The Worldly Philosophers

"This is a great book. It still has not been equalled. It’s a run through where the classical economists came from, who they were, what they thought and why they thought what they thought and how they worked as a group to try to produce a more productive and peaceful and prosperous civilization. They regarded themselves as engaged in a holy mission to understand this commercial, and then later industrial, economy in which humanity was increasingly enmeshed and how to properly manage it. The book is truly wonderful. It still saddens me that no one has managed to write anything as good, to give a sense of who these people were, not just the classical economists, but the neoclassical and even the Keynesian economists, too: how they saw the world and the influence they had. It goes back a little bit before Smith. The meat of the book goes from Smith to Keynes . Afterwards, there are extra chapters, written for the second and subsequent editions, bringing the story forward further in time. The main thrust of the story is humanity’s coming to consciousness, through the work of economists from Adam Smith to John Maynard Keynes, about how to properly understand and manage a commercial and industrial economy to make it sufficiently productive and to make society prosperous. The added chapters are more of a downer: it turned out that John Maynard Keynes was not the last word in economics after all and that there were economic problems that remained, that humanity proved incapable of successfully managing the economy for public good and social betterment. We’ve seen further evidence of that in the Great Recession of 2008-10 , the secular stagnation since, the unexpectedly rapid and extraordinary rise in income and wealth inequality since 1980, the probable effects of that rise in inequality upon our politics and our political organization—I don’t think it’s possible to understand either Donald Trump or Boris Johnson without the shifts in income distribution in the North Atlantic since 1980. Those parts do not fit with what is the happy, enlightening and very utopian, forward-looking story that Heilbroner tells in the core of the book, about each generation of economists solving problems left unsolved by previous ones and, ultimately, arriving at what you could call a Keynesian-Pigouvian synthesis—with some Smithian synthesis—of proper macroeconomic policy to preserve full employment, of taxes and subsidies on especially desirable or especially noxious activities to get the market focused on the right direction, and great trust on the properly managed market economy as a very powerful human social calculating mechanism and institution for coordinating our extraordinarily wide, deep and complicated societal division of labor. It does. Some of them are grouped together. It goes chronologically. Its first major note is Smith. It then goes on to Ricardo’s insights and Ricardo’s blindnesses, then to Thomas Robert Malthus trying to get Ricardo to think about the business cycle systematically and failing to do so, John Stuart Mill’s puzzling over how it was that you could get the economy to do well and how much you had to socialize in order to make the economy work properly for human betterment. That’s what pushed John Stuart Mill towards advocating some form of socialization of the distribution of property, and maybe of more. Even in the early 1870s, John Stuart Mill looked at the economy in which he was enmeshed and said, ‘It’s been great for the rich. It’s been great for production. It has greatly enlarged the size and comforts of the middle class, but the working class is still stuck in the same near-subsistence, life-as-nasty-brutish-and-short trap that it was one, two or five centuries ago.’ “They regarded themselves as engaged in a holy mission to understand this commercial, and then later industrial, economy in which humanity was increasingly enmeshed” He argued that we needed not only a full-fledged redistribution of property and the provision by the government of a lot of goods and services, but a limit to human fertility, that child licenses should be required in order to prevent us falling into the Malthusian trap of human numbers out-running natural resources. Mill looked at all the innovations of the century before 1871. He saw huge gains in productivity and technology, but he also saw that the productivity gains that had been seen over the previous century had not trickled down to the working class. So he rejected the idea that the market economy by itself could and would do the job and became a socialist, in a rather odd way. I think that Smith thought it had already been largely accomplished and that it would continue to be accomplished. That is, productivity in Smith’s thought had become so great that the workers of Britain were substantially prosperous. They were much more prosperous than they’d been one century before, let alone two or three centuries before and he thought that this trend was likely to continue into the future. It is Malthus who really brings down the hammer and says that people will ultimately breed no matter what. And because of that there are really only two possible endpoints. One endpoint is that the working class is desperately poor. Children are so malnourished that their immune systems are compromised and they are carried off by the common cold, and women are so malnourished that they can’t really provide their infants with enough milk. Infant mortality is extraordinarily high, or even women so skinny that they cease ovulating. In this endpoint, even though your average woman has ten pregnancies, only two children survive to reproduce and so the population remains stable. The other endpoint is monarchy, patriarchy and religion, where fathers have such authority that they are able to tell prospective suitors, ‘You cannot marry my daughter until you have a farm of your own and can provide her with a prosperous life. And I don’t care how much she loves you and you say you love her. You’re not getting married until you are prosperous enough.’ But this patriarchy needs to be backed up by monarchy because, if you don’t have a big king at the top to demonstrate the authority of the big father, then how will little fathers retain their authority? “In some ways, Marx turned Malthus on his head” And then you also need religion. The daughters and the prospective sons-in-law need to be absolutely certain that, if they engage in sexual intercourse before marriage, they will go to hell. Otherwise they’ll do what people do. Only if you have your monarchy, patriarchy and religious orthodoxy can you have a society that can stay out of this Malthusian trap. And it stays out of this Malthusian trap by postponing the average age of female first marriage to 26, so the decade between 16 and 26 is not one in which women have children. It’s only 26 to 36. By cutting down potential fecundity by half, you can actually maintain a good society, which is, of course, the crux of Malthus’s argument against Condorcet, Godwin and co. He argued that they wanted to destroy the authority of religion, they wanted to destroy the authority of monarchs, and Godwin even had this girlfriend, Mary Wollstonecraft, who wanted to destroy the authority of fathers over their daughters. He argued that they thought this would lead to progressive Enlightenment, human knowledge and happiness, but that, actually, it would lead to a world in which everyone is starving to death and fighting over crusts of bread—because our fertility will have outrun our natural resources to such a degree that the world will have become an absolute hellhole. Yes, and Malthus’s point is that the workings of the system—the system, in this case, being both an economy in which there are diminishing returns to scale and limited natural resources—and also human psychology in its orientation towards fecundity, greatly limit the extent to which we can produce utopia. We can only get as close to Utopia as possible by constructing a society in which women are absolutely terrified that they will go to hell if they have sex before 26. If you can do that, you can manage it, otherwise not. But, of course, other people found other ways out. This Malthusian view of the world is why John Stuart Mill was arrested for distributing birth-control information in the streets of London as a young man. But this—artificial birth control and other expedients—was viewed by Malthus and others as a grotesque violation of the natural order. Yes."

"The first edition of this book, which I read in high school (in 1960), got me to major in economics and devote my career to it. The book’s updated editions are just as good and give a good, not-popularized feel for what the major economic ideas are really about (and also a good feel for the people who created them)."

"This is the oldest book I’ve chosen by far. The first edition came out in 1953 – I read it in my senior year in high school. That’s one of the reasons I love this book. We had what was called the Honours Social Studies class. The teacher was quite sophisticated, a very unusual guy. He had an MA from Harvard. Heavens no! It was suburban Chicago. The median family income in our suburb in 1960 was $3 different from the national average. It was, quite literally, middle class. We took this class and six weeks of it was an economics unit, and he assigned this book. It’s what got me into economics, quite frankly. I am an economist today because of this book. Let me tell you why. The book did two things. Firstly, it talked about the problems economists deal with. At that time I was terribly interested in public policy and wanted to improve the world. I still am, but I’ve sort of given up hope on much improvement being possible. The other reason is that a number of these essays, at least in that edition, had a few equations. I was quite good at math – not great, but good. I thought, “Here is a chance to use math and think about something in a formal way which, along with being useful, is just a wonderful combination.” For me, that was just glorious. We also had anthropology, sociology and government, but they all just paled by comparison. It was the beauty of the formality and the specificity of economics which to me was demonstrated in that book. So it had tremendous influence. In the mid-1990s, I actually wrote Bob Heilbroner, and this was really bad of me. I wrote: “Your book got me into being an economist. I wish some of your more recent books had inspired me as much as this one did.” That wasn’t a good thing to say. The guy was quite far left – he wrote a lot of stuff which I felt was rubbish. But this book is just beautiful, it really is. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . Most of the prominent economists of the first half of the 20th century and before are discussed. It’s not just the ideas, it’s to give a feel for the people as people. I won’t go through them all, but I’ll just tell you the ones that intrigued me. I’m very interested in Keynes , personally. He was an amazing character, a tremendous investor. He made a fortune on the stock market, he was probably bisexual, he was very heavily involved in the Bloomsbury group. I also like David Ricardo, partly because he was of Jewish origin. He too made a bundle. I visited the synagogue where he was brought up, in East London. I also like Joseph Schumpeter, who ended up at Harvard. He had a tremendous reputation as a ladies’ man. He said, “I always wanted to be a great economist, a great lover and a great horseman, and I regret life has only granted me two of the three.” When he went to Harvard people were worried that he’d chase after the wives of his colleagues in economics. After he went to a department party, he said, “Gentlemen, your wives are safe.” I can’t remember if that story is in the book or not. [Heilbroner was one of Schumpeter’s pupils.] Stop! Stop, stop, stop. The economics profession is not in disrepute. Macroeconomics is in disrepute. The micro stuff that people like myself and most of us do has contributed tremendously and continues to contribute. Our thoughts have had enormous influence. It just happens that macroeconomics, firstly, has been done terribly and, secondly, in terms of academic macroeconomics, these guys are absolutely useless, most of them. Ask your brother-in-law . I’m sure he thinks, as do 90% of us, that most of what the macro guys do in academia is just worthless rubbish. Worthless, useless, uninteresting rubbish, catering to a very few people in their own little cliques. I know. It’s up to us to educate them. I got this line from a friend in architecture the other day. He said exactly the same thing. I went through the same litany, trying to disabuse him of this notion. It’s like pushing a stone up a giant hill. It’s not going to get me very far, I agree. But nonetheless it is the case that most of us, and most of what we do, remains tremendously useful, tremendously relevant, and also fun! I agree, and a lot of the insights are still very much valid. Nonetheless, all the people in the book have been defunct for at least 60 years now. There have been some great economists since then, in the last 30 to 40 years. For example, George Akerlof, with his notion of asymmetric information and the failure of markets. It’s a truly brilliant idea and it’s ubiquitous in our lives. There’s Gary Becker, who in my view is the top economist of the last 50 years. His notions of family bargaining and how families behave are terribly important, and affect how, in the end, we all think. These guys who Heilbroner is talking about and the other ones of the last 50 years – none of whom is a macro person, by the way – have had equal influence. It goes on. It just is no longer stuff that is relevant to the macroeconomy. Unfortunately that’s a very important area and we have been derelict on it. I do believe in markets. People are interested in being useful in this profession. It doesn’t mean the people who were the bad guys from the last 20 years in macro are going to be doing anything different. They’re incapable of doing anything different! But markets do work and the dead and useless get shoved aside by the young and useful. I’m a tremendous optimist. I do believe markets work and that people run to fill niches. There’s an obvious niche here, and you’re already starting to see it being filled. I’m sure the journals in academe are going to reflect this change too."

"First of all, I should say that the list I constructed is ordered chronologically—not necessarily when the books were published, but rather when I first encountered them. The Worldly Philosophers was my very first exposure to economics and finance. Up until then, I thought the subject was about balancing your checkbook, which seemed pretty boring to me. This book really opened my eyes to the fact that there’s some very deep and beautiful logic underlying the economy, and financial markets and institutions especially. There are some things about the economic world order that we can understand. And not only can we understand them, we have the power to tap into the forces of self-interest and the profit motive to achieve certain goals. That seemed incredibly exciting to me. Also, I had never really connected economic ideas with other sciences. For example, in this book, you find Thomas Malthus, who was responsible for economics becoming known as the ‘dismal science’ because of his argument that populations grow geometrically and food supplies seem to grow arithmetically, hence we’re all bound to starve to death. Fortunately, Malthus was mostly wrong in his predictions (at least so far), but it was one of the first examples of connecting human biology to economic considerations. In fact, Charles Darwin, perhaps the most influential scientist in recorded history, acknowledged Malthus’s Essay on the Principle of Population as an inspiration for his formulation of the theory of evolution. So The Worldly Philosophers was really my first exposure to economic science as a legitimate field of study, one that had some really important and challenging questions that could actually be answered through scientific means. Well, the description of Marxism and the Marxian dialectic struck a chord. We take it for granted that Marx was a radical, a disruptive rabble-rouser who just wanted to see revolution occur. But when you read about the particular social, cultural and economic milieu in which he lived, you begin to understand how his ideas emerged quite naturally and justifiably. Marx was shaped by the some of the very negative social consequences of the Industrial Revolution, like the systematic and wholesale exploitation of children as a source of cheap labor. So Marx’s labour theory of value wasn’t developed in a vacuum, but out of necessity in the face of very obvious human suffering. Heilbroner told fascinating stories of how all of these important ideas emerged, not randomly or out of the antiseptic world of academic theories, but from specific social and environmental contexts that were driving societies at the time. No, I was in high school when I got my first taste of economics, and when I was actually dead set on a career in the sciences. I went to the Bronx High School of Science in New York City, which is a specialized public school focused on science, technology, engineering, and maths (STEM). The school was tuition-free for any New York City resident, but you had to pass an entrance exam to be admitted, so it drew a very diverse pool of students from all five boroughs who shared an interest in STEM. I really blossomed at Bronx Science and just assumed I would pursue an academic career in math, physics, biology, or possibly computer science (computers were just becoming available at the time and we had a beautiful IBM 1620 mainframe to play with). It was a wonderful educational experience, but I started getting the sense that STEM wasn’t focused on the same magnitude of issues that these worldly philosophers took on. So that was the beginnings of my interest in economics. It wasn’t an immediate connection, just a small spark of curiosity and interest. I read Worldly Philosophers as part of my social studies class, still planning for a career in STEM, but that spark eventually turned into a large wildfire that still drives me to this day."