Monday, June 22, 2009

A History of Economics

I forgot to mention I read this book a few weeks ago. Galbraith is an excellent and entertaining writer.

An underlying theme is Galbraith's emphasis on how the economic ideology of different historical periods seems to flatter those who hold power. Hence you have physiocrats in France during the 18th century, mercantilists during the 17th century, and neoliberalism during much of the 20th century, with a dash of Keynesianism for those who like that sort of thing.

I was reminded of this book whilst reading this lengthy thread at Crooked Timber in which Daniel "dsquared" Davis argues that economics should really be split into two disciplines: industrial cybernetics and political economy, with one being based on the development of practical applications of empirical research (like engineering) and the other being based on a discussion of the ethics, morality, and political consequences of different policies (basically a branch of political philosophy).

IIRC Galbraith endorsed this point: the idea that you can separate ideology from reality in political discussions is naive in the extreme (as Daniel argues here). Also Galbraith coined the term "the conventional wisdom" to describe beliefs that are widely assumed to be true for the sake of ideological convenience (think EMH, rational agents, drugs are evil etc)

I was going to write up a lot of quotations but frankly I can't be bothered: I advise you to buy and read a copy of this excellent history of this peculiar science.

[image from here]

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