The Toynbees have been prominent in British intellectual society for several generations:
Toynbee attended public schools in Blackheath and Woolwich. In 1873 he began to study political economy at Oxford, first at Pembroke College and from 1875 at Balliol College, where he went on to teach after his graduation in 1878. His lectures on the history of the Industrial Revolution in 18th and 19th century Britain proved widely influential; in fact, Toynbee coined, or at least effectively popularised, the term "Industrial Revolution" in the Anglophone world—in Germany and elsewhere it had been brought into circulation earlier by Friedrich Engels, also under the impression of the industrial changes in Britain. Toynbee died at age 30 in 1883. His health had rapidly deteriorated, probably due to exhaustion by excessive work. He married Charlotte Atwood, who was 12 years his senior, and a cousin of Harold F. Davidson, the famous rector of Stiffkey.
According to Arnold Toynbee, applying the historical method in economics would reveal how supposedly universal economic laws were in fact relative. For example, he argued that, in spite of commonly held beliefs, free trade was not generally advantageous in itself, but only under certain circumstances which should not be considered absolute. Toynbee considered few laws as universally true, such as the law of diminishing returns. Therefore, there were no universal rules as to how strongly the state should interfere in the marketplace, either; depending on the situation, different degrees of regulation could be appropriate.
Another idea Toynbee dismissed was to consider free competition as universally beneficial to economic and societal progress, especially as reflected in its apotheosis in Social Darwinism, which promotes laissez-faire capitalism. Toynbee did not equate "a struggle for mere existence and a struggle for a particular kind of existence." From the very beginning of history, he argues, all human civilization was essentially designed to "interfere with this brute struggle. We intend to modify the violence of the fight, and to prevent the weak being trampled under foot." Although economic competition does have its advantages, being the driving force behind technical progress, these were "gained at the expense of an enormous waste of human life and labour, which might be avoided by regulation." Toynbee suggests a differentiation between competition in production on the one hand, and competition in the distribution of goods on the other:
[...] the struggle of men to outvie one another in production is beneficial to the community; their struggle over the division of the joint produce is not. The stronger side will dictate its own terms; and as a matter of fact, in the early days of competition the capitalists used all their power to oppress the labourers, and drove down wages to starvation point. This kind of competition has to be checked; there is no historical instance of its having lasted long without being modified either by combination or legislation, or both. In England both remedies are in operation, the former through Trades Unions, the latter through factory legislation.In itself, a market based on competition was neither good nor bad, but like "a stream whose strength and direction have to be observed, that embankments may be thrown up within which it may do its work harmlessly and beneficially". However, in the early phase of industrial capitalism "it came to be believed in as a gospel, [...] from which it was regarded as little short of immoral to depart".
Inspired by Arnold Toynbee's ideas, Samuel Augustus Barnett and Henrietta Barnett founded the first university settlement, which was named Toynbee Hall in his honour, in 1884, shortly after his death. A centre for social reform, Toynbee Hall was on Commercial Street, Whitechapel in the East End of London. It remains active today. The concept was to bring upper and middle class students into lower class neighbourhoods, not only to provide education and social aid, but to actually live and work together with their inhabitants. This soon inspired a worldwide movement of university settlements. The idea was to help members of the future elite understand the problems of British society; this was especially important at a time when class divisions were much stronger, social mobility was minimal, and the living conditions of the poor were completely unknown to many members of the upper class. Toynbee Hall attracted many students, especially from Wadham College and Balliol College where Toynbee had taught.
In 1916 the Arnold Toynbee House in New York was founded by a group of young adults who were part of the Stevenson Club at Madison House and with the help of philanthropist Rose Gruening. Eight years later, the settlement house was renamed Grand Street Settlement.