ABSTRACT
In the late nineteenth century, British tradition divided itself into two major currents. The first, starting with certain ideas in Adam Smith and David Ricardo and stressing objective value, ethics, and amelioration, culminated in the great works of Alfred Marshall, A. C. Pigou, and Sir Dennis Robertson. The second, beginning with little rivulets in the writing of Longfield, and fed by a powerful stream of ideas from the Continent, stressed subjective value and pure theory as the proper basis for economics. Henry Sidgwick tried to give the utilitarian tradition a further push toward evaluating ethics and morals in a more reasoned manner than he felt had been done by earlier writers. According to Pigou, real income was related to resources, capital, knowledge, the quality of people, government, and, for a nation such as Britain, foreign trade. Welfare, said Pigou, referred to the goodness of a man’s state of mind or to the satisfactions embodied in it.
