To understands its flaws, a revision to the evolution of ideas is illuminating
«A study of the history of opinion is a necessary preliminary to the emancipation of the mind«. John Maynard Keynes, The End of Laissez Faire (1926)
Loads we have been taught during our economics studies, and through the theory books. And, like a sheep, we tend to follow the current no questions asked. But maybe, just maybe, you have once asked yourself where did those ideas come from. Anyway, the lecturer skipped that part, and your curiosity did not go way further, passing the course being your immediate concern.
But then again, maybe you are an insightful person. Perhaps, while studying, you questioned to yourself how is this model supposed to hold, if it contradicts these other realities I’m aware of. Afterwards, you checked its background, and realized about some preposterous assumptions. Nonetheless, you probably thought that was something you could live with. I dare say, the real shock came when your friends were discussing about the IPhone one of them had acquired recently, the others claiming it was a rip off, that it was not worth its overly elevated price. At that precise moment someone probably turned into you and requested you solved the discussion, after all you are the economist, you should be able to define what value is and quantify it. It must have been a bombshell to realize you could not define such a pillar of your field.
It is at this point when those words from your lecturer slide back into that brain of yours: “Economics is the science which studies….”. Holy moly. Science, he said? It is my understanding science is something we actually know about, thus we can explain and predict phenomena related to it. Why are then all economic reports assessing policy impact written in hypothetical language? Why they always use should, or might, or expect, or the likes of it? But scientist shouldn’t be scared to make statements, because in fact they are certain about them. Upon closer examination, you soon notice we don’t know as much as it is commonly believed about economics. In fact, we have a long way ahead to catch up with other formal sciences.
Why is economics so insistently treated as such, though? It has been a while since it started to be studied formally. One would think that it would have a more solid ground to lay on by these heights. It is, therefore, disappointing to see that it is not the case.
It is this moment you start wondering what is the point of what you are studying. You start to question it. You know there must be something to it, you can appreciate your subject of study on a daily basis and distinguish patterns and rules which seem to hold. You now consider the chance what you were taught is rotten to the core. You want to learn about it, though. That’s why you chose to study this field. There must be another way. But you come to the realization that it cannot be so easy, provided so many clearly clever folk have been misguided.
Then, you figure they must have got it wrong from the very beginning, just because they tended to follow up what previous economists had established. Despite their cleverness, they were operating under the wrong basis, to begin with. Hence, you conclude that in order to avoid falling in the same errors, you must identify them, and for this purpose you need to track them down to their origins.
If you have followed a process any similar to what I have just described, congratulations, you found what you were looking for. Here is when I come in. With the preceding lines, I just made my case as to why I am here today starting this new series of posts, why I decided to go back to examine the evolution of economic ideas. It is the reason to be for these series of reflections I’m going to go through.
As Keynes said, a revision to the evolution of ideas can be illuminating. The context in which they arose might reveal our conception of them is not the originally intended. We can therefore learn their purpose. And, believe me, that knowledge is a game changer.
Like (I guess) yourself, I was also let down in university. I decided to try something new, instead of following the current, get to the shore and walk my own path. An excellent professor told me once: “History is not uniform, everybody has his own version of it. One thing is what really happened, and another is what we are told from the perspective of those who register it”. That is exactly the purpose of this series, instead of following the history we have been told to the same dead end as always, I figured I’d use the time machine which literature is, and witness myself what was exactly said, in which context and with what motive. This way, I might be able to make my own version of history of economics.
One hopefully free from the errors of the past. That is this series of reflections, a critical analysis of the history of economics, unveiling its flaws, and sketching the direction it should have gone instead. My wish is we are closer to what economics ought to be by the end of it.
Throughout this journey, the most notorious names in economics will recurrently come up: Smith, Ricardo, Marx, Quesnay, Cantillon, Samuelson, Keynes, Marshall, Hayek, Jevons, Mengers, Wald, Malthus, Solow, and plenty of others. Even Aristotle will show up. They will arise during the coverage of the big topics in economics: The theories of value, distribution, growth, and cycles. Meanwhile I will address the fundamental problems with economics, such as formal vs social sciences, magnitudes, microeconomics vs macroeconomics, economic models, or what type of events economics ought to study. There will even be some special entries dedicated to particular economist, like Mr. Marx (his own thought, not interpretations) or Thomas Aquinas and the role of Christianism. To close on a high note, my conclusions about what economic really is and how it should be studied will be displayed with the help of a debate I shall keep as a surprise by now.
The lay out of the series is going to be brief entries, between 500 and 1500 words, published with frequency until the end of it. There will be 13 entries in principle.
Last, but not least, I shall welcome all contributions and debate in the comment section and be actively reading and replying to it. Given the concept of “each has his own version of history”, it could be exciting big time to have some kind of intellectual community along the way sharing their perspectives on the main ideas they extract, thus running a parallel mutated version of the story we are going to be telling. It is my belief it can be a much more enriching experience for us all. Period.
Anyway, for this time I’m going to call it a day. I hope I awoke your interest, and will see you soon at entry I with the beginning of the journey. All the best.