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The Economics of Edwin Chadwick: Incentives Matter

Author(s):Ekelund, Robert B.
Price, Edward O.
Reviewer(s):Singleton, John D.

Published by EH.Net (April 2013)

Robert B. Ekelund, Jr. and Edward O. Price III, The Economics of Edwin Chadwick: Incentives Matter. Cheltenham, UK: Edward Elgar, 2012. xi + 246 pp. $100 (hardcover), ISBN: 978-1-78100-503-3.

Reviewed for EH.Net by John D. Singleton, Department of Economics, Duke University.

To the extent that Edwin Chadwick is known to historians of economics, Robert Ekelund? (Professor Emeritus in Economics at Auburn University) and Edward Price (Professor Emeritus at Oklahoma State University) have helped inform this awareness through a number of articles over the past 35 years. The Economics of Edwin Chadwick: Incentives Matter collects these insights and aims to establish Chadwick?s import, both within classical economics and to modern economics. The book therefore combines exposition Chadwick?s writings and interpretation in modern terms and frameworks with comparisons to contemporary analysis and evaluation. Interested readers will discover an engaging and frequently thoughtful examination of Edwin Chadwick?s economics.

The book is organized into three parts totaling nine chapters. The first, ?Who Was Edwin Chadwick?? provides an introduction and useful biographical sketch of Chadwick?s life, while the second chapter presents the book?s overriding theme: Chadwick?s modernity. Two parts, ?The Regulation of Markets? and ?Law, Sociology, and Economics,? structure the discussions of the numerous areas to which Chadwick applied his economic analysis. His contributions in the areas of competitive bidding for exclusive contracts, the railways, funeral and burial markets, education, business cycles, criminal justice, sanitation and others are reviewed in turn. The final chapter offers the authors? reflections on Chadwick?s relevance for contemporary society.

Ekelund and Price argue throughout that ?cases and abstractions from the writings of Edwin Chadwick show that … he brought modern economics to the table in evaluating markets, public policy, and (what he believed to be) the appropriate division of roles between government and the private sector? (p. 45). Although this statement provokes ruminations about what ?modern? subsumes and what it means for an eighteenth-century writer to be so, the authors do not indulge these. They apply modernity to mean Chadwick?s ?use of concepts such as the ?common pool,? time and opportunity costs, the demand curve, marginal analysis, strategic behavior, public choice, implicit markets (as for ?accidents?), property rights and liability assignment? (p. 45). An additional aspect of the authors? claim is Chadwick?s marshaling of statistics to support his recommendations: ?Chadwick stands out as a pioneer in the science that requires evidence for reasoning and conclusions regarding economic and social policy? (p. 44).

The chapter detailing Chadwick?s analysis of the railways provides an illustrative example. Chadwick contended that the rail system of England was fraught with inefficiencies, such as monopoly, fragmentation, and waste, and supported nationalization. In making this argument, he offered statistics that compared costs and performance across six European countries which showed prices and the degree of price discrimination in England to be the highest.? ?According to Chadwick, railway operation and consolidation could be achieved through a bidding process and operation by the (or possibly a number) of franchisees after bidding is complete? (p. 79). Chadwick?s characteristic competition ?for the field? solution through franchise bidding appears elsewhere as well and is elaborated by the authors in a separate chapter.

Ekelund and Price do an excellent job of contextualizing Chadwick?s arguments regarding the railways by comparing them with the opinions of William Galt, Jules Dupuit, and A.T. Hadley and through examining his exchange with John Stuart Mill. Galt, like Chadwick, also advocated nationalization, though he supported the operation of the railways by the government. In contrast, Dupuit and Hadley had more optimistic perspectives on open competition. A letter by Mill to Chadwick in 1864 captures the debate: ?About the economical advantage, touched upon in your letter, of a consolidation of railways, you are not likely to find any help in the French economists. They are, nearly all of them, more hostile to consolidation and to government action that I am; and I am more so than you? (quoted on p. 88).

Chadwick?s analyses of criminal justice and sanitation in England display particular sophistication. Chadwick identified rent-seeking, free riding, common pool resources, and asymmetric information as systemic inefficiencies that a proposed reform must remedy. Although his insights do bear strong resemblances to familiar modern counterparts, the weakest aspect of the book is the intimation of relation without probing for genetic links. Taking the novelty of Chadwick seriously in areas like market failure needs an account that dialogues with the traditional narrative or the reader is left to wonder why and how such a prescient thinker became neglected by his antecessors. Moreover, the exercise of evaluating the veracity of Chadwick?s economics from the viewpoint of the matured doctrines inclines too many passages to the curious hobbyists? ? as opposed to the historians? ? interest.

In their concluding appraisal, Ekelund and Price suggest Chadwick?s modernity in a third sense: ?Economic theory is one thing ? the world as it actually exists is another. This might be the mantra of Edwin Chadwick as it is for most policymakers in all countries today? (p. 216). In other words, Chadwick was keenly aware of the constraints and trade-offs that must be faced when crafting policy. ?As such Chadwick originated a popular notion in the economics of regulation and institutions ? that no state of the world is nirvana, and that, before committing societal resource to use, all feasible alternatives must be examined? (p. 178). In the effort to apply economics in weighing costs and benefits, Chadwick?s struggles, at least, are undoubtedly modern.

John D. Singleton (john.singleton@duke.edu) is coeditor with J. Daniel Hammond and Steven G. Medema of Chicago Price Theory (Edward Elgar, 2013) and author of ??Money is a Sterile Thing?: Martin Luther on the Immorality of Usury Reconsidered,? History of Political Economy, 2011.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):19th Century