For the last several months, the time I’ve spent on this blog has largely been taken up with the ideas of recognizable economists. As large a task as it was, I likely underestimated it. I’ve found it to be such an intellectually fruitful experience that it deserves a moment of retrospection.
We’ve covered key ideas and arguments from Adam Smith and Karl Marx to J.M. Keynes and F.A. Hayek. Let’s retrace our steps for a moment.
Our survey began with Adam Smith’s legendary The Wealth of Nations, which outlines many concepts familiar to economics students today. Smith did not claim to invent any sort of science, and largely stuck to explaining the phenomena of commerce intuitively. Some of his concepts—like length discourses on coinage—have not retained their relevance, but his arguments in favor of free trade were a foundational attack on the mercantilist outlooks which had prevailed hitherto.
Karl Marx was many things, but an economist was not one of them. He does not err too much in his evidence-based criticisms of capitalism. Yet Marx extrapolated from these a framework in which capitalism was exploitation—at the very period in which the bargaining power of labor relative to capital was at its nadir. He ignored critical concepts like human capital and inter-class mobility. While the success of turn-of-the-century labor movements might be hailed as a vindication of Marx, it did not bring about the overturning of capitalism he predicted. His work is shot through with bad logic and bad theory.
Writing in the 1930s, Keynes breathed life into the field of macroeconomics. His sweeping formulations created an illusion of mathematical precision which has persisted to the present. His General Theory is shot through with witty and clever observations about investing, efficient markets, and other concepts—in a sense therefore, Keynes’ thinking was greatly ahead of his time. His theory itself retains value as long as it remains abstract, as long as his formulae remain nebulous conceptions of ungraspable truths. Yet Keynes would ultimately lend his name to Keynesian economics, and this school of thought appeared to place more stock in definitive economic concepts which sought to treat the subject as a science rather than an art. Keynes himself contributed less to such mis-applications of his own ideas than his critics admit—but his boldness, however tempered by restraint, was an encouragement to less scrupulous disciples.
I will not attempt to hide my fondness for Hayek. His economic concepts are not easily understood, as they make fewer assumptions and therefore reach limited conclusions. But his body of work avoids logical errors and contradictions. He articulates better than any of the others a history of economic ideas which is largely forgotten and should be remembered. In the latter half of his life, he focused his studies on stating the intellectual and moral case for liberal society, inspiring a renaissance of liberalism in the West and in Soviet-occupied Europe. It is easy to dismiss Hayek as a sad old pessimist, because many of his policy prescriptions are negative: things to avoid doing. He therefore has little appeal to academics with inflated senses of their own judgment, and politicians with distorted senses of their own responsibilities. He is, almost without doubt, a pessimist. He does not place much faith in human beings to consciously direct all of human affairs. But he need not be discouraging. He points to individual decision-making and liberty as the best hope for mankind, and assures his readers that deviations from this are but fools’ gold.
We have, of course, merely scratched the surface of our subject. Yet we have already spent more time on the subject than I originally intended, and the backlog of project ideas has continued to grow. For now, we will leave Hayek’s The Fatal Conceit for those readers interested in a more anthropological take on his thesis in The Road to Serfdom. We also pass over for now the work of Friedrich List and his National System of Political Economy, in which he makes a case for economic nationalism and against free trade—echoing arguments Alexander Hamilton made to Congress in 1790. We may revisit this in the future.
Ultimately, our approach here was consistent with how I prefer to approach such heavy topics: as much reliance as possible on original source material. I generally believe that the impenetrability of many fields of study is a myth. My entire previous exposure to economics came from three classes in college, two of which overlapped almost entirely with each other. Even limited backgrounds like this are enough to explore these ideas in more detail. The goal here at tenminutemajor.com is to ensure that you’re almost as well off reading our summary as you are the original work—we do this so you don’t have to!
Finally, my contrarian streak felt vindicated considering just how little the debate of economic ideas is still discussed. Hayek directly challenged Keynes’ ideas in the 1930s, but the economic debate has turned remarkably quiet today. I’ve spoken with multiple economics majors this year who tell me they’ve never heard of Hayek—but everyone has heard of Keynes, along with whichever neo-Keynesian can offer the most appealing menu of distributive justice policy proposals. I will not go so far as to insist that Hayek is right on every point and Keynes is wrong, but in the twelve-round battle of the minds, they still have unfinished business to settle. It’s another example in my mind of how popular knowledge or consensus opinions can be seriously misinformed about ideas of great importance. It always bears repeating: the only antidote to dogma is that of a three-year-old: always ask “why”.