Chapter 1 begins with (p 1):
Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.
Note two things. Marshall defines economics as political economy and then says economics examines “individual and social action.” This broader definition has been narrowed by individual action (methodological individualism) while leaving social/political actions to political scientists. I regret this division when most topics mix economic, social and political dynamics.
Marshall then says that our actions reflect our work habits and religious beliefs, which is why economics studies both wealth and humanity. He then prioritizes the study of helping the poor gain wealth over helping the comfortable get rich because poverty is much worse. This observation is often (rightly) used to justify taxing the rich to help the poor, since the poor gain much more from $1 than the rich lose by paying it. (Economists frown on “interpersonal comparisons of utility” class comparisons are easier to justify due to falling marginal utility of income.)
Marshall explains that such progress is new, relative to those (beginning with Aristotle?) who accepted poverty and slavery as “natural.” Marshall thinks that the Industrial Revolution (a term that does not appear in the book) has reduced “poverty and ignorance” among the British working classes (p 3):
This progress has done more than anything else to give practical interest to the question whether it is really impossible that all should start in the world with a fair chance of leading a cultured life, free from the pains of poverty and the stagnating influences of excessive mechanical toil; and this question is being pressed to the front by the growing earnestness of the age.
Marshall says the recent need for studying economics (“concerned with the wellbeing of mankind”) arises from the Industrial Revolution (p 4):
…the emancipation from custom, and the growth of free activity, of constant forethought and restless enterprise, have given a new precision and a new prominence to the causes that govern the relative values of different things and different kinds of labour.
Thus, it is the increase in free choices, whether selfish or unselfish, that has changed the nature of competition and created a paradox in which people are less generous with neighbors but more trusting with strangers who occupy a larger share of their economic lives. Such changes in relations upset fans of small-scale, self-reliant communities (e.g., Gandhi), but not those who see the advantages of using prices and markets to maximize the benefits from a given basket of resources.
Marshall points out that this trend is more humanitarian than critics might assume, since “the backwards races” have no shortage of sharp dealing. (Money lenders in poor villages are still quite dodgy.) Marshall defends the new norm of competitive trade among strangers because it leads to better deals but also because it rewards truth and honesty. (He also implies that wealth encourages generosity, e.g., taxpayers agreeing to pay millions of pounds to slave owners for their slaves, who were then freed.)
Marshall then explains how it would be nice to have selfless cooperation displace competition, but that “…the history of socialistic ventures, shows that ordinary men are seldom capable of pure ideal altruism for any considerable time together” [p 7]. And that’s why the nice things we have are the result of more “competition,” i.e., “more self-reliant habits, more forethought, more deliberate and free choice,” which Marshall calls “economic freedom” [p 8].
When did economic freedom become so important? Only after the Industrial Revolution blew apart (“like a wayward monster”) social and economic traditions. In the early years, these changes were terrible for many people, but they saved the British from Napoleon and helped a growing share of the working classes achieve greater economic, political and social freedom.
Marshall then notes how “economic science” needs to increase “that knowledge, which enables us to understand the influences exerted on the quality and tone of man’s life by the manner in which he earns his livelihood, and by the character of that livelihood” [p 11].
…and that’s how the chapter ends: with a promise to explain and magnify the economic freedom that has disrupted and (more than) improved the lives of so many people.