Thursday, January 22, 2009

The economics of a simpler time - a reading list for reformers

It's not unusual for people fed up with the current world economy to suggest that we move back to a simpler time - one without easy credit, strict controls on interest rates (or their abolishment), a gold-backed currency, and without a focus on growth or rampant consumerism.

This is not an impossible dream. The option IS on the table... with a catch. Whatever benefits there may be from such a move come at a cost. If a country, culture or society is to make such a decision, it is very important to know exactly what the benefits and drawbacks of a 'simpler' system are.

As it happens, some of the finest economic minds in history lived during such an age, and left detailed analyses of their world to posterity. Anyone seeking economic reform or an overthrow of the current system will be well-served by reading what they have to say. (When doing so, keep in mind that some things HAVE changed. The 19th century did not have access to air travel, refrigeration or the internet.)

Here's my suggested reading list, with a few comments:

1. Thomas Malthus, 'Principles of Political Economy'. Reverend Malthus is best known for his essay on population, but he was a remarkably capable economist with a strong focus on sustainability, centuries ahead of his time. This is an outstanding basic economics text, covering a wide variety of subjects with humility and an enjoyable style of writing.

2. David Ricardo, 'Principles of Political Economy and Taxation' - Ricardo wrote this book under protest. Despite that, it turned out to be an important early investigation of what determines rent and taxes. Some of it is just plain wrong, but all of it is thought-provoking. Also, it's very short. It makes an excellent companion to Malthus, since the two refer to each other.

3. John Stuart Mill, 'Principles of Political Economy' - If you only read one book on economics, this should be it. Beautiful writing, clear exposition, an impressive scope... and he did it all without equations.

Some of you may wonder why Adam Smith didn't make the cut.

I quite enjoyed the Wealth of Nations - enough to re-read it several times. However, despite having some wonderful passages, as a complete text, it's mostly of historical interest. The book is too wordy for its own good, and extremely repetitive. The topics Smith covers are better dealt with in Mill and Malthus, who also correct a few of the pioneer's most obvious errors. Smith had a few specific axes to grind with respect to events that were important at the time and are now obscure, leading to very long stretches of boredom for the modern reader.

The Everyman edition of the Wealth of Nations, which I own, includes notes on the side of each paragraph summarizing its content. If you buy such a print edition, then Smith makes fantastic bathroom reading... flipping the book open to a random page and reading a paragraph or two at a time is a joy. Reading it through, though, as a cohesive work? Not so much.

1 comment:

Larry said...

The Wealth of Nations is, indeed, difficult to wade through. But it contains much of interest. Edward W. Ryan, who teaches economics at Manhattanville College in Purchase, NY, has selected passages from Adam Smith's Theory of Moral Sentiments and - especially - The Wealth of Nations. The result is a short, very readable book. Its title is "In the Words of Adam Smith: The First Consumer Advocate". It was published in 1990 by Thomas Horton and Daughters, and is still in print. ($15.97 at, used copies from $3.97.) I recommend it highly as an enjoyable and quick introduction to Adam Smith.

Larry Willmore, Laxenburg, AUSTRIA