Saturday, July 5, 2014

Nasar, 2011, Grand Pursuit: The Story of Economic Genius (Economic history)

Sylvia Nasar is the populist author of “A Beautiful Mind,” popularized in the Russell Crowe movie. As an economics correspondent for the New York Times and a business professor at Columbia School of Journalism, she has some claim to understanding the big picture, but she is no Robert Heilbroner - still the best introduction to economic thought in The Worldly Philosophers. The book is organized in three parts - hope, fear, and confidence. Her story begins in the middle of the 19th century, with a preface mentioning the classics (Malthus, Ricardo, Smith, Locke) who then recur as footnotes to the thinking of Alfred Marshall, judged the father of modern economics. Generally, the book is strong on colour and descriptive background, but weak on economic foreground, so it is more useful for atmosphere than for substance. Nasar’s assessments of influence and weight don’t authoritative to me.

“Hope” begins with Marx and Engels, with more biography than philosophy, and a rather cursory dismissal of Marx, based mainly on his failure to spend much time with the proletariat of his day.  She hits her stride with Alfred Marshall, although there is still rather more background on 19th century industrial revolution society than on Marshall’s actual work. Other chapters in “Hope” address the Webb’s and the founding of the London School of Economics, Irving Fisher, and Joseph Schumpeter, bridging into “Fear”, which begins with Schumpeter, then Keynes at Versailles (revealing) and the debate between Schumpeter and Hayek, then back to Keynes and Fisher in the 1920s, and the interpretation of the problems of the depression. Capitalism and Communism in the 1930s are presented as experiments, interpreted by Beatrice Webb and Joan Robinson.  Something of the atmosphere of ideological battles is captured in the chapter on Friedman vs Keynes in the Second World War, with a separate chapter returning to the story of Schumpeter and Hayek during the Second World War. The final section, “Confidence,” begins with Keynes and Bretton Woods (again, more atmospherics than substance - don’t look to this for a description of institutions or functions), and Joan Robinson in Moscow and Beijing.  Here I think Nasar tips her hand as a prisoner of the capitalist world; incredulity for followers of Marx, and little reporting of the ongoing problems experienced by capitalism.  One useful thread, I think, is the observation that Paul Samuelson’s elegant mathematical arguments came to dominate American economics after the Second World War, eclipsing the more nuanced narratives of the economic philosophers and historians. The fact that these opaque technical arguments can be divorced from social and political reality and put to the service of moneyed interests (see the last scenes of the documentary, “Inside Job”) is the bane of modern economics, for which we await a remedy from the next generation of economists. 
David Last, 30 December 2011

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