By Ink Alone: A Brief History of Economics: Nothing Brief About It
by Matt Stevens
E Ray Canterbery’s history of Economics is more a history of the ideas and the characters who came up with them and truly a tracing of economics. But it is a good read. Canterbery has fun telling the stories and anecdotes of the differing characters that created our economic understanding.
World Scientific Publishing Company, July 15, 2001
Canterbery starts out with what everyone considers the father of economic thought, Adam Smith, and then progresses through the history of thought in Europe, finally arriving at the next great thinker, John Maynard Keynes. Then the Americans take charge with Milton Friedman, JK Galbraith, and the return of neo-classical economists in the form of President Ronald Reagan and UK Prime Minister Margaret Thatcher.
Canterbery’s book is easy to read and fast paced, and most of the economic ideas are very well explained, up to the point where the in-depth discussion of Keynes and his impact on how we thought about economics occurs. At that point, the ideas start to get complex and the explanations and differences between competing groups becomes rather pedantic and minuscule such that a non-studious follower of economics could get lost in the mumbo-jumbo.
Also, when Canterbery finally gets to his discussion of the revival of the neo-classical school, his biases start to become overly prevalent. Canterbery is not a fan at all of the monetarist arguments of the Chicago School led by Milton Friedman, or of the Supply Side Economics that Reagan pushed through in the 1980s. His argument is that it created the greatest unequal wealth distribution in the history of man, and it wasn’t needed to grow the US economy. Basically, the workers got shafted, and the rich got insanely rich.
But his most interesting argument has significant impact on the world today. He argues that the deregulation and growth of the Wall Street Economy of the 1980s created a Casino Capitalism, in which America moved away from industrial production and to making money off of financial instruments. People ceased to create physical items cars, bikes, shoes, anything and simply became service managers. This Casino Capitalism thus created an artificial wealth and should have long term impact on the economy.
The book was published in 2001, and it apparently just took 7 years for him to get it right. Canterbery also argues that the rich financiers needed the growth of free trade, and thus pushed it to create a downward trend in product pricing, further driving down wages. And he cites the best argument that wages of those making below $200,000 have grown only slightly above inflation since 1980, while those making above $200,000 have grown at 1000s of percentages. They have reaped the benefits at a disproportionate rate to the rest of the country.
However, my biggest complaint with Canterbery is not his outstanding biases (I can live with those), but it is his ability to completely ignore any economists not from Great Britain or America (except JB Say from France) in his entire treaty. He also completely ignores the economic developments and theory that might have been happening around the world. His discussion of Marx is there, but he focuses little on the differences between USSR, China, and Yugoslavia and India, all socialist countries with wide variation. He talks not at all about the failed development in Latin America, or the growth of the Asian Tigers. His analysis of the state directed capitalism of Japan is extremely lacking. it is simply a too brief of a focus.
In conclusion, Canterbery’s book is a great read to understand the economics theories and the progress of economics to this point. He of course leaves out the Bush Administrations’ additions to the Casino Economy (which I imagine he would argue there are many). Take his theory analysis, and take his hatred of the Reagonomics with a grain of salt, and you’ll learn a lot. I do recommend a somewhat brief background in Economics, especially for the post-Keynesian readings, as they get complex.
Three out of Five Melons!