January 2013 newsletter – Robin Marris

Robin Marris

Robin Marris, who died on 25 September 2012 at the age of 88, is best known for his contribution to our understanding of business corporations. He did important research in other areas, too, and was an active participant in policy debates.

The Economic Theory of Managerial Capitalism (1964) combined the work of Edith Penrose on the growth of firms with earlier ideas about large corporations behaving differently from small owner-managed firms. Robin focused on the separation of ownership from management in large firms and the weakness of shareholder control, which allowed managers considerable discretion. In his view, managers used their discretion primarily to make their firms grow faster than shareholders would prefer, since in larger firms managers get higher salaries and status. The book attracted a lot of academic attention, and Kenneth Galbraith’s use of it in his 1966 Reith lectures and 1967 The New Industrial State made it known to a wider audience.

As Robin recognised in a 1998 revision of Managerial Capitalism, economics and the world have moved on. The existence of large firms is now explained theoretically by their ability to reduce transactions costs, and shareholder control of managers is now analysed as a principal-agent problem. The share of managerial remuneration in the form of stock options and bonuses has also been increased, with the aim of aligning the interests of managers more closely with those of shareholders.

Robin continued to disagree strongly, however, with the common view of dynamic neoclassical firms and undynamic managerial firms. He argued in 1964 that growth-seeking by managers is socially desirable because of positive externalities of the sort later embodied in endogenous growth theory. He was deeply sceptical of the social benefits both of takeovers and of the effects of stock options on managerial behaviour. As he put it, noting the greatly increased pay of top managers, ‘the search for a perfect control contract between shareholders and managers is … liable to be perverted’.

In the 1950s Robin did an innovative study of shiftwork, published in The Economics of Capital Utilisation (1964). The research questions were why capital equipment on average is used for less than a quarter of all the hours in the year and what if anything should be done about this. The book developed a theory and tested it against a wide range of evidence, including questionnaire surveys of eleven industries. Robin’s prior had been that a widespread extension of shiftwork would be socially desirable, but his eventual conclusions were much less clear-cut.

In Reconstructing Keynesian Economics with Imperfect Competition (1991), Robin argued that Keynesian macro theory, of which he was a lifelong advocate, made sense only when combined with the theory of imperfect competition, as Michal Kalecki had recognised much earlier. Only if firms were able to set their own prices, rather than having to accept the prices set by a perfectly competitive market, would a fall in aggregate demand reduce an economy's total output, as Keynes claimed, rather than merely reducing the general price level. Curiously, one man, Richard Kahn, played a key role in developing both strands of theory in Cambridge in the 1930s. What kept the strands apart, Robin argued, were tensions in the triangle of personal relationships between Kahn, Keynes and Joan Robinson. Robin’s intriguing book was among the first to include a disk with a simulation model to run on personal computers.

In the mid-1970s, dismayed by the abuse of union power, Robin broke his close links with the Labour Party and became, in his words, ‘hostile to socialism’. But he ‘never swung spiritually to the political right’ and continued to write with passion and insight on social policy issues, becoming a Labour supporter again in the 1990s.

Increasingly interested in research on the human brain, Robin argued in How to Save the Underclass (1996) that universal access to education and Thatcherite liberalisation (of which he approved) had created a ‘severe meritocracy’ in which the least able are left unacceptably far behind. The best solution in his view lay in policies to accelerate growth, which would boost the demand for unskilled labour. Failing that, a generous welfare state financed by higher taxes on the more able would be necessary, though it might have difficulty in attracting electoral support.

Robin’s social concern extended worldwide. In 1964-66 he worked in the Ministry of Overseas Development under Barbara Castle, and in the 1980s did research for the World Bank. In Ending Poverty (1999), he presciently stressed the importance of good macro policies in developed countries and good management of the international financial system, as well as the need for more aid.

Robin graduated from Cambridge in 1947, his studies having been interrupted by war service. After periods of work in the Treasury and with the UN in Geneva, he returned to Cambridge in 1951 as a fellow of King’s College and a lecturer (later a reader) in the Faculty of Economics, posts he held for the next 25 years. He was a popular and inspiring teacher, and a long series of students, including me, benefited from his lively mind and warm personality.

In 1976, for a mixture of personal and professional reasons, he moved to a chair at the University of Maryland, where for three years he was head of department, and in 1981 to Birkbeck College, London, again serving as department head and retiring in 1987. Dennis Snower, who knew him in both places, writes that:

In Maryland, Robin came with many fresh ideas and had a deep interest in promoting insightful, pathbreaking research, regardless of whether it was fashionable. He was also interested in promoting the careers of promising young researchers. His administration was unconventional and often erratic, but there is no doubt that the ambitions and visibility of the department rose during Robin's chairmanship. At Birkbeck he did not have a similar invigorating effect, to put it blandly. He did himself no favors by choosing a path of academic leadership. He could have fared better by focusing on activities that engaged his greatest strengths.

Robin’s life was complicated by three failed marriages. But, and not unrelatedly, he was an intensely attractive person. He was also wonderful company — in seminars, at home, at restaurants, at parties or on his little boat on the Solent — full of ideas and information, witty, charming and generous. He made many friends and is remembered affectionately even by most of those with whom he crossed swords.

Adrian Wood
Department of International Development, Oxford