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Classical Economics Reconsidered, by Thomas Sowell � D2Digest

Sowell’s book gives a good, solid defence of the Classical economists; in particular, he argues strongly that Keynes was attacking a straw man in his passages on Say’s Law. But the theme of the book that really struck me was the somewhat ingenuous contraposition of intelligent and humane statements from Smith, Locke, Jevons et al, and wide-eyed wondering “why is it that modern leftists demonise these wonderful people who thought so much about the misfortunes of the poor?”. Sowell does this enough in the book to have irritated me, because he knows damn well how it is.

I’ve come across this trope in a couple of other books on the classicals; more often it’s from a left-wing perspective “Adam Smith, hero of the free market right, actually believed in state education for all!” and so forth. The fact is that, some time after The Wealth of Nations, we all started talking about political economy in terms of conflicting interests between classes. Then a while later, we started thinking about the whole issue in terms of marginal returns and productivity. Then we started talking about a managed economy and the role of money, credit and demand. And then later, we started putting the whole thing into axiomatic mathematical form. Each time we had a shift in the terms of the debate, we had to decide which “side” all previous figures in history would have been on and adjust our views of what they were saying accordingly. So now, two hundred and fifty years later, we can see that Adam Smith is talking about a lot of the same things that we read about in our economics textbooks, but we’re asking a lot of questions that he would not have recognised as questions, and answering him with things that Adam Smith said about entirely different, but superficially similar, questions of his own day. In the famous “Invisible Hand” passage, for example, it is not at all clear that Adam Smith meant the same thing as he do when he used the phrase “employ his capital”.

The fact of the matter is that it is incredibly hard for us to have any idea of which side Adam Smith might really have been on in any modern policy debate, because the laissez-faire debate of the nineteenth century really does not map at all well onto any modern debate about “free- market capitalism”. The word “capitalism” is less than a hundred years old in its etymology and the concept which it names is probably one that came into being in the mid nineteenth century, because it was only around then that class became an important unit of analysis in political economy.

This is a problem I just don’t see a solution to. It’s the devil’s own job to do honest intellectual history in political economy, because the very words we use to discuss the issues shape the way that we think about them. Or to put it another way:

We have no real hope of understanding Adam Smith, because half-way between him and us stands Marx.

We have no hope of understanding Marx, because half-way between him and us stands Marshall.

We are unlikely to understand Marshall properly, because between him and us stands Keynes.

And we have very little hope of understanding Keynes, because half-way between him and us stands Paul Samuelson.

And so economics makes its Zeno-like progress, with no very clear evidence that we are getting any nearer to anywhere we might want to go. One might have thought that it would have helped for people to be scrupulously punctilious about scholarship, clearing up questions of exactly what people said and what they meant by it. But that’s exactly what Sowell did, and it didn’t help one bit, because in order for there to be any point in writing the book in the first place, he still needs to shoehorn the classical economists into today’s categories.

DD sez: I doubt that this is a problem which is confined to the history of economic thought, which is why I tend to think that the “postmodernists” might be more likely to be on to something than do most of my friends.

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