Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Tuesday, December 01, 2009

Books I

Posted by Simon Halliday | Tuesday, December 01, 2009 | Category: , , |

I have split this post into two sections: non-fiction (Part I) and fiction (Part II). All as a consequence of reading more than I've felt like writing about what I've read. But, I know that the content always cements itself better when I write about it.

Non-fiction Hayek - The Fatal Conceit
I have enormous respect for Hayek because he has an interesting methodological take on economics and because he supports evolutionary methods in economics. First, he takes an methodological position in economics that opposes the position taken by most economists in that he advocates a non-mathematical approach. Second, he argues for strongly for an evolutionary perspective on economics, which results in him advancing a theory of group selection. But I do not agree with the conclusions he draws from the positions he takes, namely that of quasi anarcho-capitalism, or a state that exists purely to uphold laws and to act as defence against outside forces. Nevertheless, I believe that many of his arguments against socialism are accurate and should be better recognised and negotiated by socialists and statists alike. But Hayek also makes several errors, some of which I will bring up in this review, mainly those conceived by academics I have read, but about which you may not know.

First, he conflates a notion of a firm as actor and an individual as actor when firms are not individuals and markets often do not operate with an internal market structure, i.e., people are not priced within firms, they are managed. The problem with this is that corporatism and competition are often incompatible, or, at least, firms that have obtained substantial market share will spend substantial amounts of money to maintain that market share (see Herbert Simon on this). Second, he does not discuss the benefits of monopolies, and neither does he do much to consider Schumpeter's arguments about the roles of monopolies and entrepreneurs as innovators (maybe I've missed something), nor does he consider the extent to which markets facilitate lock-in and monopolization and which, if harmful, cannot be undone without suitable government intervention. Third, he articulates how human society needs both filial ties and commercial ties for it to function well, but he does not accurately specify the exact limits of each, and when he tries to make some arguments as to some limits (i.e. market interactions are 'commercial' family interactions not), they often seem forced rather than well-argued or evidence-based, that is what about gift exchange, or charitable giving, or helping a neighbour, doing volunteer work? Where exactly does the boundary lie and why? Does the boundary exist at all, or is it a hangover of Adam's Fallacy (as Duncan Foley might put it). Fourth, and probably most importantly, Hayek does not speak about power and the market - not market power, but how individuals with amassed market share have political power outside of the market and in the political sphere. They can, and do, exert power over others in a way that is anti-democratic and anti-libertarian. There are several other problems with the book, but these are the ones that leapt out at me.

That said, Hayek commands his territory well. He bulwarks private (several) property with many strong arguments, defends an epistemology based on evolutionary arguments for economies and group selection in particular, marshals an attack on more mainstream economic thinking (his famed 'Fatal Conceit' chapter) and socialistic thinking in particular, and continues onward to garner a position that stands for both a minimal state, yet with specific liberties. But when reading the book, I got the sense, disturbingly, that Hayek would rather live in an authoritarian state that defends private property than a democracy that does not. This jars with my senses of liberty and democracy. Nonetheless, the book is a landmark of libertarian philosophy and must be read by any ambitious scholar of the institutions and mechanisms of capitalism and human cooperation.

Robert Heilbroner - The Worldly Philosophers
What new can be said about The Worldly Philosophers? The book is a marvel of easy-to-access history of economic though, charting the path from before Adam Smith, through Ricardo, Malthus, Marx, Veblen, Keynes and Schumpeter and ending with a discussion of the ends of the worldly philosophy - both its intentions and its extinction. Going in, I already knew a substantial amount about those whom Heilbroner wrote about, but I had not had their stories told to me with such panache and verve. Having previously read various short biographies of Marx, for example Paul Johnson's acerbic short biography in Intellectuals, it was refreshing to see a more forgiving and holistic view of Marx, especially from an author who has written so much using marxist theory. The Worldly Philosophers makes a fantastic introduction to the history of economic thought - simply to provide a more expansive understanding of the intentions of economics and why so many have found its study to be such a stimulating and motivating force in their livings. I want to buy copies for my parents, and my wife will read it soon. What made it all the more pleasurable, is that, unlike many more technical books on economics, it was an easy 'read before bed' book because you could capture the narrative and sink back into it with ease, and emerge from it without feeling anxious about statistics and abstruser musings. I recommend this book strongly to any student of economics and anyone related to that student, you'll understand them better, I promise (it should be compulsory reading for any parent who wants their child to study economics).

Finally, it should be given a strong recommendation because of the final chapter, in which Heilbroner discusses the 'end' of Worldly Philosophy. In it, Heilbroner launches an attack on mainstream, largely mathematical, neoclassical economics, arguing for a more inclusive, historically located economics that allows people to consider simultaneously the small, niche questions that they do, in addition to the 'big-think' that made so many of the worldly philosophers great. Paul Samuelson, who recently passed away, gave similar advice in a recent interview, saying that, in hindsight, non-technical economic history and history of economic thought had greater relevance than he would have originally thought, giving particular weight to understanding the structures and evolution of the institutions that make so much of modern society, modern capitalism possible and, current events notwithstanding, to make them flourish. What a marvellous book.

H. L. Mencken - Prejudices: A Selection (James T. Farrell ed.)
Mencken was a fantastically witty, intelligent and acerbic commentator. He's also probably one of my favourite conservatives (Yes, I have a list of my favourite conservatives). He wrote short and cutting pieces about subjects or things of which he doesn't approve (for example, see his essay on Chiropractic written back in 1924). I did not read all the essays in the book, its expiry date was up at the library and I intend to buy it and have the pleasure of reading some essays that I had not read. If you have not read any of Mencken's essays this book provides a fantastic short collection to introduce you to some of his more famous work, looking at everything from domestic US politics, to literature, to his thoughts on the world as a whole. Give it a try if you enjoy short, and often personal, essays.

Thomas Childers - WWII: A Military and Social History - TTC Lectures
The course was advertised as a 'social and military' history, but far more weight was given to the military history of the war, and this is where Professor Childers shines. However, he does the social history well tpp. He intersperses tales of battles (infantry firing, tanks blitzkrieging, aircraft bombging) with stories of the everyday lives of the people living and experiencing the war. Both of these aspects of the war require the emphasis that they get, though it must be said that Childers focuses greatly on the Allies' experience of the war, and the experiences of US and British citizens in particular.

Two factors made this series of lectures particularly relevant to me: the way in which Childers describes the pacific arena, and also how he lent credence to how the Russians bore the brunt of the German war machine. I had not understood the extent of the war between Japan and the United States previously, which I assume was a consequence of my anglocentric upbringing and the eurocentric instruction in WWII history. Being a non-American, having the Pacific war brought home was both perplexing and revelatory, and I began to understand some of the motivations behind the use of the nuclear bomb in Hiroshima (but not for Nagasaki). Why? Estimates for an invasion of Japan ran up to 1 million casualties, both civilian and military. Using the bomb would result in fewer casualties. Now, I do not claim the excuse the action, but rather that part of me which objected to the bomb on principle began to understand some of the political and military dynamics behind it: the jungle warfare had resulted in phenomenal US and Japanese casualties, the kamikaze killed hundred, the ritual suicides of the Japanese - whole villages throwing themselves off of cliffs, the suicide bayonet charges of Japanese soldiers - the abuse and torture of American POWs, led the Americans to believe that their enemy would stop at nothing, and would likely repeat a Pearl Harbour had they the option to do so. Again, this does not begin to excuse the use of the bomb, or the consequent fallout, but it did begin to explain it to someone whose only understanding of these things was a rudimentary knowledge of Iwo Jima.

Secondly, Childers, though he does not emphasise it to the extent I think it warrants, describes how the war was, to a great extent, won by the Russians, or maybe lost by the Germans because of their Russian invasion, and thus the brunt of which was borne by the Russians. The Russians were assisted by the allies, specifically the Americans, with supplies of food and arms, but the Russian death toll was the greatest amongst the allies, and the reciprocal casualties that the Russians (and their landscape) wrought on the Germans decisively determined the end of the war: the Germans would lose. The rest of the Allies, though they did well in Africa and Southern Europe, did nowhere near as much to end the war and could almost be considered mere irritants to Germany in the face of its Russian invasion. The reasons why we anglophiles often don't know this, I think, is probably a consequence of the Cold War - it would not have been politically feasible for historians or politicians to recount the extent to which the West was indebted to Russia for its survival, or at least for teachers to tell the children they were educating as good capitalist citizens to believe that a communist power was their saviour.

Childers thus constructs an intelligent and useful historic architecture, filling in many of the gaps that I had, while also allowing me to understand the breadth of what I still do not know by hinting at many of the military, social, political and economic factors that he did not have time to consider. For example, I would like to understand better the internal functioning of Germany during the second world war: exactly how it incorporated other countries during the anschluss, the means by which Hitler ruled as Fuhrer, and the internal politics that facilitated fascism. More in time, I assume, as I read and study more about WWII.

Robert Bucholz - History of England: From the Tudors to the Stuarts - TTC Lectures
Initially I found it odd being lectured to by someone with an American accent. However, what Bucholz does well is to introduce the non-Briton to British history. Therefore, even though I am a colonial, I benefited from him explaining a number of things that would be obvious to a Briton because he would have absorbed through cultural osmosis, whereas as a non-Briton I would have to look it up to understand it better (my father's commitment to his birthplace notwithstanding).

Bucholz produces a fascinating and well-structured course. Starting just before the reign of the Tudors to set the scene of medieval and pre-protestant Britain, he proceeds onwards to the War of the Roses, the establishment of the rule of the Tudors through to Elizabeth's death. This first large part of the course taught me a substantial amount of things that were predominantly mythical to me. Two of the most important myth-breakers: first: England's irrelevance to European politics, and, second, the extent of the tall tales I had internalized about some of England's rulers. For example, although I understood that Henry VIII was profligate and arrogant, I had not understood the extent to which he almost bankrupted England through inane wars, or the extent to which his rebellion was quite unimportant to many, though obviously significant to others because of its protestant nature. Second, I had not understood that, although Elizabeth I ruled well, many actions she took jeopardised Britain's stability and its rule as a good protestant state - she let down many of the iconoclastic sects of Christianity.

Moving beyond Elizabeth into the Stuart rule, I learned a substantial amount about the revolution leading up to the Glorious Revolution. Bucholz seems to cover most of the areas well and answered many of the questions I would have considered had I done this course in a classroom, covering the ineptitude of Charles I, the brilliance of Oliver Cromwell and the gap left by his subsequent death, the restoration of Charles II, and the ultimate succession of William of Orange with the advent of the Constitutional Monarchy. Not having known all the details of the Glorious Revolution previously, I marveled at the sequence of events that led up to it. Moreover, the ways in which Britain has evolved since then are equally fascinating and constitute more history that I would like to pursue to understand better the contemporary United Kingdom.

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