Book review: New Ideas from Dead Economists

One of the things that I feel I missed during my undergraduate and graduate studies was a systematic understanding of the history of economic thought. It was there in bits, but I never really picked up what I felt was a more complete appreciation of how various economic concepts and theories had developed over time. I've filled in a lot of the gaps since, but reading Todd Buchholz's 1989 book New Ideas from Dead Economists has helped a lot. I see that the book is now in its fourth edition (published this year), but I read the revised edition (from 1999), which has clearly been sitting on my bookshelf unread for far too long.

The book has chapters devoted to all of the big names that you might expect, including Adam Smith, Thomas Malthus, David Ricardo, John Stuart Mill, Karl Marx, Alfred Marshall, Thorstein Veblen and JK Galbraith, John Maynard Keynes, Milton Friedman, James Buchanan and the public choice school, and Robert Lucas and the rational expectations theorists. Along the way, a lot of other famous economists, not all of whom are dead, make cameo appearances.

Buchholtz makes a lot of explicit links between the various big names. I hadn't realised just how strong the 'family tree' of early economics was:

Almost all renowned British economists since Adam Smith have been linked through close friendships. Remember that Smith's good friend David Hume was a "godfather" to Thomas Malthus, who was an intimate friend of David Ricardo, whose comrade James Mill encouraged his economics. James begot John Stuart Mil. A slight break occurs since Mill did not befriend his successor Alfred Marshall. But Marshall learned from Mill's works (and from the economist F.Y. Edgeworth, nephew of Ricardo's friend Maria Edgeworth) and then taught Keynes, who dominated British economics until World War II and produced numerous prominent disciples.

And this:

From 1776 to 1976 just five books reigned over economics in nearly unbroken succession: Smith's Wealth of Nations, Ricardo's Principles, Mill's Principles, Marshall's Principles, and Samuelson's Economics. What they lack in imaginative titles, they make up in endurance.

Later editions of Samuelson's book were still in use at many institutions when I started my economics training in the late 1990s, although it was never a required textbook in any of my papers. One of the more surprising aspects of Buchholtz's book is that Paul Samuelson doesn't get his own chapter. He made so many contributions, not least the neoclassical synthesis, that it surprised me.

I was also surprised how much of the book gets devoted to microeconomics. My previous exposure to the history of economic thought was heavily dominated by macroeconomics. I especially appreciated the chapters on Alfred Marshall and the public choice school. Understanding the role of government has been an important theme in the development of economic through. Indeed, Buchholtz draws a lot on this point, and towards the end of the book he writes:

They all knew one thing, however: they could not ignore the interplay between government and the economy. Adam Smith blasted the government for supporting the trade restraints of the guilds. Malthus contended that Poor Laws promoted poverty. Ricardo warned that protectionism could sink England into the abyss of a new dark age. Marx argued that government worked only as a tool of exploitation and oppression. Keynes tried to shake government employees from a deep and dangerous sleep. And so on.

...each of the economists we have studied, despite their many differences, warned us that governments always face political pressures to take measures that can ruin good economies.

That is not to say that Buchholtz is promoting a laissez faire libertarian approach to economics. More that there are meaningful political constraints and public pressures on government choices. This is a point that I have increasingly stressed in my ECONS102 class, especially in the last couple of years - that 'good' economic policy might nevertheless be difficult for government to implement because of politics.

I really enjoyed this book. Buchholtz writes in an easy-to-read style, neither dry and formal, nor so informal that the serious points are lost. If, like me, you want to build up your understanding of the history of economic thought, this would definitely be a good place to start.