Although recognized equally for his contributions to economic policy, methodology, and the history of ideas, Lionel Robbins made his name as a theorist. In the 1920s he attacked Alfred Marshall’s concept of the “representative firm,” arguing that the concept was no help in understanding the equilibrium of the firm or of an industry. He also did some of the earliest work on labor supply, showing that an increase in the wage rate had an ambiguous effect on the amount of labor supplied (see supply).
Robbins’s most famous book is An Essay on the Nature and Significance of Economic Science, one of the best-written prose pieces in economics. That book contains three main thoughts. First is Robbins’s famous all-encompassing definition of economics, still used to define the subject today: “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses” (p. 16). Second is the bright line Robbins drew between positive and normative issues. Positive issues are questions about what is; normative issues are about what ought to be. Robbins argued that the economist qua economist should be studying what is rather than what ought to be. Economists still widely share Robbins’s belief. Robbins’s third major thought is that economics is a system of logical deduction from first principles. He was skeptical about the feasibility and usefulness of empirical verification. In this view he resembled the Austrians—not surprising since he was a colleague of the famous Austrian economist Friedrich Hayek, whom he had brought from Vienna in 1928.
In 1930, when Keynesianism was starting to take over in Britain, Robbins was the only member of the five-man Economic Advisory Council to oppose import restrictions and public works expenditures as a means of alleviating the depression. Instead, Robbins sided with the Austrian view that the depression was caused by undersaving (i.e., too much consumption), and he built on this concept in The Great Depression, which exemplifies his anti-Keynesian views. Although he remained an opponent of Keynesianism for the remainder of that decade, Robbins’s views underwent a profound change after World War II. In The Economic Problem in Peace and War Robbins advocated Keynes’s policies of full employment through control of aggregate demand.
The London School of Economics was home to Robbins for almost his entire adult life. He completed his undergraduate education there in 1923, taught as a professor from 1929 to 1961, and continued to be associated with the school on a part-time basis until 1980. During World War II he served briefly as an economist for the British government. Although Robbins was an advocate of laissez-faire, he made numerous ad hoc exceptions. His most famous was his view, known as the Robbins Principle, that the government should subsidize any qualified applicant for higher education who would not otherwise have the current income or savings to pay for it. His view was adopted in the 1960s and led to an expansion of higher education in Britain in the 1960s and 1970s.