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A beautiful new book

September 27, 2011 - Lee Smith
Sylvia Nasar wrote the book “A Beautiful Mind” about John Nash, a Nobel Laureate in Economics, who suffered from paranoid schizophrenia. The book became a film by the same name in 2001 and went on to win academy awards for Best Picture, Best Director, Best Adapted Screenplay and Best Supporting Actress.

Nasar has returned to the bookshelves this year with “Grand Pursuit: The Story of Economic Genius.” It is not about any one person, but about many people who helped develop the field of economics. I am just getting into the heart of the book, but am impressed by the way in which Nasar tells the stories of these economists’ personal lives, and how they developed and transformed economic ideas over time.

The book begins, interestingly enough, by focusing on two authors, Jane Austen and Charles Dickens, and how they lived and what they observed in terms of wealth, poverty and the direction of (London) society.

The transition of economics to more of a science is made as thinkers begin ruminating on the works of Adam Smith, David Ricardo and Thomas Malthus. This fresh analysis examined the Industrial Revolution and whether capitalism held out a future of promise or misery for laborers, among other things. Much of early economics was pessimistic that mankind could not change what were regarded as “immutable” laws, such as population increases always translating into competition among laborers that left unskilled workers near a subsistence-level of existence.

Karl Marx picked up the theme and said history would prove capitalism unsustainable. He advocated revolution. Marx is a troubling character (in the book and in history) who advanced a theory without any research, without even ever visiting a factory, Nasar notes. He was as lazy personally as he was intellectually. And he was, of course, wrong.

The hope of economics emerges (in this book) with the works of Alfred Marshall, known as one of the founders of the field. He actually went out and did the research Marx did not do. Marshall found, among other things, that workers were benefitting from capitalism and that they were not interchangeable or exploited. Employers rewarded skilled employees. Employers also were forced — through competition — to boost productivity and to lower prices for consumers. Everyone benefitted.

What Marshall uncovered, essentially, were hidden truths, elaborating on the “invisible hand” postulated by Smith. Among other things, he noted an evolutionary-like reality: Small, incremental improvements in productivity, over time, created more wealth to be shared by more people. The actual numbers — share of the national (British) economy going to labor — proved him right.

I suppose some will say that economics just isn’t interesting. But I think Nasar has done a good job of trying to make it so. If nothing else, she deserves credit for reminding us that economics has been and remains important to our understanding of a major component of our lives.


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