It is debatable whether economics should actually be defined as being a science. A science like math or physics usually gets its satisfaction from proving something to be irrevocably true. Solve a complex equation and QED thats the answer, theres no argument. Economics on the other hand will rarely give us a simple answer. Ask 5 economists a question and youll get 6 different answers. Yet economics could make claim to be a science even if, as John Ruskin disdainfully called it the Science of getting rich (Ruskin 1). Over the years economics has also managed to adopt the equally unflattering label of the Dismal Science - perhaps fitting for a subject where even the leading theorists can fail to agree. We could say economics began as soon as hunter men began to exchange their captured prey with other cavemen. But generally the science of economics did not begin to be formalised until fairly late. However, over the past two centuries, the science of economics has seen no shortage of colourful characters all offering their solutions and diagnoses of the economic problem. This is a small selection of some of the economists who have shaped the subject (for good or ill). The Dismal Prophecies of Malthus One of the first economists to proffer his theory was T.Malthus. Malthus is chiefly remembered for his essay on population. In this essay, Malthus argued the human race was doomed because the population was increasing at a faster rate than our capacity to grow food. In many ways Malthus was one of the earliest proponents of The End Is Nigh syndrome, and unsurprisingly it was Malthus who claimed for economics the label The Dismal Science. Fortunately, Malthus displayed a trait that many later economists would share - he was wrong. The population didnt starve. In fact during the nineteenth century the forces of capitalism flourished creating unprecedented wealth- at least for those who owned the means of production. Adam Smith - The Invisible Hand One of Capitalisms strongest exponents was the economist Adam Smith. In his book, The Wealth of Nations, Smith claimed that if people followed their own self interest, then these individual acts of selfishness would have the remarkable effect of leading to the greatest overall benefit for society. This is the basic principle of the book, although Adam Smith did take 1,260 pages to say it (unfortunately, very few economists have ever learnt the art of being concise). Adam Smith has thus become synonymous with support for free market economics. However, many people forget he was rather a modest Scottish intellectual who became chair of Moral Philosophy at Glasgow University (Smiths other major work was about charity and ethics but it is for his articulation of free market economics that he is chiefly remembered). His seemingly paradoxical argument about the free market has remained at the centre of all major debates in economics. Is an unbridled free market really the best economic system? Nevertheless, even the most ardent free market economist cannot ignore the fact that capitalism creates inequality and in the nineteenth century this inequality was painfully evident. Thus, many economists came along to challenge the free market ideologies of Adam Smith. Karl Marx - The Revolutionary Economist Whether deliberately or not Karl Marx was destined to play a major role in world history. Basically, Karl Marx was of the opinion that the inequality of capitalism would inevitably lead to a revolution by the oppressed workers and the formation of a Communist state. In fact Karl Marx went to extraordinary lengths to explain this principle. His most important work, Das Kapital, could make claim to be one of the most boring books ever written (perhaps only beaten by Adam Smiths Wealth of Nations and Ludwig Wittgensteins Tractatus Logico-Philosophicus). However in F.Engels, Marx had a companion who was able to help romanticise the ideals of Communism. But despite the various attractions of Marxism, it never really took hold in the US and Western Europe. J.M.Keynes - The Greatest Economist? Mainstream economists were, before WWII at least, fully entrenched in the free market orthodoxy of classical economics. Just to reiterate, these economists differed little from the original ideas postulated by A.Smith, who held that the free market would create wealth and prosperity. All problems would invariably be solved by the inexorable workings of the invisible hand of the market. However in the 1930s free market economics faced a seemingly impossible challenge The Great Depression with its mass unemployment, bankruptcies and falling output. In the face of such economic hardship the appeal of radical alternatives created serious political turmoil - Western democracy itself was threatened. But many economists stuck to their ideology arguing in the Long Run everything would be OK. It was thus in the middle of the Great Depression that J.M.Keynes rose to prominence, retorting to orthodox economists: In the Long Run we are all dead. Keynes saw no point in waiting a couple of decades for the Depression to come to an end. He argued for immediate government intervention and, in particular, he called for the government to spend, spend, spend. John Maynard Keynes was born in 1893, which was the year that Karl Marx died. Both Marx and Keynes were to write influential critiques of the Capitalist system but here the similarities end completely. Marx was a rather angry loner, many of his enterprises failed and much of his life was spent working anonymously in the British Library. Keynes in many respects was very different; he cut a dashing figure - a brilliant economist, who could also mix with the elite of British society. Keynes attacked the inequities and insufficiencies of the free market but that didnt stop him from making a small fortune by speculating on the foreign exchange markets. Keynes was also a visionary: While the Allies were clamouring for a victors peace at Versailles in 1919, Keynes resigned from the British delegation. He argued the reparations imposed on Germany would be impossible to repay and that they were a recipe for the humiliation of Germany and future problems. His book The Economic Consequences of the Peace became a best seller and in retrospect proved to be a damning indictment of the narrow-mindedness of the allied victors. Keynes was brilliant at many things and he knew it. Once he was placed second in an economics exam. His only reply was that: That shows I know more economics than the examiner. Keynes didnt just restrict himself to economics; he wrote a book on mathematical philosophy (highly praised by Bertrand Russell). He was also a leading figure in the Bloomsbury group of leading artists, poets and writers. Keynes later even opened his own theatre, which like most things he tried his hands at, proved a great success. Keynes was no socialist but this didnt stop him from poking fun at free market economists. In direct challenge to the optimistic assertion of Adam Smith, Keynes took a different view. Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone. This shows Keynes at his best - happily attacking orthodox views with a panache and confidence that was hard to resist. Keynes may have had many human weaknesses but he was able to brush these aside with his evident genius and enormous capacity for innovation and radical ideas. It was the effects of the Great Depression that led Keynes to his greatest work. He scoffed at the orthodox free market economists who said the government should do nothing in the face of mass unemployment. Keyness strategy was for the government to intervene, borrowing if necessary. This would create jobs, which would give income for others to spend thus creating more jobs. A deceptively simple idea, but too radical for western governments who were unwilling to borrow. Unfortunately it wasnt until the onset of the Second World War that employment increased to pre 1929 levels. By the end of the war Keynes was given high regard and he was put in charge of the economic planning for post-war Europe. Unfortunately on achieving worldwide fame he died untimely at the early age of 62. However he has left a profound mark, helping to create a whole sub section of economics (Macro Economics) |
