Marshall’s ‘welfare economics’ and welfare’: a reappraisal based on his unpublished manuscript on progress.

.The birth of welfare economics is usually associated with the name of Arthur Cecil Pigou, Marshall’s favourite pupil and successor at the Chair of Economics in Cambridge. In his main contributions (Wealth and Welfare, 1912; Economics of Welfare, 1920) Pigou adopts an utilitaristic approach, mixing some analytical tools and concepts inherited from Alfred Marshall with pre-Marshallian (especially Sidgwick’s and Mill’s) theoretical concepts (O’Donnell 1979). The conventional view, largely developed in the literature, underlines the existence of a Cambridge School tradition in welfare economics, which goes from Mill to Pigou and Kahn (Bergson 1938 and 1954; Mishan 1960; Levin 1956; Cooter and Rappoport 1984). Marshall’s contribution is usually summarized in the analytical tools developed in his Principles of Economics: consumer’s and producer’s surplus, utilitaristic and mathematical approaches, the concepts of national dividend and social welfare, and so forth. Nonetheless, Marshall’s welfare economics cannot be reduced to the analysis developed in Principles: there are, indeed, other writings where it is possible to find a more comprehensive reasoning on welfare; most notably the notes written for his unpublished book on Progress. In this paper we illustrate Marshall’s view of welfare, taking into account especially those notes, in order to clarify how his true contribution to welfare economics must be distinguished from the simplified version given in Principles.