Todd Buchholz's "New Ideas From Dead Economists"
A book review on Buchholz's attempt on the history of economic thought along Anglo-American tradition.
Originally published in 1989, I am reading the “completely revised and updated” 4th edition. Despite the being titled “New Ideas from Dead Economists”, there is nothing “new” here. That seem to be just a marketing ploy more attuned to “motivational” speakers rather than economists.1 This book is a sort of mash-up between history, biography, and academic discussions with seemingly different emphasis on each chapter.2 In thirteen chapters, Buchholz tried to provide a basic introduction on economic thought from Adam Smith to behavioral economists. While he was not able present the “new ideas”, the accessible language and storytelling, similar to Dubner and Levitt’s Freakonomics and Malcom Gladwell’s books, make this a worthwhile read.
Buchholz starts tracing the history of economic thought with Adam Smith, the disorganized moral philosopher whose absent-mindedness thrown him into “huge, nauseous pool of goop.”3 Especially in the US television, Smith’s name is equivalent to the “invisible hand”, a phrase he only mentions once in his hundred pages “The Wealth of Nations”. Smith thinks, as summarized by Buchholz, “labour as the chief engine of economic growth accelerating when (1) the labour supply increase, (2) labour subdivided, or (3) labour quality rose through new machines.”4 This reminded me in one of the topics in Economic Development with Dr. Cid Terosa probing the stylized characteristics of low-developed countries which is low per capita income.
Where Y is the GDP (or Income), N - Population, W - total hours worked, E - total number of employed persons, the terms in the equation are as follows:
Y/W - labour productivity
W/E - proxy for quality of jobs
E/N - proxy for quantity of jobs (similar to, but not equal to, current measure of labour force participation)
That parallelism between the above equation and what Smith argued centuries ago is unmistakable.
The next two chapters discussed the ideas and lives of Thomas Malthus and David Ricardo including their clash over solving the general glut in the economy. (Keynes policy prescription on government intervention to address anemic demand sided with Malthus.5)
We all know how Malthus’ dismal projection have not hold true so far. Buchholz writes “that long-term forecasts regarding economic resources and technology require divine gifts, and not degrees in economics.” (Buchholz must have this “divine gift” as his website describe him as a “trend forecaster and global economy expert”6 while his Wikipedia page has a dedicated section for his “economic forecasting”.7)
In the next chapters, Buchholz narrates the desperate lives of John Stuart Mill and Karl Marx. Mill did not have a conventional childhood and grew up under his stern father. Karl Marx lived a life in destitution. Mill gave economics the concept of utility and deductive reasoning. Marx on the other hand has a disputed contribution to the discipline. Marx’s “labour theory of value” is largely dismissed in contemporary economics.
A chapter on Alfred Marshall, whose “Principles of Economics” was used as the standard economics textbooks for decades, is next. I realized that Marshall’s ideas are one of the foundations in modern economic thought. Examples of these are the distinction between short-run and long-run analyses, consumer and producer surpluses, and elasticity. Keynes praised Marshall saying a “master economist” like Marshall must be a mathematician, historian, statesman and philosopher to some degree. One economist that lived up to that eminence is Amartya Sen, who is glaringly omitted from this book.
Next to Marshall is a chapter on the olde and new institutionalists. The old institutionalists are represented by Veblen and Galbraith, who focused on dismantling “Marshallian marginalism,” and Joan Robinsons. The part discussing Joan Robinsons is personally delightful because I realized that many of the ideas in microeconomics are attributable to her. Some examples of these are the ideas on “monopolistic competition” and “monopsony.” (Discussions in microeconomics today, doesn’t really dwell much on the proponents of the analytical tools used except maybe in doctoral programs.) New institutionalists are represented by Nobel laureates Douglas North and Robert Fogel and an economist from Austrian school, Joseph Schumpeter. In the later part, contribution of economists in legal analysis of negligence (based on Marshall), property rights (Ronald Coase), crime (Gary Becker) and corporate finance (Adolf Berle and Gardiner Means) are discussed.
Chapters IX and X gives an account to a more recent dichotomous debate in the history of economic thought which is the Keynesian versus Monetarist (with Milton Friedman as its most prominent figure). Basically, the contention is who handles the economic levers – fiscal or monetary. Today, as Buchholz mentioned, we are generally all Keynesians and monetarists.
What I learned about Keynes from the book is that he is opposite of what most people quipped about those “people who can’t do, teach” and that economists, if they really know where the money is, why aren’t they rich? Well, Keynes died rich leaving a portfolio worth around 20 million in today’s dollars and an art collection.8
The last chapters of this book deals with the Public Choice School and the clash between rational expectation theorists and behavioral economists.
The Public Choice school, represented by James Buchanan, basically argues that government are political entrepreneurs. I remembered while discussing the role of entrepreneurship in economic development, Dr. Terosa mentioned in passing that politicians are entrepreneurs. I thought it was still Schumpeterian argument. A couple of months ago, I also happened to watch a YouTube video featuring Milton Friedman arguing, quite convincingly, that politicians are engaged in the “business of competing with each other to get elected.”9
Spanning centuries, Buchholz presented the lives and ideas of dead economists. These are not new ideas, but rather enduring ideas of the past economists in the Anglo-American tradition. This is another caveat in this book – other notable dead economists are omitted. But with an accessible text, this is suitable for the general public. Anyone who is more serious in the history of economic thought, though, need to look elsewhere.
References
Buchholz, Todd G. New Ideas from Dead Economists: The Introduction to Modern Economic Thought, 4th Edition. Updated edition. New York: Plume, 2021.
Milton Friedman: Make Politically Profitable For Wrong People To Do Right Thing, 2013. https://www.youtube.com/watch?v=MEVI3bmN8TI
Todd Buchholz. “About Todd Buchholz | Economist, Keynote Speaker, Best Selling Author.” Accessed November 30, 2024. https://www.toddbuchholz.com/about.
Wikipedia Editors. “Todd G. Buchholz.” In Wikipedia, July 3, 2024. https://en.wikipedia.org/w/index.php?title=Todd_G._Buchholz.
His website is more akin to that of a motivational speaker and pastor than that of an academic.
Chapters on Adam Smith, Thomas Malthus and David Ricardo contain relatively more biographical accounts.
Buchholz, New Ideas from Dead Economists, 15.
Buchholz, 36.
Buchholz, 117–18.
“About Todd Buchholz | Economist, Keynote Speaker, Best Selling Author.”
Wikipedia Editors, “Todd G. Buchholz.”
Buchholz, 265–66.
Milton Friedman.