The love of central planning, esotericism and specialization dominate economics (political economy) like no other discipline. How else to explain the likes of Paul Samuelson, Karl Marx, John Maynard Keynes, Joan Robinson and Irving Fischer. The soft underbelly reveals a far more interesting and realistic grasp of reality with the likes of Joseph Schumpeter, Milton Friedman and Friedrich Hayek. Today it is the latter who rule.
What the former tired was nothing less than utopian in their attempt to field an instrument for mastery of a domain that was classically understood to be humanist than positivist. Political economy may be an ‘engine of analysis’ as Alfred Marshall said, or an ‘apparatus of the mind’ as Keynes put it, nevertheless, economists no more set the world to producing and consuming than baseball statisticians hit home runs. Nevertheless, the fallacy of hubris seems embedded within the very fabric of western grasp.
The recent exposition of the dominant personalities that hovered throughout this craft is put on display by Sylvia Nasar in her magisterial ‘Grand Pursuit: The Story of Economic Genius’ Simon & Schuster 2011. Her book examines the lives and impact of the greatest minds that sought to open and dominate a discipline that for centuries was thought to be encapsulated within the finite exoticism of Jewish or Arab partisan intelligentsia. She divides her book into three chapters resembling a play: ‘Hope, Fear and finally Confidence’ are her protagonists as she examines the lives of both men and women who sought to master the complexities of Pandora’s Box.
In wartime Vienna we meet Joseph Schumpeter who was jubilant in his public display of extravagant carelessness. After being admonished by a business associate he immediately rode down Vienna’s main boulevard with an attractive blond on one knee and a brunette on the other. In May of 1924 the crash of Vienna completely broke Schumpeter. Yet he continued in private to write the most convincing macroeconomic tracts before Friedman or Hayek. It was Schumpeter who coined the term ‘creative destruction.’
With Nasar we meet Yale’s best economist named Irving Fischer; entrepreneur, scholar, exercise fiend, Prohibition exponent, paper fiat money zealot and eugenics advocate. He too lost everything in the Great Depression and in so doing had to endure years of public humiliation and ridicule. In such trying times he sat down to write his most infamous tract, ‘The Debt Deflation Theory of the Great Depression’ written in the fury of 1933 it is still cited today among economics as the finest and most acute analysis of what caused the Great Depression.
Throughout Naser’s book you affirm the basic common insight that economists are political creatures too.
There are two distinct economists missing for Nasar’s book: Jacques Rueff and his cogent analysis of the faux gold standard given in Bretto Woods (1944-1977) and Murray Rothbard’s analysis on the politics of why the Hoover Administration was so lax in intervening to prevent the Great Depression.
If you wish to read an engaging book that details the lives and events that dominated the last half of the 20th century, try Sylvia Nasar ‘Grand Pursuit: The Story of Economic Genius.”