplorable labour conditions and unhealthy quality of life, is the fundamental goal for many of the socialists mentioned above. The interpretations of these problems and especially the means suggested to solve them are rather various, from the abolition of private property to the suppression of competition and the creation of a completely new society (Gide and Rist, 1948). Among them, Saint-Simon’s position is particularly interesting for the subject of this paper, because, in our view, it is the common ground (direct or indirect) which helps understanding many of Marshall’s and Perroux’s deep resemblances on this wide theme75. Saint-Simon’s idea of progress is strictly connected with his “new Christianism”, which envisages struggling against poverty through the betterment of moral and physical health of the poor. Accordingly, Saint-Simon indicates as primary and necessary to develop their (potential) intelligence through a proper education and adequate health conditions. For him, the pillar of progress lies on work: it can be improved through an efficient organization of labour and better skills that are possible only once poverty and ignorance are defeated (Gurvitch, 1965). For both Marshall and Perroux the most grievous problem to face is that of poverty that they connect to a state of feebleness76. For Marshall, as himself stresses 77, it has been his long-life chief subject of inquiry; the poor are people with ‘‘poor physique and feeble will, with no enterprise, no courage, no hope and scarcely any self-respect, whom misery drives to work for lower wages than the same work gets in the country’’ (1884, pp. 144–45). Perroux discusses at length the problem of wealth inequalities and poverty referred particularly to underdeveloped or developing countries and stresses that very often

and organization, tries to promote a “French” version of corporatism or neo-corporatism (1938a; 1942a;), which aimed at joining labour and capital into an organic whole (1938a). Labour community was to be neatly distinguished from any totalitarian corporatism (1942b) in so far as it was based on free syndicalism (1938b) and equal number and power between labourers and entrepreneurs (1938a). 75 However, two other contributions are significant in this context: Le Play’s, for his emphasis on the role of family, which in Perroux, as in Marshall, is considered as a fundamental community (1942a: 110) in a progressive society; and Chevalier’s who underlines the necessary role of the State for the supply of crucial public services (see below). 76 The link between ‘poverty’ and (moral, physical) ‘feebleness’ is also stressed in Saint-Simon, who clarifies: “le manque d'instruction et de santé se montre dans ses projets. Son imprévoyance et sa faiblesse seraient bientôt la cause de sa propre destruction, si on l'abandonnait à ses inspirations” (Gurvitch, 1965: 32). 77 “In 1893, before the Royal Commission of the Aged Poor, Marshall claimed “I have devoted myself for the last twenty years to the problem of poverty, and …. very little of my work has been devoted to any inquiry which does not bear on that” (Keynes, 1926: 205)

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poverty goes hand by hand with economic and social feebleness78. Marshall and Perroux have a very complex conception of progress, which involves an intricate combination of elements. According to Marshall, “progress has many sides. It includes development of mental and moral faculties, even when their exercise yields no material gain.” (manuscript note, folder 5/3/1). Economic development involves, of course, an increase in wealth, production, and incomes but they are considered only means towards the true progress as he clearly stresses: ‘‘the production of wealth is but a means to the sustenance of man; to the satisfaction of his wants; and to the development of his activities, physical, mental and moral’’ (1920: 173). Man – in its complex social dimension - is considered both the true goal of progress and its most important source. As we have seen, Perroux defines his economic approach as “economics of man” which embodies two different but connected conceptions: “economics of the whole man” (économie de tout l’homme) and “economics of any man” (économie des tous les hommes). The former term means that individuals’ whole nature (egocentric and allocentric) is taken into consideration; the latter concept stresses the attention given to every human being79. Man and human beings are at the core of Perroux’s economics, not only as chief subject-matter but also as main objective. His human economics aims indeed at providing the satisfactions of all the fundamental needs for everyone and the maximum of freedom80 in order to achieve the blossoming”81 of the potentialities and capabilities hidden in each man82. Perroux’s economics, then, like Marshall’s, has as ultimate task to find the way to progress, which “is bound up with the progressive society”83 (1983: 40-41). It cannot be “simple material growth” then (pace Blaug 1999): it involves all those forces that increase in a cumulative way all the material resources necessary for the

78 “La pauverté allait d’ordinarie avec la faiblesse. La notion de pauvre appelait la notion de faible” (1961a: 506). 79 “C’est l’idée englobante de l’économie de l’homme, entendue comme l’économie de tout l’homme et l’économie de tous les hommes. Économie de tout l’homme veut dire che l’ être humain entier est accueilli avec ses mobiles allocentriques et ses mobiles égocentriques....Économie des tous les hommes signifie économie des tous les êtres humains vivants” (1961a: 511-12). 80 According to Perroux, progress expresses itself in terms of freedom (“le progrés s’exprime en terms de liberté”, 1967: 64). In Marshall, freedom is a very important, crucial element: it is a necessary part of his “Ye Machine”, along with a certain number of routines (Raffaelli 1994; 2005; Caldari 2015) but moreover it is something that each individual should have in order to express his/her own potentialities, capacities, free from bounds that may limit and check that creative energy that characterizes human beings. In a letter to bishop Westcott on the 20th of January 1901 he firmly states: “In my view Freedom is life” (Whitaker, 1996, vol. II: 293-295). An analogous assertion of the importance of freedom is emphasised by Saint-Simon in all his writings (Gurvitch 1965). 81 Marshall uses a very similar term, with the same meaning and substance of Perroux’s “épanouissement”: that of “ to spring”. The following quotation is just an example out of several similar passages:” Economists have accordingly now learnt to take a larger and more hopeful view of the possibilities of human progress. They have learnt to trust that the human will, guided by careful thought, can so modify circumstances as largely to modify character; and thus to bring about new conditions of life still more favourable: to character; and therefore to the economic, as well as the moral, wellbeing of the masses of the people. Now as ever it is their duty to oppose all plausible short cuts to that great end, which would sap the springs of energy and initiative”. (1920: 48). 82 “L’économie humaine propose la satisfaction des besoins fundamentaux de tous, le maximum de liberté concrètement vécue par chaque être humain, pour attendre le but de l’épanoussiment des toutes les virtualités de l’homme en chaque homme” (1961a: 399). 83 Accordingly, in his analysis, Perroux distinguishes between (overall) “Progress” and (wealth, material)“progresses”. The latter does not imply necessarily and automatically the former.

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“blossoming” of every man and of the whole man84. When individuals are considered as the main aim of progress and development, the concept of quality of life is evoked. This is a really widespread topic in Marshall’s writings: for him it is indeed the true test of progress. A good quality of life requires not only a certain level of income but also other elements not easily valued in purely economic terms like fresh air, green spaces and so on (Caldari 2004, 2006b). Marshall pays large attention to the risk that man and its environment could be subjected to the strictly material requirements of production and could worsen people’s quality of life. Very similarly, Perroux warns against the economic imperatives that may produce the waste, decline, and degradation of human beings85. He gives large attention to different aspects connected with individuals’ quality of life86: the problem of pollution and the quality of natural resources (air, water), the conditions of housing and workplaces, the problem of urbanization87 (1991: 502; 529). All these aspects are deeply inquired by Marshall too, whose idea of progress is very close to the modern concept of sustainable development. It is not surprising therefore that, especially for these topics, Perroux praises and often recalls Marshall as the economist who has paved the way to a proper understanding the forces of progress (see for instance 1967: 136, 138). When individuals are considered as the source of progress the most crucial element recalled, in a very Saint-Simonian way, is education. Through education it is possible to enhance individual potentialities and stimulate otherwise hidden human resources. Moreover, for Marshall, education helps distributive justice because it raises the wages of unskilled workers: on the one hand it reduces their number, making that kind of work scarce, on the other hand it improves the quality of work and increases production. This explains the reason why ‘‘the best investment of the present capital of the country is to educate the next generation and make them all gentlemen’’ (1873a: 106). For Perroux, the improvement of individuals’ quality of life is based on some crucial elements like hygiene, health but especially education (1984: 112). Education is in fact considered the chief means to obtain the employment of all the hidden, latent human resources88 and it further allows the betterment of the quality of work and increases the level of wages. (1961a: 395). High remuneration levels are important but it must go together with good labour conditions. Through a “relecture of Saint-Simon”, Perroux warns against the possible several damages industry may inflict on workers, becoming a devourer of human

84 “...un ensemble de forces qui accroissent cumulativement la disposition de ressources matérielles nécessaries à l’épanouissement des tous les hommes et de l’homme total en chacun d’eux” (1961a: 195). 85 “Elle est irrationelle, l’économie qui accepte la destruction des ressources potentielles, des objects utiles, mais combien plus l’économie qui accepterait le gallispage, l’amoindrissement, l’avilissement des êtres humains” (1961a: 359). 86 “Nous ne sommes pas riches seulement de ce que nous gagnons, mais du soleil que de larges baies laissent pénétrer dans nos lieux d’habitation ou de travail, de l’air pur qui circule dans des rues spacieuses, du square coquet que nous pouvons fouler. Nous sommes riches de la bonne humeur communicative et de la joie de vivre de nos compagnons de travail, riches au sens propre du mot de la santé d’autrui, de son équilibre mental, de sa résistance” (1943: 33). 87 It is possible to discern here another possible influence of Le Play who gave large emphasis to local milieus and the importance of territorial organization. Le Play greatly inspired Lebret who gave particular attention to the effects of urbanization on the “épanoussement human” (Bévant 2014) and Benoit-Levy who introduced in France the Garden City Association, a phenomenon first developed in England and that Benoit-Levy experienced directly during his visits to Letchworh and other realities. Marshall himself – admirer and reader of Le Play – was very much involved into the Garden City movement and the Society for Promoting Industrial villages (Caldari 2004). 88 “L’éducation le moyen du plein emploi de toutes les ressources humaines latentes” (1961a: 165).

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senses (“devoratrice de sens humains”, 1973: 221). This risk is particularly connected with large firms chiefly focused on technical efficiency and financial profitability (1973: 221-222). We find the same worries in Marshall, who developed a severe and deep criticism of large firms and especially of their organization based on scientific management principles (Caldari 2007). It is again in Saint-Simon the idea that industry was the primary place to allow people to realize themselves as individuals and to educate them. The educative scope of industry is strongly stressed in Marshall, who notes that “work is not a punishment for fault: it is a necessity for the formation of character and, therefore, for progress” (1925: 367) and particular relevance is given to those employments that “demand powers and activities of mind in various kinds.... the faculty of maintaining social intercourse with a large number of persons..” (1873b: 158). But Perroux as well underlines this important function of industry (1973), pointing out that production must be understood as moral and intellectual more than material: its main aim is not indeed inert wealth but man; it is a production of man by means of man (1964: 50-51). Saint-Simon’s industrialism envisages the shift of political power into the hands of representatives of the economic world (entrepreneurs, engineers, bankers, and so forth) in order to have an efficient administration of the country (Gide and Rist 1948). Both Marshall and Perroux, instead, underline the important role of the State89. Perroux notes that to govern an industry is not the same as governing a nation (1964: 44-46). Market economy is unable to guarantee all the elements that are the necessary premises for progress, because it is focused on the logic of profit or, as Perroux stresses, recalling R.Harrod, the logic of nothing for nothing (“rien pour rien”, 1960: 8). Moreover, “history does not record any case ... of ‘nations’ able to dispense with the activity of units called public ones which try to effect a regulation of the whole, with the welfare of the community in mind” (1980: 160). This is the reason why Perroux stresses the urgency for welfare economics90 and - against Saint-Simon’s parabole - state intervention. State not

89 Besides the State, an important relevance is given to trade unions and syndicates that they have deeply inquired into their functioning, potentialities and limits according to a very similar perspective. Marshall considers trade unions as very important means to educate and to give people an important “esprit de corps”; he appreciates them especially for their efforts to raise workers’ “standard of life and character as much as their wages” (1920: 703). He is however critical when trade unions aim at imposing rigid and bureaucratic rules. Perroux considers syndicates as a centre for social and moral education (1938b: 47) and an important factor of civilization (1938b: 50). However, as they are representatives of particular categories (1930), State intervention is nonetheless necessary in order to harmonize the opposite interests (1938b: 49). 90 Perroux deeply criticizes Pigou’s approach to welfare, in so far as it is static and unconnected with history, time and development (1961b: 31) and it is focused only on the monetary quantifiable dimension (1960: 113; 1984: 103); he moreover stresses how Pigou neglected the important insights given by his master Marshall on the existence and urgency to hold a wider perspective especially when dealing with questions of welfare. Robertson on the contrary is considered as the one who has followed Marshall’s legacy on this field (1960: 113-14). It is interesting to note that Perroux’s critiques of Pigou are indeed the same Marshall himself expressed (Bharadwaj 1972) and that are well synthetized in the following words written to Pigou “I’m charmed by the brilliancy...of your book. But I am also frightened. I’m certain that almost everything you say is true, with the qualifications that are latent in your mind: but some of them seem to me in danger of misleading people who do not know the ropes of economic complex interactions” (Whitaker 1996, III, 332-3). The meaning of these lines is well clarified in Principles: “The statical theory of equilibrium ... is barely even an introduction to the study of the progress and development ... Its limitations are so constantly overlooked, especially by those who approach it from an abstract point of view, that there is a danger in throwing it in definite form at all.” (1920: 461).

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only has to invest in order to guarantee a decent quality of life to all91 but it has to intervene in order to protect people against the dangerous extremisms of market logic92. In his view, economics and politics must have as chief common goal the development of the most important resource, that is human resource93 by means of investments in human capital aimed at increasing people’s intellectual, moral, and professional levels (1961a: 329). Marshall considers investment in human capital as a fundamental step towards progress and when parents are unable to raise their children properly, it is the State, in his view, that should take their place so that ‘‘the children even of those parents who are not thoughtful themselves, may have a better chance of being trained up to become thoughtful parents of the next generation.’’ ‘‘To this end—writes Marshall—public money must flow freely’’ (1920: 718). But State intervention is fundamental also to supply all those goods and services that cannot adequately be supplied by the market (Caldari and Masini 2011; Caldari and Nishizawa 2014) because as he notes “the chief aim of the Government of a Western country is to promote the well-being of the people” (Manuscript note, folder 5.26).

4. Some final remarks

Several and deep affinities exist between Alfred Marshall and François Perroux: from their conception of economic science to their methodological approaches; from the central subjects of their analysis to the main aim of their study. As we have seen, their affinities are far from being accidental. On the one hand, Perroux – a careful reader of Marshall – found in his several writings a number of aspects that were clearly in step with his own view; accordingly he largely quotes Marshall, stressing the importance and the originality of his contribution with regard to: the way in which he used static analysis, partial equilibrium, cœteris paribus pound, organic analogies; the relevance given to irreversible time and dynamic analysis; his concepts of economic space, external economies, power, domination effect, economic chivalry; his understanding of ‘socialism’. On the other and most important hand, Marshall and Perroux share a common ground of philosophical, economic and political readings and acquaintances that result into a significant convergence of perspective and approach. Among them we have seen: Comte, for their idea of economics as social and complex science; the Historical School, for the importance to take into account facts in their historical development and therefore to promote an applied part of economics; Spencer for their consideration of biology and evolution and their conception of organization (or structure); Levasseur, for the attention to economic space; Cairnes for the importance of the contrasts among different groups; J.S.Mill for the idea of progress; Le Play for the role recognized to family, community and the attention given to urbanization problems; Chevalier for the imperative role of the state and public intervention to promote progress; Saint-Simon for their concern for the problem of poverty, education, importance and dangers of industrialisation; the Christian or Catholic socialists (Ludlow and Maurice for Marshall, Mounier, Lebret, and Desroche

91 “Coûts de l’homme signifient... coûts prioritaires assumés par une puissance publique au sein d’un group humain déterminé, pour assurer à tous les êtres humains les conditions fondamentales de leur vie” (1961a: 305). 92 “C’est lui [le pouvoir politique] qui , dans sa sphère, protège les hommes de l’envahissement du marché, les met dans des conditions favorables pour résister à la ‘mercantilisation’ de l’être humain...” (1973a: 129). 93 “Il existe un lieu géométrique des convergences des projets et des activités tant politiques qu’économiques: c’est le developemment plénier de La Ressouce Humaine” (1973a: 135).

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for Perroux) for the importance given to Moral principles, sense of community, human development and betterment. In large part of the economic literature the liaisons between François Perroux and Alfred Marshall are nearly neglected. On the contrary, it is widely underlined the important role played by the Austrian School (most notably Mises and Schumpeter) and Marx, and large attention is given to his relation with several British economists (particularly Keynes, Harrod, J.Robinson). Undoubtedly, these authors had an important influence on Perroux, who nevertheless did not spare them severe critiques. Yet, it is also recognized (Quéré, 2010: 145) that “Marshall’s prestige in France began ... as an indirect result of the impact ... of the ideas of François Perroux...concerning issues related to economic development, inequality in development patterns and local development” and that the role of Perroux “in propagating Marshall’s doctrines and conceptual framework was central” (Quéré 2010: 148). One may wonder why, therefore, large part of the literature is to a great extent silent on the nexus between the two economists. A partial answer may be in what follows: Marshall and Perroux have both a very compound approach to economics; their being economists imply attitudes and interests that usually belong to sociologists, biologists, mathematicians, philosophers and so forth. Their thought is therefore as a multifaceted patchwork, which is difficult to conventionally compose. However in the literature their main contribution to economic science has been and is usually highly simplified. Until short time ago, Marshall was mainly dealt with in the literature as the economist of partial equilibrium analysis and tools (demand and supply schedules, representative firm, short and long run equilibrium) whereas his more innovative and original scientific contribution was disregarded or misunderstood94. Apart from a few exceptions, among which we find Perroux, only recently, since the 90s, the work of many Marshallian scholars has resurrected Marshall’s contribution, stressing his originality and richness of thought. As for Perroux, his scientific contribution, especially at international level, is nowadays almost unknown or limited to a small part of his whole work (most notably the poles of development). According to the traditional interpretations it would be therefore impossible to discern any significant connection between Marshall “the essence of Victorian economics” (Heilbroner 1999: 60) and Perroux the “grand contestataire” (Weiller 1989). Yet, if one goes beyond this conventional construe, it is not only possible to distinguish the various bonds between them but also (and especially) to rediscover the richness and deepness of the contributions given by these two economists.

94 Perroux’s collegue and friend (Perroux 1938c) Henry Guitton significantly casts: “Peu d’auteurs, sans doute, ont été autant lus et aussi mal compris que Marshall. On l’invoque surtout à propos des analyses mécaniques et des équilibres partiels. En vérité, il voyait non dans les mathématiques ou les sciences physiques, mais dans la biologie le véritable guide de la science économique, qui est fondamentalement une science de la vie” (1951: 153).

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