91R. J. H. J. Matthews to Harrod, 10 September 1925 [a]

On G. D. H. Cole's suggestion, Matthews--the secretary of the Workers' Educational Association, southern District--asks Harrod to give a lecture on 10 October to students of the Trade Union and labour organizations on subjects of their interests; he prospects the possibility of a tutorial class or a one year class on industrial history or economics, if demand arises. [1]

  1. 1. Harrod was eventually appointed as tutor for the tutorial class for working people on economics by the University of London, Joint Committee for the Promotion of the Higher Education of Working People (A. T. <Miteleson> to Harrod, 16 November 1925, in HPBL Add. 72763/107. Two syllabuses are preserved in the same file, one on "General Economics" (of which there is a photocopy in HP (NC)) and the other on "Economic History of England from 1760 to the Present Day". Harrod's collaboration with the Workers' Educational Association was further continued until the economic class was discontinued in 1926 (H. E. Austen to Harrod, 29 July 1926, in HPBL Add. 72763/145). Harrod had already lectured the previous year for the Association: see letters 80 R and 81 R.

    The "general economics" syllabus ("Tutorial class under the University of London Joint Committee for the Promotion of the Higher Education of working People". Undated, but marked 5/11/24 in the printer's signature; in HPBL Add. 72763/108-10) is interesting for the similarity in its arrangements of subjects (sections 2-7) with that of the first chapter of The Trade Cycle (Harrod 1936:8 ):

    • General Economics.

      Economics is a study, broadly speaking, of all the activities by which man tries to satisfy his needs with the least possible expenditure of unpleasant or painful effort. But it is a study of these from a certain point of view; it does not treat exhaustively of the technical methods of each separate activity, but only of certain general characteristics.

      1 At the outset we shall give a brief historical sketch of the growth of this study.

      2 Next, it is necessary to make certain important definitions--of wealth, a commodity, utility, marginal utility, etc., and to state the psychological law that lies at the base of economics--the law of diminishing utility. From it may be deduced the principle of equal marginal utility. That principle would be the only contribution which the science of economics would have to offer to individuals living in isolation. All the further complications spring from the fact of Co-operation or Division of Labour.

      3 A discussion must follow of the various kinds of division of labour and of their historical development. Next a special kind of division of labour will be analysed, viz., the division between the organisers of production and those who carry out the organisation, between the controlling mind and those who are controlled. A still more peculiar form of specialisation, is the specialisation of the man who provides capital. This leads to an exact analysis of the meaning of capital and an historical sketch of how the business of providing capital became a specialised function.

      4 Approaching the same subject from another point of view, we shall define what the old economists meant by the factors of production, and fill in what they left out in their analysis. This brings us to the point when we desire to discuss the problem of distribution.

      5 But before that we must deal with exchange, and the law of supply and demand. The nature of a market. Methods by which the market is extended.

      6 Next, the relation of normal prices to market prices and to the cost of production. An analysis of the cost of production. Prime costs, supplementary costs, etc. The problem of joint products.

      The tendency to equality of profits, wages, etc.

      7 A distinction must be drawn between the conditions of competition and those of monopoly. Pure competition v. pure monopoly, and intermediate states--"unfair competition," etc. A description of the circumstances tending to produce each.

      How a monopolist fixes prices.

      The "economies" of monopoly and of competitive large-scale production.

      The laws of increasing and diminishing returns.

      We are now ready for the problem of distribution.

      8 1. The Law of Rent. Stated in its different forms. The relation of economic rent to rent as commonly understood. Extension of the notion of rent.

      9 2. The views of the older economists concerning Wages. The Wages Fund Theory. The Iron Law of Wages. Walker's Theory of Wages. Marshall's Theory.

      10 3. The Nature of Interest. Marx.

      4. The Nature of Profits.

      11 5. The Relation of Wages, Interest, and Profits.

      12-14 Let us now, having seen the actual distribution, discuss the ideal distribution of wealth. Behind the problem of the distribution of wealth is the problem of the distribution of productive resources. How is the ideal distribution of productive resources to be obtained? Distinguish between an absolutely ideal distribution of productive resources and a distribution ideal relatively to given distribution of wealth whether ideal or not. The latter is roughly achieved through the price system where competition is perfect and trade is free. But the price system does not of itself secure, and may lead to divergences from, an ideal distribution of wealth.

      There is the further problem of how to maximise productive resources. How to stimulate the productive employment of rare ability. We should discuss how far the price system does this and compare it with other possible systems.


      15 Definition and functions of money.

      16 Various currency systems and the principles underlying the control of them.

      17 Credit. A brief description of banking in general and of the British system in particular.

      18 The Quantity theory of money. The relation of the volume of legal tender money to the volume of credit money.

      19 The rate of discount.

      The foreign exchanges.

      20-21 The theory of international trade.

      National Finance.

      22-23 Revenue and expenditure. Productive expenditure and the burden of taxation.

      The distribution of the burden of taxation. Rival principles. The principles inherent in the British system. A history of the British system. Principles illustrated by some special problems of the Income Tax.

      Direct v. indirect taxation. Problems of incidence.

      Import duties. Protective tariffs.

      24 Some time will be needed at the end to map out the ground already covered and to indicate how our studies may be further developed.


      General principles. Clay: Economics for the General Reader. Cannan: Wealth. Henderson: Supply and Demand. Flux: Economic Principles. Marshall: Economics of Industry.

      More advanced. Marshall: Principles of Economics.

      Economic History. Mrs. Knowles: Commercial and Industrial Revolutions in the 19th Century. Cunningham: The Growth of English Industry--Modern Times (2 vols.). Toynbee: The Industrial Revolution. Layton: An Introduction to the Study of Prices.

      Money. Withers: The Meaning of Money. Bagehot: Lombard Street. Robertson: Money. Cannan: Money. Fisher: The Purchasing Power of Money.

      For Students who Take a special interest in this Subject. Hawtrey: Currency and Credit. Marshall: Money, Credit, and Commerce. Keynes: A Tract on Monetary Reform.

      National Finance. Dalton: The Principles of Public Finance. Stamp: The Principles of Taxation. Plehn: An Introduction to Public Finance. Bastable: Public Finance. Hilton Young: The System of National Finance.

      1. a. From the Worker's Educational Association, Reading#, one page TLS, in HPBL Add. 72763/106. Photocopy in HP (NC).

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