Edward O. Price

Sir Edwin Chadwick on Competition and the Social Control of Industry: Railroads

This article investigates a well-developed contribution to the analysis of railway economics made by Sir Edwin Chadwick (1800-1890), a lawyer and civil servant. Specifically, this article critically evaluates Chadwicks unorthodox theory of competition and industrial organization; demonstrates that his solution to the railway-natural monopoly problem encompassed to a large extent those of his most innovative contemporaries in England and Europe interested in railway economics; evaluates the theoretical merits and deficiencies of consolidation of the British railroads under Chadwicks principle, an evaluation that applies to any implementation of Chadwicks plan; and examines the filiations between Chadwick and John Stuart Mill on the question of railroads and social control. We believe that a review of these issues seems especially timely given the precarious position of privately owned rail lines in the United States, and we conclude that Chadwicks principle should be given serious consideration if nationalization of railroads (or any other industry for that matter) becomes the choice of society.

The Economics of Edwin Chadwick

The authors detail Sir Edwin Chadwick’s sophisticated conceptions of moral hazard, common pool problems, asymmetric information, and theory of competition, all of which differ starkly from those promulgated by Adam Smith and other classical economists. Also examined are Chadwick’s views on government versus market role in dealing with problems created by natural monopoly, and whether some or all market problems justify government regulation or alterations of property rights. The authors investigate Chadwick’s utilitarian approach to labor, business cycles, and economic growth, contrasting his modern view with those of his classical economic contemporaries.