September 2, 2024
In his underrated book (originally published in 1960, but containing a collection of essays that spanned decades), Epistemological Problems of Economics, Ludwig von Mises wrote:
Once one has correctly grasped the position of the concept of cost within the framework of modern science, one will have no difficulty in seeing that economics exhibits a continuity of development no less definite than that presented by the history of other sciences. The popular assertion that there are various schools of economics whose theories have nothing in common and that every economist begins by destroying the work of his predecessors in order to construct his own theory on its ruins is no more true than the other legends that the proponents of historicism, socialism, and interventionism have spread about economics. In fact, a straight line leads from the system of the classical economists to the subjectivist economics of the present. The latter is erected not on the ruins, but on the foundations, of the classical system. Modern economics has taken from its predecessor the best that it was able to offer. Without the work that the classical economists accomplished, it would not have been possible to advance to the discoveries of the modern school.
Mises did not hold this view to his dying day—the Socialist Calculation Debate and the Keynesian Revolution—were unanticipated, and revealed much about what it was possible for economists to believe. Still. At least when he wrote this, Mises saw things as “economists vs. the world.”
Mises wasn’t alone. In a recent blog post, Timothy Taylor highlights quotes from the relatively-obscure Simon Newcomb. Newcomb was a polymath, who made contributions in astronomy, but also found time to write Principles of Political Economy. In a paper titled “The Problem of Economic Education” in the Quarterly Journal of Economics, he observed in his opening lines:
The fact that there is a wide divergence between many of the practical conclusions of economic science, as laid down by its professional exponents, and the thought of the public at large, as reflected in current discussion and in legislation, is one with which all are familiar.
In other words, the warring factions of economists is a sideshow. The real action, says Newcomb anticipating Mises, is “economists vs. the world.”
More from Newcomb via Taylor:
The disagreement in question is not between different classes of economic students or different schools of thought, but between well-established economic conclusions on the one hand and the ideas of the public on the other. … What I first propose to show is that we have to deal with ideas centuries old, on which the thought of professional economists has never made any permanent impression except, perhaps, in Great Britain, and that in the everyday applications of purely economic theory our public thought, our legislation, and even our popular economic nomenclature are what they would have been if Smith, Ricardo, and Mill had never lived, and if such a term as political economy had never been known. … Great changes in public sentiment do not occur suddenly, and economists must expect many years of hard work before the doctrines which they oppose are wholly rejected.
According to Newcomb, economics occupies a curious position insofar as its maxims are routinely subjected to democratic approval. Imagine, he asks, if we did the same for natural science:
Coming to our own times, we may take, as an instance out of hundreds, those developments of electrical and mechanical science which have made the steamship, the railway and the telegraph what they are. To these developments public opinion and the instincts of the masses have contributed absolutely nothing. As guides or judges, they would have been worthless until the results were reached. Any one who should have proposed to submit the question of the double expansion of steam, or that of a quadruplex telegraphy, to a popular vote, in order that the common sense of the masses might be brought to bear on the subject, would have been classified as a wag.
Newcomb takes aim at non-economic perspectives on protectionism, public works, wages, taxes, and price controls, among others topics.
Good reading for grown-ups in 2024.
Only it was written in 1893.