Abstract
In developing a comparative theory and methods course for economics majors a few decades ago, relevant reading materials were scarce. Thomas Kuhn and later Sandra Harding added breadth to our students’ education, but not depth of knowledge in their chosen field of study. Fortunately, the past ten to fifteen years have brought considerable good readings to this corner of the discipline, and the book under review augments this bounty. Dimitris Milonakis and Ben Fine write of the evolution of economic thought with an approach in which history and method take center stage. They chart the changing relationship between economics and the other social sciences, especially the separation of the two, and argue that integration would be a more productive path.
The book focuses on two great schisms in the development of the economics we know today. The first was between deductive and inductive methods, given fresh insight in this volume’s description of the Methodenstreit of the 1880s, involving the principals of Gustav Schmoller of the German Historical School, and Carl Menger, arch marginalist. With the marginalist revolution, however, method and substance lost diversity, taking the form of the hypothetico-deductive approach whose key figures are better known today because of the long reign of neoclassical economics. The richness of the classical writers—Smith, Mill, Marx, and others—can be attributed in part to their engagement with ideas that would later be assigned to sociology, philosophy, and history. Notable exceptions as economics narrowed to the neoclassical paradigm were Weber and Veblen (bridging economics and sociology), and Schumpeter. How many students of economics today, at the undergraduate or graduate level, explore their work?
To Milonakis and Fine, the closely related social and historical developments of an economy influence the economic concepts used to understand and analyze it. They are of course arguing against any notion of a value-free discipline, or one that can serve equally well across time and socioeconomic formations. Not surprisingly they seek and highlight voices that argued against asocial and ahistorical economics. From Smith to the present they are in search of an economics that makes wide use of inductive and deductive processes, individualistic and holistic modes of reasoning, and historical context. They note that even when the development of economics is taken seriously today, as in most fields the history is generally written by the victor: for economics, practitioners of the current narrowly constructed version of the discipline. Mainstream history is generally based on a building-block model of development, leaving out disputes that were subsequently papered over or cast aside. In the form of political economy, the discipline used to be “rich, multi-dimensional and pluralistic” (9). In the contemporary form of economics, it is more typically characterized by formalistic models, methodological individualism, and techniques that, while sophisticated, presume that one form of economic reasoning serves all our needs.
The span of political economy and economics addressed in the book is from Smith to Keynes, with a brief concluding chapter on moving beyond the formalist revolution. The arguments are organized chronologically, with rich chapters dealing with Smith; Ricardo; Mill; Marx; the German Historical School; Marginalism and the Methodenstreit; Marshall; British historicism; Veblen and a separate chapter on Commons, Mitchell, and Ayres; another on Weber and Schumpeter; then Positivism; the Austrian School; and Keynes. The authors make the point that the chapters are largely self-contained, making possible classroom use of some chapters rather than the whole book. I found value in each of them. Ending their survey in the mid-twentieth century means that the feminist challenge does not figure into their history for this volume.
For teaching purposes, the book could be used as a history of economic thought text, or as a companion volume to a mainstream text for such a course. As a stand-alone text, getting students started in the book would take real effort on their part, and the instructor’s. The early chapters assume familiarity with the era of classical political economy, the period that students of today are least likely to know. Once the first few chapters are behind the reader, enough knowledge has been acquired that subsequent reading will be easier for those new to the material. The authors describe the book as appropriate for upper-level undergraduates and graduate students, and this seems an accurate assessment.
When the reader first browses this book, she may wonder why it ends with debates surrounding the Keynesian-to-neoclassical transition of roughly the 1970s. This fine discussion, drawing careful distinctions between the mathematical abstractions of the “new classical microeconomics” and the more tentative, nuanced marginalists of a century ago, makes clear the shaky foundations of the economics being taught today. For a fuller understanding of the roots of our “autistic” discipline from these authors, one has to turn to another book by the same authors published in 2009, their From Economics Imperialism to Freakonomics: The Shifting Boundaries Between Economics and the Other Social Sciences (also by Routledge). The title of a section of the concluding chapter of From Political Economy to Economics, “From implosion of principle to explosion of application,” offers insight into what the companion volume will provide. Riding on its scientific claims, imperialist economics purports to provide answers for many of life’s problems. The process is too familiar: abstract in the extreme from real life; formulate “scientific” answers; then prescribe for the complex world from which you have simplified without making adjustments for the restrictive original assumptions. The ironies and contradictions abound: people seem to be so intrigued by the insights of this perverse approach to social science that bestsellers result. Clever technique is the primary product of today’s monolithic world of economics, and it has been made entertaining for mass-market readers. The danger here is that the readers of these popular applications will acquire the thinking of many an economist in seeming to take seriously Robert Solow’s well-known and disapproving quip, quoted in a chapter introduction of the book under review (295), that “…economics is the physics of society.” It should be noted that the physics of today is much more complex and nuanced than it was in the early twentieth century, when positive economics attempted to emulate it. By comparison, economics reflects arrested development.
This is another excellent book in the Economics as Social Theory series edited by Tony Lawson for Routledge. The series is a part of the flowering of political economy mentioned at the beginning of this review. May the renaissance continue!