The Fortunes of Economics

By Robertson, David | Review - Institute of Public Affairs, March 2004 | Go to article overview
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The Fortunes of Economics


Robertson, David, Review - Institute of Public Affairs


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 organizes 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 criticize.

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 economies'.

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.

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