Listener: 18March, 2000.

Keywords: History of Ideas, Methodology & Philosophy

Of course there were economists before Adam Smith (1723-1790) but he was the first to offer a reasonably comprehensive account of economic behaviour, founding the “classical” school of economics with its concern of how economies grow. His Wealth of Nations, published in 1776 on the eve of the American Revolution (which he supported), is a book which people quote rather than read, so its richness, its humanity and its subtlety tends to be lost. Smith, a professor of moral philosophy, later customs collector (and not as endeared to free trade as one might think), was a close friend of David Hume (1711-1776) who was also a Scottish philosopher and economist.

David Ricardo (1772-1823), a London Jew, is in the list not just because of his key theories of land rent, trade, labour value and money, but because he begins the formal modelling the economy. He was a wealthy stock broker, a member of parliament (for a rotten borough), wrote Principles of Political Economy and Taxation, and was influential in the policy debates of his day.

The German independent scholar Karl Marx (1818-1883) has an honoured place in economics, even if many of his disciples have not. He was the last great “classical” economist, perhaps more a synthesizer of past economics theories, but enriching them with philosophy, history and sociology. Marxism has suffered enormously from Marx predating the neo-classical revolution, although it is clear from Marx’s own writing that he was fascinated by new ideas, and would have seized upon neo-classical economics, had he been a generation younger. He is best known for Das Kapital, although I prefer his younger socially oriented writings.

Many economists contributed to neoclassical economics, with its concern of how markets work, adding the demand side of the economy to the supply (or production) side of classical economics. The greatest was English Cambridge professor, Alfred Marshall (1842-1924), a mathematician who hid his mathematics behind prose, a theorist who assiduously collected facts, visiting factories and walking the streets of London (with poverty investigator Charles Booth). His Principles of Economics, published in 1890, remains a masterpiece of microeconomic exposition of market behaviour. (It was recommended reading to my student generation 70 years later.) He is my personal favourite from this list ….

… but I would have been mesmerised by the charisma of Marshall’s prize pupil John Maynard Keynes (1883-1946), the “maynard” to distinguish him from his father John Neville Keynes. Even Keynes’ detractors are keynesians, for they use his macroeconomic framework for the study of business fluctuations and unemployment. (Was Keynes a keynesian – or Marx a marxian?) Keynes was a Cambridge academic but also advised the British government, and contributed to the creation of the post-war economic institutions although dying before the began to function. Probably the best writer among economists, his General Theory of Employment, Interest and Money was also one of my textbooks.

The last of the pantheon was also a Cambridge professor, but this time at the Massachussets Institute of Technology, at US Cambridge. Paul Samuelson (1915-) led the development of rigorous mathematical modelling of the economy, something which Marshall and Keynes, also good mathematicians, avoided. In some ways the mathematization of economics has been its curse, yet it cannot be ignored. Moreover Samuelson has a humanity, humour, and intuitive insight that distinguishes him from his corrupted followers. His Principles of Economics, my first year economics textbook, is still a pleasure to read.

…. AND SOME ALMOSTS

I have avoided the common practice of stacking a list with recents. American professor, Milton Friedman (1912-), is not there because I am not sure his monetarism is anything more than an ideology attractive to businessmen. His methodology would struggle to get a pass in a first year philosophy class. Regrettably it has been adopted by too many pedestrian economists.

I have hopes that Joseph Schumpeter (1883-1950) may yet join the pantheon. An Austrian, and a short time Minister of Finance, he ended up teaching at Harvard in the US, to be eclipsed by Keynes. His breadth of vision, encompassing history and sociology, would be a welcome return within the economics profession. In recent years, I have found myself turning to Schumpeter’s approach, to explain economic growth, financial crashes and the role of social institutions.

American Ken Arrow (1921-) might be a possible addition for a number of brilliant insights into how markets work and risk, including the Arrow-Debreu general equilibrium model, which he developed with French economist Gerard Debreu (1921-), but was started by French-Swiss economist Leon Walras (1834-1910). Arrow is best known for his voting paradox, in which communities are unable to make consistent decisions. Incidentally, he and Samuelson are uncles of Larry Summers, the secretary of the US Treasury.

My punt for the next to join is Ronald Coase (1910-), an Englishman based at the University of Chicago. His insights into transaction costs and the role of property (which generated a new inter-discipline of Law and Economics) are so revolutionary that my generation of economists are still struggling to come to terms with them.