The arrival of Lionel Robbins brought about considerable changes to the teaching of Economics at LSE. His book An Essay on the Nature and Significance of Economic Science (1932) (Second Edition Robbins 1935) provided a definition of Economics that had a great impact: "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." (p. 16). This led to a more theoretical approach to teaching and research in Economics at LSE, such as in the work of John Hicks (1904-1989) and his Value and Capital (1939).
A second important impact Robbins had on LSE was his interest in European Economics. Unlike Cambridge, where there was very little interest in Economics outside Marshall's Principles, students in Economics at LSE had to study languages and read passages of Economics in French or German. Robbins enjoyed reading German texts and became very interested in Austrian Economics. In 1931, he encouraged Fritz von Hayek (1899-1992) to come to LSE to give some public lectures. These were so successful that Hayek was offered a Chair in 1931. Given the Great Depression, Hayek's work on Business Cycles was seen as important. Robbins, with support at times from Plant and Hayek, ran a famous Seminar for graduate students and staff that led to the production of much important research. Among those who attended were Hicks, Roy Allen (1906-1983), Ronald Coase (1910-2013), Nicholas Kaldor (1908-1986) and Abba Lerner (1903-1982).
The possibility of developing a more Austrian approach to Economics at LSE by Robbins and Hayek was cut short by two events. The first was the publication in 1936 of The General Theory of Employment, Interest and Money by Maynard Keynes and the second was the outbreak of the Second World War.
The General Theory had an immediate impact, not least on some of the younger economists at LSE, such as Kaldor and Lerner, who quickly became Keynesians. Another effect was that in The General Theory, Keynes avoided dealing with genuine dynamic analysis by continuing to use Marshall’s comparative statics, so that the Austrian approach to dynamic analysis became of less interest.
With the outbreak of the Second World War, many LSE academics, including Robbins, left LSE to contribute to the war effort. LSE moved to Cambridge, where Hayek, whose offer to contribute to the war effort had been declined, taught and edited Economica. In his research, he continued to move away from pure theory and into more political and philosophical areas and published The Road to Serfdom in 1944.
With the end of the Second World War, LSE returned to Houghton Street, academics returned from government service and Robbins began rebuilding the Economics Department. The Department attracted excellent young economists, such as Dick Lipsey, Kevin Lancaster, Max Steuer, Bernard Corry and Maurice Peston and the Robbins Seminar was revived and flourished.
There was one area in which LSE lagged behind developments elsewhere and this was in Econometrics. In The Nature and Significance, Robbins (1935) had expressed extreme scepticism about the use of statistical estimation in Economics and so there were no econometricians in the Economics Department. This concerned the younger economists in the Department and a number of those mentioned above formed a group and set up the Methodology, Measurement and Testing (M2T) Seminar to carry out empirical tests on economic theories. The arrival of Bill Phillips (1914 – 1975) in the Economics Department and support from Jim Durbin (1923 – 2012) in the Statistics Department began to change views on the need for Econometrics, but the changes came after the end of the Robbins Era.
References to the Economics Department and individual economists are threaded through Dahrendorf (1995), as a diligent examination of the index will reveal. Cord (2018a) contains thematic chapters concerning the Economics Department and biographical chapters on economists from all three periods.
Robbins’s autobiography (Robbins 1971) and Susan Howson’s biography (Howson 2011) provide much material on this period.
A brief introduction to Austrian Economics is provided by Kurz (2018). For evidence of the Austrian influence on Robbins’s economic analysis, see Robbins (1934) and Robbins (1972).
For biographical information on Hayek, see Ebenstein (2003) and Boettke and Piano (2018). Garrison and Barry (2014) present essays covering the range of Hayek’s research interests. Cord (2013) and Backhouse (2014) evaluate the debate between Hayek and Keynes in the 1930s. Finally, Kresge and Wener (1994) have an extended interview in which Hayek presents his forthright views on LSE and many other topics.
There is a good deal of information on the younger economists who flourished at LSE during the Robbins Era:
For Ronald Coase, see: Mariano (2018) Thomas (2016) and Williamson and Winter (1993)
For John Hicks, see: Hagemann (2018), Hagemann and Hamouda (1994), Helm (1984) and Puttqaswamaiah (2001)
For Kaldor, see: Kaldor (1996) and Targetti (1992)
For Lerner, see: Young, Schiffman and Zelekha (2018).
Both Coase (1994c) and Hicks (1982b) comment on their personal experiences in the LSE Economics Department in the 1930s, while Coats (1993c) looks at the Inter-War years at LSE.
Lionel Robbins’s scepticism about statistical estimation in economics and the early econometric efforts presented at the (M2T) Seminar are discussed in Thomas (2009). The influence of Karl Popper on members of the Seminar is discussed in de Marchi (1988b). For a biography of Dick Lipsey, see Steuer (2018).
For information about Jim Durbin and his role in the development of econometrics at LSE, see Harvey and Batholomew (2018) and Phillips (1988b).
Bill Phillips's influence on Economics and Econometrics has generated a considerable literature. As a sample, see: Bollard (2016), a biography that combines an account of Phillips’s life with a non-technical discussion of his research; Forder (2018), a further biographical note; Hendry and Mizon (2000), with an evaluation of his contributions to Econometrics; Leeson (2000), which reprints all Phillips’s publications with comments and evaluations; and Lipsey (2000), with a discussion of the Phillips Curve.
Please click on the button for a detailed list of references.
- Backhouse, R.E. ‘Hayek and Keynes’, Chapter 5 in Garrison and Barry (2014).
- Boettke, P.J. and E.E. Piano (2018) ‘Friedrich Hayek (1899-1992)’, Chapter 15 in Cord (2018a).
- Bollard, A. (2016) A Few Hares to Chase: the economic life and times of Bill Phillips, (Oxford: Oxford University Press).
- Coase, R.H. (1994a)Essays on Economics and Economists, (Chicago: University of Chicago Press).
- Coase, R.H. (1994c) Economics at LSE in the 1930s: A Personal View’, Chapter 15 in Coase (1994a).
- Coats, A.W. (1993a) The Sociology and Professionalization of Economics: British and Americal Economic Essays, (London: Routledge).
- Coats A.W. (1993c) ‘The Distinctive LSE Ethos in the Inter-War Years’, Chapter 20 in Coats (1993a).
- Cord, R.A. (2013) Reinterpreting the Keynesian Revolution, (London: Routledge).
- Cord, R.A. (Ed.) (2018a) The Palgrave Companion to LSE Economics, (London: Palgrave Macmillan).
- Dahrendorf, R. (1995) A History of the London School of Economics and Political Science 1895—1995, (Oxford: Oxford University Press).
- de Marchi, N. (ed.) (1988a) The Popperian legacy in economics, (Cambridge: Cambridge University Press).
- de Marchi, N. (1988b) ‘Popper and the LSE economists’ Chapter 4 in de Marchi (1988a), 139-66.
- Ebenstein, A. (2003) Friedrich Hayek: A Biography, (Chicago: University of Chicago Press).
- Faccarello, G. and H.D. Kurz (Eds.) (2018) Handbook on the History of Economic Analysis Volume II: School of Thought in Economics, (Cheltenham: Edward Elgar).
- Forder, J. (2018) ‘A.W.H. Phillips (1914-1975)’, Chapter 23 in Cord (2018a).
- Garrison, R.W. and N. Barry (Eds.) (2014) Elgar Companion to Hayekian Economics, (Cheltenham: Edward Elgar).
- Hagemann, H. (2018) ‘John R. Hicks (1904-1989)’, Chapter 17 in Cord (2018a).
- Hagemann, H. and O.F. Hamouda (eds.) (1994) The Legacy of Hicks: His Contributions to Economic Analysis, (London: Routledge).
- Harvey, A.H., and D. Bartholomew (2018) ‘James Durbin (1923-2012)’, Chapter 25 in Cord (2018a).
- Helm, D. (Ed.) (1984) The Economics of John Hicks, (Oxford: Basil Blackwell).
- Hendry, D.F. and G.E. Mizon (2000) ‘The Influence of A.W. Phillips on Econometrics’, Chapter 38 in Leeson (ed.) (2000), 353-64.
- Hicks, J.R. (1982a) Money, Interest & Wages: Collected Essays on Economic Theory, Volume II, (Oxford: Basil Blackwell).
- Hicks, J.R. (1982b) ‘Introductory: LSE and the Robbins Circle’, Chapter 1 in Hicks (1982a)
- Howson, S. (2011) Lionel Robbins, (Cambridge: Cambridge University Press).
- Kaldor, N. (1996) Causes of Growth and Stagnation in the World Economy, (Cambridge: Cambridge University Press).
- Kresge, S. and L. Wener (Eds.) (1994) Hayek on Hayek: An Autobiographical Dialogue, (London: Routledge).
- Kurz, H.D. (2018) ‘German and Austrian schools’ in Faccarello and Kurz (2018), pp. 252-273.
- Leeson, R. (2000) A.W.H. Phillips: Collected Works in Contemporary Perspective, (Cambridge: Cambridge University Press).
- Lipsey, R.G. (2000) ‘The Famous Phillips Curve Article’, Chapter 24 in Leeson (ed.) (2000), 232-42.
- Mariano, A. (2018) ‘Ronald H. Coase (1910-2013)’, Chapter 22 in Cord 2018).
- Ménard, C. and E. Bertrand (Eds.) (2016) The Elgar Companion to Ronald H. Coase, (Cheltenham: Edward Elgar).
- Phillips, P.C.B. (1988b) ‘The ET Interview: Professor James Durbin’, Economic Theory, Vol. 4 (August), 301-27.
- Puttqaswamaiah, K. (Ed.) (2001) John Hicks: His Contributions to Economic Theory and Application, (London: Transaction Publishers).
- Robbins, L. (1934, 2009) The Great Depression, (London: Transaction Publishers).
- Robbins, L. (1935) An Essay on the Nature and Significance of Economic Science, Second Edition, (London: Macmillan).
- Robbins, L (1971) Autobiography of an Economist, (London: Macmillan).
- Steuer, M. (2018) ‘Richard G. Lipsey (1928-)’, Chapter 29 in Cord (2018a).
- Targetti, F. (1992) Nicholas Kaldor; The Economics and Politics of Capitalism as a Dynamic System, (Oxford: Clarendon Press).
- Thomas, J. (2009) ‘Robbins’s Nature and Significance and the M2T Seminar: Measurement with Theory and Theory with Measurement’, in Cowell and Witztum (2009), pp. 403-30.
- Thomas, J. (2016) ‘Coase and the London School of Economics in the 1920s—1940s’, Chapter 2 in C. Ménard and E. Bertrand (2016).
- Williamson, O.E. and S.G. Winter (Eds.) (1993) The Origins of the Firm: Origins, Evolution, and Development, (Oxford: Oxford University Press).
- Young, W., D. Schiffman and Y. Zelekha (2018) ‘Abba P. Lerner (1905-1982)’, Chapter 16 in Cord (2018a).