1929-1961: The Era of Lionel Robbins

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.

Suggested Reading:

General:

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.

References:

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