I just finished reading a book about economists and their theories that my aged father gifted me for my birthday this August in Goa. Looking at the title and reading the preface and introduction, it struck me immediately as mischief and meddling in publishing once again.
The Worldly Philosophers by Robert L Heilbroner, published by Penguin, is about a few great economists who made a lasting impact in the field of economics and is meant for the general reader. However, the title can be quite misleading for it is not about philosophy or philosophers, and the author has quite a story to tell in the preface to the book about how he came to write it, as well as its title. Its subtitle might be more appropriate: The lives, times and ideas of the great economic thinkers.
Having studied economics in Delhi University over 40 years ago, I think that this kind of book is dangerous for a lay reader, for it can provide a very wrong or misleading understanding of great economists and their theories. As I just mentioned, how the book itself came to be written is strange and here is what Heilbroner says in the preface to the seventh edition of the book:
“While pursuing my graduate studies in the early 1950s, I earned my living as a free-lance writer, ranging very far from economics when the need or the occasion presented itself. As a consequence of one or another such piece, Joseph Barnes, a senior editor at Simon & Schuster, asked me to lunch to explore various book ideas. None of them seemed quite right, and a pall fell as the salad arrived… he began asking me about my graduate studies at the New School for Social Research and I found myself talking with enthusiasm about a particularly fascinating seminar on Adam Smith that I was taking under the inspired teaching of Adolph Lowe.”
The selection of the economists he decides to focus on is highly suspect, even for a general reader. And even if one accepts that he has chosen to focus on classical and neo-classical economics, which form the mainstream of economic thought, there are some glaring errors, in the form of omissions. He has chapters on Adam Smith, Malthus and David Ricardo, but completely leaves out Alfred Marshall. Then, after a strange chapter on the dreams of the Utopian socialists, he moves to Karl Marx. After that, comes an even stranger chapter on the Victorian world and the underworld of economics, followed by one on Thorstein Veblen. Finally, he concludes the book with John Maynard Keynes and Joseph Schumpeter. Anyone who has studied economics and knows the subject will agree that no book of economic thought can be complete without discussing Alfred Marshall, the contributions of economists from the Austrian school of economics such as Friedrich Hayek and Schumpeter and also more recently the huge influence of monetary economics, pioneered by Milton Friedman. And then, there is the entire field of development economics, which is absent from the book.
The selection of economists and their ideas is not the only problem with The Worldly Philosophers. The bigger problem is the way Robert L Heilbroner presents their ideas and the context in which they took shape. The book is part history, part biography and only in small part, economics, and as one would expect, it falls between all three stools. Each chapter dealing with the ideas and theories of a great economist, flits between his personal life, his theories and ideas and the particular time in which these ideas were being formed. The sections dealing with their personal lives, range from the irrelevant and superfluous to the mischievous and the maligning of characters. The worst part is that many of the reference notes that the author provides as source for much of this, are obscure books or authors and one is not sure if any of it can be taken as fact*.
Take this, from the chapter titled The Wonderful World of Adam Smith:
“This absent-minded professor was born in 1723 in the town of Kirkaldy, County Fife, Scotland. Kirkaldy boasted a population of fifteen hundred; at the time of Smith’s birth, nails were still used as money by some of the local townspeople. When he was four years old, a most curious incident took place. Smith was kidnapped by a band of passing gypsies. Through the efforts of his uncle (his father had died before his birth), the gypsies were traced and pursued, and in their flight, they abandoned young Adam by the roadside. “He would have made, I fear, a poor gypsy,” says one of his early biographers.
In the very next paragraph, Heilbroner writes that Smith went to Oxford and stayed for six years, but since Oxford was not yet a citadel of learning, he remained largely “untutored and untaught”. The author then cites the writing of a foreign traveller who attended a debate in Oxford in 1788: “All four participants passed the allotted time in profound silence, each absorbed in reading a popular novel of the day.”
The book has reference notes, but none for the sections which I have just quoted. And almost every chapter in the book has similar passages that are not merely irrelevant to economics or economic theory, but ludicrous. It is true that economics as a subject came into being as moral philosophy in those times, but very little time or ink is spent telling the reader about Smith’s teaching of moral philosophy, or indeed how he came to write The Theory of Moral Sentiments and The Wealth of Nations.
When he writes about Malthus and Ricardo, he writes more about their serious disagreements and their friendship, a subject that John Maynard Keynes too has addressed in his book, Essays in Biography, which I wrote about on my blog some time ago. But for me, the serious omission is to not focus enough on Ricardo’s idea of comparative advantage which came about as a result of him opening up the study of an economy to competition from outside and not merely considering the closed domestic scenario. Instead, Robert L Heilbroner portrays Ricardo’s ideas as merely one of class conflict, in which the landlord ruled through his hold on the price of grain. This, when Heilbroner does write about the demand for grain in Britain soaring and Britain’s position as a foodgrain exporting nation being challenged by cheaper imports from overseas, which led to the Corn Laws.
It is not merely that Heilbroner misses the point completely, and I suspect, deliberately, he also misrepresents the teachings of these great economists. This, I consider to be dangerous for the lay reader. Similarly, he writes about Marx’s ideas in the Inexorable System of Karl Marx. Here too, he dwells too much on Marx and his friendship with Engels, instead of focusing on Marx’s study of capital and the industrialist’s penchant for profit-making leading to super-normal profits, at the expense of labour. At the time of Marx’s study, Britain was in the throes of the Industrial Revolution, and for the first time, capitalists had access to machinery and equipment which relegated labour to the least important factor of production. Marx’s belief that capitalists would expand and add capacity by investing in more machinery, in order to generate higher profits while keeping wages the same or lowering them, until such time as labour wages were so squeezed that it would impact demand adversely bringing down the entire capitalist system like a house of cards is quite an extreme view of how market forces can work. Heilbroner does write about this theory of Karl Marx, but this time doesn’t connect it with Marx’s idea of class conflict. Nor does he give enough importance to Marx’s theory that economics itself is determined through the forces of history, an idea that is often referred to as historical determinism, though it is here that class comes into play most, not in the ideas of Ricardo or Malthus, or for that matter, of Adam Smith.
Most readers who are not familiar with economics would be aware of the economic hardship and tribulations that Marx had to endure during his life, and how dependent he was on his good and trusted friend, Engels, to help him see his work through. But having to read about Marx’s wife Jenny sharing a prostitute’s bed in jail, or about his own relationship with his maid, Lenchen, in a chapter about his economic ideas is rather unnecessary. Worse, Heilbroner thinks he was anti-Semitic as well.
In chapters on Keynes and Joseph Schumpeter, again, Heilbroner fails to write about their core economic ideas and how they impacted economics, both in theory as well as in practice. If the author had instead chosen to present each economist’s theory as a reaction to what was then occurring in the political economy, and if the ideas of the Austrian school of economics with Hayek and Schumpeter being its main proponents, had been shared as a reaction to socialism and its experience in Europe and the Soviet Union, we might have had a more comprehensive history of economic thought. The book might then have presented an interesting debate between their supply-side economics and Keynesian demand theories.
The inclusion of Thorstein Veblen in such a book is a curious one, for his economic ideas did not impact the study of economics, nor widen its scope in any significant way. He did make useful observations about the leisure class and its consumption habits in Theory of the Leisure Class, about which too I have written on my blog as an Owl Wisdom Podcast. Heilbroner writes about a relatively little known (I hadn’t even heard of it) book of Veblen’s called The Theory of Business Enterprise in which Veblen supposedly “turned everything topsy-turvy” in that the capitalist was no longer the driving force, but machines and technology. And, as is typical of Heilbroner, he includes details of Veblen’s Norwegian background, his struggling to find a job at University of Chicago which, we are told was founded by Rockefeller, and later at Cornell, his unhappy marriage and his philandering, all of which is quite irrelevant and diverts attention from what ought to be the main focus.
Then, in chapters such as Dreams of Utopian Socialists, we have Heilbroner discussing people like Robert Owen and others who believed in the power of the community and tried setting up communes. He even writes about John Stuart Mill and Jeremy Bentham, without even once mentioning their philosophy of utilitarianism. And why socialists? Merely because they believed in the power of the community?
In a similarly vague and general chapter on The Victorian World and the Underworld of Economics, Heilbroner writes about Edgeworth and Henry George in a rambling way, without ever referring to the building of Empire as the main story of the Victorian era. That it was the first time, corporations and businesses went global in the name of their empires is completely lost on Heilbroner, as is the exploitation of labour, of dumping goods on colonies while plundering them of natural resources, of the building of railways as an important impetus to strengthening the hold of the empire.
And, of course, we don’t have modern-day capitalism with maximization of shareholder value as its main goal, at all in the book. The kind propagated by Milton Friedman and his monetary school of economics, the kind that has dominated the world economy for over 40 years.
Nor is there any discussion at all on welfare economics or development economics as it is referred to these days in the book. Nothing on Beveridge and his idea of the welfare state, of Bismarck’s idea of welfarism, and the need for government intervention to steady the ship and protect the poor and most vulnerable. The author might have done well to include Amartya Sen in this context.
Finally, in the last chapter titled The End of the Worldly Philosophers? Heilbroner writes that the world has evolved through three stages from the early hunting and gathering days, to the displacement of medieval tradition and feudal command with a social order that is capitalism. It appears that he sees capitalism as the only means of organizing society and the production and distribution of its needs. Yet, he sees a new and more significant change in “increasing appearance of a new concept as the vision – indeed, the essence – of economics, and the corresponding disappearance of another much older one. The new vision is Science; the disappearing one, Capitalism.” As if one is opposed to the other, or they are mutually exclusive.
The fact that the author, a Harvard University educated professor who has also worked in government and in business, couldn’t decide on a suitable title for the book tells us of the enormous confusion contained in its pages. According to his preface, “the word economics was death at the box office”, so he thought of calling it The Money Philosophers, when another editor he was lunching with – this time from Harper’s Magazine – suggested “worldly”. He then goes on to say that a student enquired at his college bookstore about a book whose author’s name he couldn’t recollect, but the queer title was “A World Full of Lobsters”.
I don’t know about students, but a general reader would be quite at sea.
*The reference notes section heading at the end of the book has an asterix, explained below as “With renewed thanks to Dr Jaspal Chatha”, whoever that might be.