History of Economics Playground

Keynesianism, neoliberalism and the 'Dissemination' of Economic Ideas: That's the Way of the World.

It is often argued that in recent years the question of the 'dissemination' of economic knowledge has been increasingly addressed by historians of economics. However, as our buddy Tiago has noted on the previous version of this blog quite some time ago, historians seem to not really know what they're talking about when they talk about 'dissemination'. In fact, I would argue that most accounts of the history of science - and therefore, of economics - should deal with the question of dissemination, as science itself is "a form of communicative action" (Secord, 2004). Either we want to concentrate on the communication of theorems, data and concepts among economists and in that case we're studying it from an internalist point of view, or we're more interested in the development of economics as part of a larger cultural/societal context and we're externalists. But in both case, 'dissemination' (for lack of a better word) is what we're all talking about. 

Anyway. Adopting a more externalist point of view, I've been increasingly interested in the literature that some might call 'popularization' of economics and in its role in the 'dissemination' of ideas - as you may have noticed at this point, I am using a lot of quotation marks because I'm still a bit uncomfortable with these words. And for two different purposes, I've bought these two books. 

On the left, it is This Changing World, a book written by Philadelphia philanthropist Samuel S. Fels. Fels had made a fortune by manufacturing laundry soap and with this book, he was reflecting on the 1929 depression and on the way it could be overcome. In a chapter devoted to consumption, Fels criticized the way price drops had been envisioned as the only way to increase consumption, whereas this, he believed, would only lead to lower wages and lower consumption. The solution was to turn the wheel the other way round, by giving higher wages leading to higher consumption, then higher prices. As this book was published in 1933, three years before Keynes' General Theory and was written for the most part even before Roosevelt's election, we may think of it as some kind of proto-Keynesianism.

On the right, Jude Wanniski's 1978 essay, The Way the World Works, offers a completely different point of view. Written by a Wall Street Journal columnist, it is considered as one important element in the supply-side economics movement of the late 1970s, introducing to the public the now infamous Laffer curve.

Though they advocated completely different economic policies, these two books have a lot in common. They're written by non-specialists for an audience of laymen. They do not incorporate sophisticated economic thinking - that might be an understatement, in fact, as both would be considered by most economists, whatever their political positions, as quite vulgar, unscientific and ultimately, economically unsound for the most part. Yet their ideas are characteristic of a larger movement, which would be sooner or later adopted by political leaders and further refined in technical economic models.

It is significant that these books were published slightly before the ideas they communicated began to be acknowledged at the academic level. In the classical language of historians of economics, some may call them 'precursors' but because their ideas were expressed in an unscholarly way, these authors would be rather described as 'popularizers' - at best. This literature, however, is quite important. Fels and Wanniski participate in larger cultural movements that help explain why some economic ideas came to be generally accepted in the profession but also by policy makers and the public at large. In this sense, they are no more nor less important than Keynes and Roosevelt on the one hand, and Friedman and Thatcher on the second hand.

Interestingly enough, both books have 'world' in their title. Beyond addressing economic and political issues, they want to give their readers a larger view on how they think the world works - in this respect, I must say that Fels' book is a bit more humble in its style, because it is intended as a personal recollection rather than as a treatise on economic policy. This is why these books are often despised by specialists who may think they displayed outrageous overambition as opposed to their complete lack of technicality. Yet, beyond my own opinion on the substantial issues they raise in these books, I think I have some tenderness for these authors who decide, as non specialists, to  tackle issues generally devoted to academic circles.

From a historical point of view, I do think these contributions are significant. So maybe if we want to have some feel about what's next after the so-called Keynesian revolution and its neoliberal counterpart, we should have a look, not only at the literature published in specialized journals but at books published by economic journalists, pamphletists and more generally amateurs. Who knows? The future of the discipline may already be hinted somewhere in one of those books that have 'world' in their title.

Comments

0

In my opinion, people all across the world are becoming more or less fiscally conservative enough to keep inflation at bay or slow down the pace of inflation. The role of government non-deficit spending has become a vital economic tool to drive up gross domestic product and release a recovery in recent years (as shown regarding the aftermath of the Great Economic Slowdown of 2008). On the flip side, the government deficits of the countries of Cyprus, Greece, Italy, Ireland, Spain, and Portugal or SPICIG prove Keynes' theory to be an utter failure when there is currency conversion, a culture of tax evasion, weak law enforcement, stubbornness among non-taxpayers to allow the evolution of marriage laws and extension of the taxpayer base, and utter lawlessness. The Fed needs to play a larger role by using interest rates encourage the middle class to bank on their savings and borrow to sell innovation.

0

The failure of Cyprus, Greece, Italy, Ireland, Spain, and Portugal or SPICIG proved the monetary union of Europe is incomplete economic experiment. If these countries had their own currency they could have survived the fiscal crisis by devaluing their currency and other Keynesian adjustment similar to those made by the US.

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