The Stylized LME

Writing one 100 or so years ago, economist Alfred Marshall opined that Adam Smith and many of the other earlier economists sacrificed precision to the interests of seeming simplicity. They did this by employing a conversational style of writing in an attempt to explain matters which were in fact of daunting complexity. The result was much misunderstanding and time-wasting controversy (Marshall, 1920:30). On the other hand, Marshall was at pains to point out that the social sciences, of which economics is one, are not, due to the nature of their subject matter, equipped in the same way as the physical sciences are to categorize the phenomena with which they deal by ascribing to them a terminology in perpetuity, which is to boot remote from the layman’s grasp. Economics must be expressed in terms intelligible to the non-specialist and not rigidly encased in jargon which, in any case, lacks the flexibility to cope with the constant mutations the economic discipline is called upon to explain (Marshall, 1920:43). The commitment to common language when simultaneously seeking precision, therefore, requires a constant attention to ongoing change. In this light, the onus of economic analysis is on the elucidation of differences in degree rather than in kind. It is possible, for example, to envisage firms as being predominantly — not wholly — characterized by market or hierarchy orientations.