Book Review: A Grand, if Wandering, Pursuit

Grand Pursuit: The Story of Economic Genius – Sylvia Nasar

Whatever happened to our BIG thinkers in economics? Whatever happened to those titans of the humanities, applying their considerable intellectual powers to the problems of economics, forming all-encompassing, grand theories? Those were fun! When did economics get so narrow, overly mechanical and specialized? (Read: boring.) No matter how mathematical, “rigorous” or sophisticated economics thinks it’s become, we’re still wrestling with Keynes, Friedman, Hayek, Smith, Marx and so on. Those are still the guys.

And I’ll tell you what, I’d much rather have a drink with Schumpeter or Keynes—heck, even Marx—than most economists (read: glorified statisticians) today.

That’s the allure of Sylvia Nasar’s new book (you know her as the author of the mega-best-seller, A Beautiful Mind). She’s endeavored to tell the story of the big thinkers in economics, whose basic ideas are still the ones most all analysis and research pivot on today.

One of the best lessons of studying economic history, rather than the theory, is you get a sense of how and where theories came from in the historical moment. And Nasar’s book sets this context very well. Marx, of course, is basically totally wrong, but you can see how some folks would think that way in the time he lived. And, as said in this space before, The Road to Serfdom, Hayek’s masterwork, was truly a war document—a reaction to the Nazis.

Keynes would often criticize economic thinkers for being too ideological. He believed in pragmatism because the aim of economics was to set policies that could actually be achieved. Which is why, up until just a few decades ago, “economics” was commonly referred to as “political economy” (again with the humanities). The political dimension of economics can’t be underplayed (see the eurozone the last two years). There’s a lot to disagree with tied to Keynes’ views, but he was right in seeking this pragmatic method: Through time there have been countless economic theories that make logical sense, but aren't right. another reason among legion economics as pure math (logic) is a fool's game. I think a lot of pundits would be surprised to discover, if they actually studied Keynes, he was much more of a free markets guy than widely believed, and he waffled on his views constantly tied to the changing political climate.

The big quibble with this book is Nasar’s selection of topic and the narrative she weaves. This is the problem with getting a professional writer, but non-professional economist, to write such a book. There's all this talk about the money supply, for instance, yet nary a word on the creation of central banks and how these economists dealt with it—which were just revving up in the beginning of the 20th century. The presence of a co-author with awareness and experience in this territory would have paid off.

One gets the sense Nasar set out originally to do one thing, and then realized the topic was too sprawling to achieve it for a big audience. And the result is less coherent than it ought to be. The book starts with Marx and his life (with almost no mention of Adam Smith), spends most of its time jumping back and forth between economists of the World Wars (Keynes, Hayek, Schumpeter, Irving Fisher, etc.) and then, almost in total non-sequitur fashion, spends the last few pages discussing Amartya Sen. Why not end with Daniel Kahneman and Amos Tversky? Why not spend more time on Milton Friedman? It’s quite ponderous.

Perhaps the most interesting and compelling section are Nasar’s biographical accounts. Schumpeter was a libertine and a dandy and terrible at politics. Beatrice Well (Potter), who coined the term "collective bargaining" and also played a significant role in advancing women's intellectual life in the West, was tormented for many melancholy years about becoming a spinster. This is all fascinating and great reading.

Nasar strikes an optimistic note in the introduction by using Charles Dickens, his time and his work, to depict economics as a humanity and display how very far the world has come in improving quality of life, and how much work it has yet to do. She posits economics is civilization’s attempt to take some control over its own development. Which is true. But the basic rule, as ever, is free market economies are at their most potent when they are self-organizing and based on the values of human freedom, upheld by property rights and the stable rule of law.

This is great reading for anyone wanting a diversion into economics as biography without all the heavy theory. Just don't expect to have a firm grasp on the history of economic ideas once you're done.