Social and Psychological Factors in the Determination of Industrial Location

Abstract

THE traditional economics of industrial location are those derived from Alfred Marshall. He was always careful to point out that there are aims in life other than the maximization of net income, and indeed wrote what many still consider to be the classical passages pointing out that there are limits to which men will go in exerting themselves in the pursuit of wealth: 'The excellence of a moderate income obtained by moderate work' is the marginal summary' of a principle to which he attached much importance. But when he came to discuss industrial location2 it was in terms of maximum advantages of all kinds, but measurable in terms of reduced costs of production and distribution. We need not pursue this conflict through the literature of the last fifty years. But it is worth remarking that although social scientists became more aware over time of the fact that there are other satisfactions in life than increased income, they seemed no more inclined to take these into account in relation to decision making in the field of industrial location. P. W. S. Andrews and E. Brunner discussed this question briefly in relation to the present standing of the concept of profit maximization in general in an article appropriately entitled 'Business Profit and the Quiet Life'.3 They thought it was not the case that the concept of 'economic man' had been thrown out, or that in future the steering of the economy would have to be done by 'reference to psychological and sociological facts which are independent of, and so economically irrelevant to, any particular economic situation...' '... the location of a particular factory may have been precisely determined because it suited the managing director's desire for convenient access to a certain golf course, or because his wife wanted the week-end home to be in the Lake District. The question is not whether such a factor is, or is not, important in the individual case, but whether any particular factor of this kind has systematic effects upon economic variables.... 'It seems in fact to make much more sense to discuss location