Review: The Worldly Philosophers

The Worldly Philosophers
The Worldly Philosophers: The Celebrated Study of the Lives, Times, and Ideas of the Great Economic Thinkers, Sixth Edition
Robert Heilbroner
Penguin, London, 1991

Review Copyright © 1998 Garret Wilson — December 31, 1998, 3:00pm

The Worldly Philosophers was so named because Robert Heilbroner didn’t want to use the word, "economics" in the title. This would have been, in his words, "death at the box office" (8). It is nevertheless a history of the economic philosophers from Smith to Marx to recent thinkers. That history goes something like this:

Once upon a time there was (as everyone learns in International Relations) a completely different societal structure in which political lines weren’t so sharply drawn and economic transactions were not uniform, had hardly any standards, and were constrained to small areas. Records were not rigorously maintained.

Many things fell into place at once: the European political structure changed, domestic and international trade increased, and Adam Smith published Inquiry into the Nature and Causes of the Wealth of Nations in 1776. Although this publication contained relatively little new material (51), it revolutionized the study and understanding of economics by claiming that the "invisible hand" of the market would distribute goods efficiently and control prices.

Heilbroner classifies two other economists as the "gloomy pessimists" (82). Thomas Malthus published in 1798 an anonymous treatise entitled An Essay on the Principle of Population as It Affects the Future Improvement of Society (78), claiming(after watching populations grow in his day) that populations would grow so large as to make "famine... the last, the most dreadful resource of nature" (90). David Ricardo, in his Principles of Political Economy in 1817, claimed that landowners would inevitably receive unfair profits from all others in the economy because economies, including resources and labor, expand, while the total amount of land to be used is finite.

There were several philosophers who had utopian visions of socialist communities, including Robert Owen (109), Count Henri Rouvroy de Saint-Simon (117), and Charles Fourier (122). Some of their plans were put into practice, and most failed miserably. Karl Marx (136) brought out the Communist Manifesto, urging a (what he considered inevitable) revolt of the working class. In his Das Kapital, he explained exactly why this uprising was sure to come about: capitalists extract "surplus value" from workers by paying them less than their labor is worth (158). Worse yet, as competition makes profits shrink which requires capitalists to acquire laborsaving equipment, the labor base shrinks and profits fall still more. The ensuing crises driving down wages for the workers and creating gigantic companies controlling the labor class whose wages are now frightfully low (160-161).

Among the somewhat offbeat theorists, which Heilbroner refers to as the "Underworld of Economics" (171), there was Francis Ysidro Edgeworth ("a nephew of that maria Edgeworth who had once played charades with Ricardo") (174). Assuming that "every man is a pleasure machine," Edgeworth attempted to create a mathematical representation of economics based entirely on turning this pleasure seekers into numbers (174). Other eccentrics include Bernard Mandeville (178), Frédéric Bastiat (179), Henry George (184), John A. Hobson (194), and Alfred Marshall (207).

The "savage society" of the late 19th and early 20th century brought about an age of pleasure and many abuses to the economic system, especially in America. Thorstein Veblen came to see society in which people wanted to advance their status; unlike Marx, who claimed that laborers would revolt, Veblen claimed that instead of deplace their managers workers would try to emulate them (234). Since free markets tend to be efficient, Veblen believed that the only ways capitalists can make money is to sabotage the system to create profits (235).

Born in 1883, the same year that Karl Marx died (254), John Maynard Keynes published The General Theory of Employment, Interest, and Money (271) which stated that the economy was likely to remain at states of severe depression just as it had an equilibrium during prosperity (274). His solution was government intervention (275).

Joseph Alois Schumpeter was born the same year as Keynes and published The Theory of Economic Development. Schumpeter, as did many before him, saw a static economy as having no room for profit. Profits could only be brought about by changes in the system, brought about by entrepreneurs (as opposed to normal businessmen) who create innovations (297).

So far, this entire overview sounds a lot like the overview found in Economics Explained, showing the progression from Adam to Marx to Keynes, with just a few other names thrown in. Economic history to a large extent is economic history, of course, but it shouldn’t take you long to realize that Robert Heilbroner was co-author of Economics Explained, as well (something I didn’t realize until I was far along into this book). In fact, if an outline of the history of economic thought was the only aspect of The Worldly Philosophers, there would be little to recommend it over the former except for the extra philosophers it mentions.

Where The Worldly Philosophers shines is in its coverage of the philosophers themselves. Unlike many explanations of economics, the book tells about each philosopher in depth, from their birth to their death: their feelings, their relationships, their eccentricities, and even their looks. Of Veblen, for example, one learns about his extra-marital lady friends and his general demeanor: "[O]n one occasion, hoping to be tactful, a friend referred to a young lady staying at [Veblen's] house as his niece. ‘That is not my niece,’ said Veblen. And that disposed of that" (241). And when Keynes took a civil service test, he made the second highest score, of which "his lowest mark was in the economics sectoin of the examination. ‘I evidently knew more about Economy than my examiners,’ he explained later, a remark that would be unforgivably presumptuous if it were not, in this case, entirely true" (256).

Despite the significant portion of the book devoted to the lives of the economists (which at times can almost sidetrack from the economic details), I gained some new insights into economics. The section on Marxism was particularly interesting. Marx maintained that "thoughts and ideas are the product of the environment," and that, "the ultimate causes of all social changes and political revolutions are to be sought... in changes in the mode of production and exchange" (144). My current opinion is that this is exactly the opposite of what occurs: I would say that all changes in the mode of production and exchange ultimately stem from social circumstances. Cultural differences can promote or impede economic changes. I would tend to agree more with another of Marx’s statements: "Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly found, given, and transmitted from the past" (145). This statement would seem to uphold my "social determines economic" argument.

One particular letter from Pierre Proudhon, a French Socialist, to Marx when asked to join forces with Marx and Engels stands out. It is particularly relevant in light of the most recent implementations of Marxist ideas and their derivatives:

Let us together seek, if you wish, the laws of society, the manner in which these laws are reached, the process by which we shall succeed in discovering them; but, for God’s sake, after having demolished all the a priori dogmatisms, do not let us in our turn dream of indoctrinating the people. . . . I applaud with all my heart your thought of inviting all shades of opinion; let us carry on a good and loyal polemic, let us give the world the example of an informed and farsighted tolerance, but let us not—simply because we are at the head of a movement—make ourselves into the leaders of a new intolerance, let us not pose as the apostles of a new religion, even if it be the religion of logic, the religion of reason. Let us gather together and encourage all dissent, let us outlaw all exclusiveness, all mysticism, let us never regard a question as exhausted, and when we have used one last argument, let us if necessary begin again—with eloquence and irony. On these conditions, I will gladly enter into your association. Otherwise, no (153)!

Marx’s contention that the value of everything is based on its labor (156) still gives me problems, and I’ll have to think about this some more. On the face of it, what about someone who discovers gold on his/her property? What about workers randomly threading and unthreading bolts vs. building an airplane? Somehow, the workers' capital of education and skill isn't figured in. What about the amount of mental labor the capitalists puts in by designing a product, laying out the factory, and managing the operations?

Marx had great insight, however, in that he foresaw an economical landscape with the presence of business cycles, a larger proportion of big businesses, and a larger proportion of workers who are not self-employed, and a need for business innovation (165), all of which have been proven true.

Henry George had an idea that rents should be taxed (184). This idea showed up in Friedman's book, Hidden Order, although Friedman didn’t make a reference to whom this idea was from. (Note that Henry George, as Friedman pointed out to me later, didn't actually originate the idea.) Hobson was one of the first to expand on the idea that capitalism expanded and required other markets to buy the surplus (because worker were too poor to buy them and the capitalists were too rich to use up all their wealth on purchases), so this brought about expansionism and emperialism to open up new markets for the capitalists (194). This idea was taken up by Lenin (199).

In light of things happening in my International Relations class, it’s interesting to note that Heilbroner seems to portray US hegemony in a classic neorealist/neoliberal light: "It is a direct political, rather than economical, form of foreign domination" (204). This downplays those like Halliday who would say that ideas play a big part in US policy (as in the Cold War), and almost completely disregards the World System theorists who would claim that it's all about economics.

Among other interesting notes is that Veblen correctly saw "technology and science as the leading forces of historic change in the twentieth century" (246). Keynes’ famous "In the long run we are all dead" statement was from his 1923 Tract on Monetary Reform (263).

The Worldly Philosophers has become somewhat of a classic in beginning economics literature, although I didn’t find it to be quite in the "must read" category. It does explain the evolution of economics thought, although it doesn’t go into many economics intricacies. Its explanation of the ideas in Das Kapital is well done, however, and provides insight into Marx’s ideas about a perfect free-market society and how it relates to capital accumulation, labor, laborsaving machines, wages, and inevitable repeating worsening crises in the capitalist system (155). (This gives more insight into the current World System theorists in International Relations and the series of crises they see in the IR realm.)

Heilbroner’s presenting the backgrounds of the lives of the economists is welcome, but at times the personalities seem to overshadow the concepts and vice-versa. Perhaps having them both in the same book is almost too much. Or maybe one should first have a clearer idea about what each philosopher thought before reading the book. Or maybe the book should be read twice. Or maybe some of the more arcane philosophers muddied the book. In any case, this very easy-reading book is one that will add to your economics knowledge, although it might be better used not as a primer for economics concepts but as upper-beginner to lower-intermediate book that will give you an insight on the setting of the evolution of economic thought. The book closes with one such insight, which the book illustrates quite nicely all the way through: most of the theories of the economic philosophers were inadequate because they could not see future advances in technology and could not predict future social changes (316).

Note, November 24, 2000:

David Friedman, author of Hidden Order, read my original version of this essay which stated, "Henry George came up with the idea that rents should be taxed," and sent the following clarification:

This implies that the idea of taxing rents, or perhaps the idea that rent was especially suitable to be taxed, was original with Henry George. It was not—it can be found, among other places, in Adam Smith's Wealth of Nations, published well before George was born.

David Friedman
School of Law
Santa Clara University