Posted by: Dirk | June 25, 2013

(Book review) The Worldly Philosophers

This book by Robert Heilbroner, subtitled The Lives, Times and Ideas of Great Economic Thinkers, was published originally in 1953 and then in 1961 as a revised edition. It is a history of economics before the world as we know it, by which I mean the post-WWII world. The book is written as a narrative and weaves biographical sketches with world events and the interpretations of the time. By now, history of economics as a sub-field of economics does not exist anymore in most faculties of economics. The book shows why. In today’s world, we are all rich because of a) markets and b) innovative entrepreneurs. Lowering taxes and curbing redistribution will help incentives to be better aligned with the economic self-interest. Heilbroner’s book offers a wide variety of competing explanations of why we are rich and is utterly incompatible with the modern narrative.

Heilbroner follows Smith and Ricardo, Marx and Veblen, Keynes and Schumpeter and many others that wrote about the economic problem of their day. Heilbroner is very good at presenting the economists and their ideas in the context of their time and never seems to impose his will on any of his subjects. He discusses the economic theories and, in the last chapter, also compares them one to another and discusses them with respect to now (1953, or 1961). Some of the thoughts would be considered heretical in today’s faculties of economics. For instance, he presents John Stuart Mill (p. 129/130):

But – and this is perhaps the biggest but in economics – the laws of economics have nothing to do with distribution. Once we have produced wealth as best we can, we can do with it as we like. “The things are there”, says Mill; “mankind, individually or collectively, can do with them as they please. They can place them at the disposal of whomsoever they please, and at whatever terms.”

If you have followed discussions on minimum wages, tax rates for incomes and profits, the Green New Deal, health care reform, and government spending (a.k.a. as austerity management) you will notice that if Mill stands for enlightened thought than the majority of today’s economists stand for reactionary thought. Most economists are in favor of the status quo or of redistribution towards the rich (indirectly) on almost all of these issues.

The books chapters on the Utopian Socialists, Marx, Veblen and Keynes present ideas that are not part of the mainstream curriculum of economics. This is quite sad, since these are enlightened questions that address the ultimate goals of society, rents and distribution, the nature of consumption and the cures of unemployment. It is in these issues that we face a crisis today and it would be very helpful to reintroduce the history of economics back into the curriculum. As it stands, the issue of scarcity has been relegated to a back seat. Spain and Greece do not face scarcity of anything which has stopped their economies dead. They have millions of people unemployed which should be seen as a luxury. In order to understand the economy more is needed than a single fixation on how markets distribute scarce resources.

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