After Marx's dire forecast of inevitable doom, his followers were expecting the immediate destruction of capitalism and appearance of communism. However, capitalism was still flourishing, and the "increasing misery" among the proletariat predicted by Marx was totally absent. Wages had been rising. Work days were becoming shorter. Even Engels acknowledged that the "proletariat [was] actually becoming more and more bourgeois." Though the modern Marxists still believe capitalism would eventually falter, the mainstream economists saw a bright future for the system.
By the Victorian age, economics had expanded from the realm of obscure thinkers and reached mainstream academia. The system seemed to be working, and people were optimistic about its future. They no longer doubted the merits of the system, or prognosticated doom. Thus, instead of reaching for broad world views, the economists began studying individual aspects of the system in great detail. "Their contributions were important, yet not vital." (Economics wasn't the only field affected. Literature, too, was victimized by excessive elucidation of the mundane.)
Characteristic of the Victorian optimism was Edgeworth's simplification of man. In his work, Mathematical Psychics, he managed to bring the world of economics into the realm of mathematics. In order to do this, he had to simplify man into a "pleasure seeking machine." Man sought to maximize pleasure, and thus, in a purely competitive market, he would achieve the "highest amount of pleasure that can be meted out by society." However, an individualistic, perfectly competitive market did not exist. Some organizations, such as trade unions, combine the efforts of many men. Edgeworth rationalized that these were mere "transient imperfections in the ideal scheme of things," and in the long run would lose. Furthermore, noble birth would allow a man to be more responsive to the pleasure of "good living" and men were better equipped to gain pleasure from working; everything worked out for the seeking of greater pleasure. (Unfortunately, he never defined pleasure. He also failed to see that a small 'blip' in the economic world could snowball into a significant power.)
Frederic Bastiat was one of the strongest economic wits. Like, Swift, he loved using satire to elucidate his points. In opposition to the common protectionist measures, Bastiat wrote a letter proposing elimination of light manufacturers biggest competitor - the sun. He believed the most efficient means of production should be used, whether it from home or abroad. Thus, his reasoning is often employed today by those opposed to trade barriers and other forms of government intervention. Furthermore, he believed that underneath the disorder of the surface was an inner economic world seeking the good of mankind. He also raised questions concerning the intervention of government in economic affairs, the paradoxes of collisions of private and public interests, and system's lack of sense.
Unlike Bastiat, Henry George was a "restless young romantic trying to fight the big machine." He sailed the world, panned for gold, and even tried his hand at a printing business. Following a period of "the most wretched poverty," he began to write. After holding jobs at various newspapers, he discovered the great economists, and soon became well known for his views, and was even considered for the University of California chair in political economy. However, he signed his own death warrant when he attacked the 'university system' of learning, and favored 'thinking for yourself' over textbooks and teachers. After that, he returned to pamphleteering, and eventually wrote the book, Progress and Poverty.
In his book, George, like Ricardo, attacked the noble land-owners who made exorbitant sums while twiddling their thumbs. Furthermore, the high rents lead to "wild speculation in land values," and an eventual collapse of the entire system. As a solution to this problem, George proposed a tax on land that would absorb all rents. This "struck a tremendously responsive chord," and the book became a bestseller, with some calling it "the book of the half century." Even criticism served to drive up its popularity. Not only did it attack land ownership, but it caused people to raise questions about other forms of unearned income. Views such as these are still alive, and have been seen in such men as Wilson, and in a devoted following of George.
During the late 19th century, imperialistic fervor overwhelmed Europe. Each race thought they were 'the best', and superficially desired to 'help' others. Vast amounts of third-world land became European colonies. However, the real reason for colonization had more to do with the economics than altruism. Businessmen saw great opportunities in the mines of Africa and the gardens of China. The imperialistic practices, however, were not without critics. Two thinkers, Mummery and Hobson, viewed Imperialism as an aspect of the "profit-system" that would eventually lead to the destruction of the world.
Like Malthus, Hobson and Mummery were critical of saving. Furthermore, they saw imperialism as an extension of the saving process. Due to their excess money, the wealthy were unable to spend all their money. They were forced to save. (On the opposite end of the spectrum, the poor didn't have enough money to buy all the goods they desired.) Since, the domestic population was already having trouble buying all they wanted, capital investment at home would be useless. Thus, they would invest abroad. This leads to a fight between nations to gain the upperhand in the 'colonial' areas, eventually leading to wars and destruction. Ironically, Vladimir Ilich Lenin embraced Hobson's anti-imperialistic belief, and then proceeded to launch the communist take over of the world. (However, he focussed on the link between capitalism and imperialistic destruction more than anything else.)
Heilbroner, however, disagrees with the views shared by Lenin and Hobson. Instead of imperialism being caused by the need to invest excess savings in foreign lands, he sees the imperialistic practices a natural offshoot of a superior system. The "underlying propulsive mechanisms" of the capitalistic system cause it to displace other system and firmly establish itself in non-capitalistic locations. Today, however, the entire imperialistic system has changed. Previously it had fulfilled the economic needs of the mother-country while ignoring the cries of the colony. Today, the economic needs are often ignored, and instead, the focus is on ideological conflicts. The U.S. has fought numerous wars to halt the spread of communism. They even fought the Gulf War supposedly to 'halt imperialism'. (But, the cause of the war seemed to be more firmly rooted in economic needs.) Even without the imperialistic practices of a century ago, the world is still on the move towards a global economy. Multi-national corporations lead the way. Often putting different segments of the operation in different countries, the multi-nationals in a sense perform the imperialistic duty of 'raising the third world out of the dumps.' Benefiting from cheap labor, they establish high-tech production facilities in the poor countries. Soon, the workers interest is piqued and capitalism spreads like a wildfire abroad. Companies are required to be much more competitive now that a worldwide market is present. They are no longer absolutely protected by physical boundaries. (However, tariffs and other trade barriers still do obstruct world-wide competition.)
While the economics 'underground' was focusing on the evils of imperialism, Alfred Marshall was embarking an academic study of equilibrium. In the process, he published one of the first economics text that was readable by the general populace. Like others before him, he focused on the interconnectedness of supply and demand. However, he added a crucial element to the studies: time, divided into the short run and the long run. A new Batman movie may create excess demand for Batman comic books in the short run, but in the long run the production will increase to meet the demand. Unfortunately, Marshall's time was of the abstract variety, and not directly applicable to the real world. While the 'historic' time-clock was changing rapidly, with violent changes, Marshall's 'textbook' clock was slowly, meticulously plodding along, oblivious to the world. If only he would have listened to the 'underground.'