4 - The origin of the doctrine of normal cost prices: the Oxford Economists' Research Group and full cost pricing

Summary

In May 1934, Hubert Henderson resigned his Civil Service position as economist for the Economic Advisory Council and accepted a senior research fellowship at Oxford's All Souls College. His arrival at Oxford coincided with the Fellows of the Sub-Faculty of Economics encouraging the University authorities to create a University laboratory in economic statistics. In addition, All Souls had just offered to contribute to a satisfactory plan for an Institute of Economic Statistics by providing the money for the establishment of a Readership in Statistics. The University authorities took All Souls' offer to be a good basis on which to approach the Rockefeller Foundation for funds for the development of social sciences at Oxford, including funds for such an Institute, since it was thought that the Foundation preferred supporting a comprehensive plan for the development of the social sciences instead of a more narrow plan which dealt only with a Statistics Institute. The University thus appointed a committee to advise it on how best to secure an orderly development of social studies at Oxford, and the committee in turn, went to the various Faculty Boards for information and suggestions. Within this context the younger Fellows of the Economics Sub-Faculty devised their own plan of action.

In July 1934, James Meade, in a short memorandum, outlined a request for statistical data that would be of use for specific theoretical issues in the area of the short-period demand for labor.