The Fortunes of Economics

Economics and its Enemies:  Two Centuries of Anti-Economics
by William Oliver Coleman
(Palgrave-Macmillan, London, 2002, hardback, 328 pages, A$198)

In this excellent work of scholarship, the Tasmanian academic William Coleman reviews the attacks on economics that have persisted since its foundation and which continue unabated today.  In the opening chapter, the author draws the battlelines between the accusers and the defendants, and describes the field of action.  This patient and methodical introduction leads into a careful and balanced description of two centuries of conflict over economics.

This absorbing study provides not only detailed information and a telling commentary, it is also entertaining.  Coleman organises the many sources of criticism and condemnation directed at economics and economists, starting with Smith, Hume and the Physiocrats, and following the trail until economics reached maturity with Marshall and the Marginalist School.  He makes a genuine assessment of both sides of the argument, explaining the confusions caused by economic texts as well as the malicious self-indulgence of the enemies of economics.  Yet he is never condescending and restricts his judgements to the final chapter.  His patience must have been sorely tested by such restraint.

The lesson is that the enemies of economics are drawn principally from political interests of one sort or another.  For the most part, these enemies defame rather than discredit any analysis or logical argument that weakens or undermines their rhetoric.  Their goal is to destroy economics as an intellectual pursuit;  to demolish its precepts rather than simply to criticise.

This is illustrated by the contradictory use of economics in the revolutions that ended the Age of Enlightenment.  Economic reasoning based on self-interest and economic freedom brought by markets was first decried as anti-monarchist and disruptive of social order in the lead-up to the French Revolution.  This was then condemned when the Republic was established because "the citizens" saw self-interest as supporting hierarchy.  When the monarchy was restored economics was again regarded as disruptive of law and order.  Some would argue that this confusion about economics has remained with French politics until the present day!

Although Classical economists regarded themselves as apolitical, economics generated strong reactions in political circles.  The Age of Revolution saw Napoleon establish aggressive nationalism, following the United States' more peaceful model.  Nationalism elevated public policy and history/ culture above abstract economic theory.  The rise of the new Germany in 1870 coincided with the establishment of The German Historical School which introduced the inductive historical method into economics.  Economics had to be part of national development.  The protectionism advocated earlier by Hamilton and List was incorporated into industrial policy and mercantilism revived.  This all-encompassing nationalism was to exact an enormous price from Europe in the next hundred years!  The German Historical School is now part of history but, Coleman notes, its ghosts linger in so-called "development economics".

Politicians' concerns about economics and nationalism are nowhere better illustrated than in Coleman's chapter on economists in Totalitarian States.  Stalin would not tolerate alternative opinions.  First he bullied, then brutalised eminent Russian economists, before he eradicated them.  This must have been a considered decision because he is reported to have had a large collection of economics books that he had annotated.  This chapter is disturbing to read because memories of the Stalinist monster-state and Hitler's Third Reich are revived.

Coleman spends some time on the disaffection of 19th century churchmen with economics.  The main concern was that, by arguing for self-interest and individual freedom, economics undermined social order and respect for national institutions -- in particular, the status of the Church.  This was part of a common cause against universal education and intellectual freedom that saw the Church speak out against progress in scientific advances as well as economics.  The Romantic School (Coleridge, Wordsworth, Southey, et al.) were motivated to support the Church to protect the privileges they enjoyed under the established order.  Coleman examines the Romanticists at length.  He notes that their objections to rational thought and social change have found renewed expression in contemporary environmentalism -- who is to put a price tag on "the priceless"?  The Romantics and other professional scribes are treated gently until the final chapter, when Coleman exposes not only their general ignorance of the works of the economists they attacked, but also their own disturbed mental states, ill health and drug addictions.

It was Carlyle and Ruskin who most vigorously opposed "the dismal science".  This catch phrase was devised by Carlyle (1849) when commenting on The Nigger Question (p156), where he referred to the economic damage arising from the emancipation of slaves.  Ruskin was equally reactionary:  "Slavery is not a political institution at all but an inherent, natural and eternal inheritance of the human race".  These savage attacks arose because most economists supported the abolition of slavery.  Reference to "the dismal science" by modern "public intellectuals" shows how little they understand of economics, and how little research they do.

While Coleman declares the failure of anti-economics, on grounds of misrepresentation, distortion and unworthiness, he criticises economics and economists too.  Anti-economics is undermined by ignorance of economics, but it fails because economics frustrates political interests, affronts moral principles with self-interest and humiliates those demanding social status.  Because anti-economics misdirects its fire, economics also loses.  Coleman argues that if the criticisms had been better directed, economics would have to become more relevant, by reducing its erudition and being more comprehensible to its audience, which is the general public.

This leads me to some specific comments on this volume.  First the commentary ends too soon.  Economics has continued to be abused, criticised and rejected since the beginning of the 20th century, while the subject has been strengthened by intense internal disputes.  Yet, except for the excellent, though disturbing, chapter on the totalitarian states, the coverage of this volume ceases around 1900.  Since the dust jacket is adorned with an image of Keynes, one would expect more comment on this towering personality's contributions.  Keynes receives only five passing references in the book.

Probably the publisher is to blame for the misleading graphic, as well as the price of the book, which takes it beyond the budget of most potential readers.  This is unfortunate, because it is an amusing and readable history which makes a serious contribution to increasing understanding of long-standing conflicts, which are still repeated by present-day enemies of economics.  I hope that William Oliver Coleman can be persuaded to take up his pen again to bring this story up to date -- I am sure it will continue to unfold.