The Marshall–Fetter controversy over the ‘old rent concept’

Alfred Marshall’s theory of rent was a watershed moment in economics, and his ideas on the subject continue to (positively and negatively) influence economists and social scientists well into the twenty-first century. Far less well known is the scathing critique of Marshall’s theory published by Frank A. Fetter in the Quarterly Journal of Economics in 1901. Fetter identified several concepts of rent in Marshall’s work that he attacked as contradictory, arguing that Marshall embraced classical errors while still attempting to emancipate himself from them. Marshall responded by adding a critical note on Fetter to the 5th edition of his Principles (1907), but otherwise showed little public interest in a reply. However, archival evidence reveals that both Marshall and Fetter took this dispute seriously and personally, and that they continued to debate each other at a distance for several decades. This paper brings to light previously unknown archival sources—including unpublished notes, correspondence and manuscripts—to tell the full story of their controversy. Doing so sheds new light on the work of both men and adds in several ways to our understanding of the early history of neoclassical economics, of the development of the theory of rent and of theoretical paths not taken.