The Jevonian revolution and economic policy in Britain
The turning-point in economic theory in Britain which we have described in the previous chapter as the Jevonian revolution occurred at roughly the same time as a major turning-point in economic policy in Britain. Though either of these turning-points could conceivably have occurred without the other, they are clearly interconnected in that they influenced and interacted on one another as regards the particular forms they took. That they both occurred around 1870 in Britain is surely not entirely coincidental.
The long re- or e-volution in the economic role of government in Great Britain which has continued through succeeding waves, on one sector or another of the front, since the high tide of the 'classical', individualist, competitive market economy began perceptibly to recede, may be dated from somewhere about 1870. This seems, in round figures, to be the most generally suitable starting-date from which this long, vast continuing process may be traced. A few years either side of our round figures we have two significant events in economic ideas and two in politics. As we have already noted, in economic ideas there was (1) in 1869, Mill's retraction regarding the wages fund, which signified a general decline in the credibility of the classical distribution doctrines. This decline had also gradually been coming about regarding the empirically most important element in the classical account of distribution: the hard-line Ricardo-Mill version of the Malthusian population and natural wage doctrine, for which, however, no precise date of any spectacular recantation can be fixed. Secondly (2) in 1871 there was Jevons's attack on the Ricardo-Mill value doctrines, and the development of his final utility theory, in his Theory of Political Economy, which work also contained--what was much more significant in terms of policy developments--a sweeping attack on the Ricardo-Mill doctrines of wages and distribution.
Either side of these two dates there were two political events with profound consequences for the subsequent development of economic policy: (1) the Second Reform Act of 1867; and (2) in 1871 (and 1875)