Academic journal article Business Economics

Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street

Academic journal article Business Economics

Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street

Article excerpt

By Tomas Sedlacek (with foreword by Vaclav Havel). 2011. Oxford: Oxford Word University Press. Pp.368. $27.95 hardcover.

Business Economics (2013) 48, 205-206.

doi:10.1057/be.2013.19

Tomas Sedlacek's book on the economics of good and evil first appeared in the Czech language in 2009 and within a few weeks it became a best seller in his home country. Translations into English, German, Italian, and Polish soon followed, and other translations are on the way. In 2012 the book won a prestigious prize at the International Book Fair in Frankfurt. This immediately raises the question of the reasons for such a fast rise in popularity. A part of the answer lies in the subjects covered in the text. Apart from economics, the book's content spans a long period of history, delves into philosophy, touches on sociology and anthropology, and gives a fair bit of attention to psychology. The text is well written, generously endowed by citations from books from all the subjects mentioned above and by prose and poetry. The erudition of the author is reflected on every page.

Perhaps the main drawing card is the central aim of this book, which is to liberate economics from what the author views as the present shackles of positive economics based on mathematical models and return to the normative and verbal economics of the past. The normative approach advocated by the author views economic problems in light of their moral implications and goes outside the strictly economic format for ethical inspirations. The contrast between the traditional contemplative European approach and the pragmatic American problem-solving approach could not be any clearer.

The book consists of two parts. The first part takes us through ancient economics and beyond. It traces any mentioning of economic issues, starting with the oldest work of literature in Mesopotamia 4,000 years ago. It continues with the Old and New Testament, Ancient Greece, Christianity, and ends with Adam Smith. The writings from early Mesopotamia include the term "animal spirits," later introduced by Keynes and contrasted with mathematical expectations. There is no record of historical progress in Mesopotamia. However, the Hebrews conceived progress as relating to not only material things but mainly to spiritual matters. This conception of progress changed much later when, as noted by Keynes, growth and material advancement appeared 300 years ago.

An interesting observation relates to the Egyptians, who are credited with the foundation of bureaucracy and regulation. Similarly, Egypt is credited with the acknowledgement of business cycles through Pharaoh's dream of seven years of abundance followed by seven years of famine. The Hebrew interpretation of the causes of business cycles was that they were God's punishment vs. God's blessing. The role of money in the Old Testament is also noted. In the chapter on Ancient Greece we learn that the first economist was Hesiod, his main economic contention being an assertion that labor is the source of all good. Another Greek economist, Xenophon, advocated the advantage of trade and investment and took note of the benefits of the division of labor, 2,000 years before Adam Smith. With regard to utility, the dispute in Greece was one between the Stoics and the Hedonists (Epicureans). The Stoics considered all economic behavior constrained by moral rules, while the Hedonists considered constraints to be already part of the utility function.

The importance of economics in Christian teaching is amply demonstrated in the last book of the New Testament, where the height of punishment was considered to be "not being able to buy and sell." A very fitting application of the Christian rule, "do unto others as you would have them do unto you," solves the problem in the modern theory of games known as "prisoner's dilemma." A similar parallel in the theory of games is where some applications of the biblical advice, "when struck on one cheek, turn the other cheek," is appropriate. …

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