Microeconomics

Robbins’s treatment of microeconomic issues was never wholly systematised. This reflects his basic approach to his work as an economist — to take, pragmatically, the tools available and to use them to deal with a particular problem. Nevertheless there was an essential unity to his treatment, for underlying it were three elements derived from Austrian economics. Firstly, there was the precept that microeconomic problems must not be treated in a concept divorced from general equilibrium — a partial equilibrium conclusion should be subjected to what might be called in later language ‘general equilibrium sensitivity’ considerations. Secondly, cost reflected, in such a general equilibrium context, opportunity cost. It was not therefore sensible to approach cost schedules as if given and fixed, irrespective of demand changes, or to approach them as if ‘real’ cost meant anything other than foregone satisfactions. Thirdly, because factors always had alternative uses, including own consumption of their services, it was not helpful to reason in terms of an equilibrium model in which factor supplies were fixed.