One of many accusations of the economics discipline is that it spends too much time on the ideas of rich white men, long since buried. In our world ruled by moral and intellectual relativism and group identities, such an accusation is serious indeed. We can ridicule such positions all we want, and Mises does an excellent job of it in chapter 3 of Human Action, but there may be still some merit to the accusation. Beyond relativism, how serious is the charge: are we reading too many dead economists?

For those of us with a large research and consumption interest in the history of economic thought (HET), that kind of indictment requires a response. Reading Duarte & Giraud's 2016 article in the Journal of the History of Economic Thought should be a wake-up call, both for those sneering at econ for idolising a bunch of dead guys and those of us who wants to read more of them: the fate of HET seems pretty doomed. Looking through publications in the 5 most prestigious economics journals over the last 25 years (as well as Economic Journal, Journal of Economic Perspectives and Journal of Economic Literature probably to have anything to work with at all), Duarte & Giraud finds something quite hopeless – HET is virtually eradicated from the discussions of professional economists:

Those who have argued that historians of economics should work hard to tighten the links between HET and its home discipline have possibly underestimated the extent to which economists have become impermeable to the history of thought, even if still using it for particular purposes in papers published in top journals. [...] the fact, plain and simple, is that analytical history of economics is pretty much absent from today’s major economics journals. (pp. 457-458)

So much for the charge of studying dead men of centuries past. So maybe the accusation is completely backwards; maybe we should be reading more dead economists from centuries past?

Some reasons for why we read these men whose ideas may be as dusty and forgotten as their gravestones have been given by well-known economists who themselves discarded its value (despite spending much time reading and writing on economists of the past): Schumpeter argued that it helps us understand current theory; Stigler said the history of economic thinking was a costly and inefficient learning method for economic arguments in general; and Samuelson seemed to believe that its only purpose was to find the gradual development of work that present-day economists are advancing and perfecting (Boettke et al 2014: 538).

While those reasons are acceptable, they leave out the most important reason: the accumulation of relevant economic knowledge doesn't progress linearly in a Whig-theory-of-history fashion; things get lost along the way, our profession occasionaly go down dead-ends, ideas aren't always refuted but simply discarded and ignored. The reason we care about economists of centuries past is for us to know this and bring back the sound ideas that others have cast aside. If we would take most of what's taught in economics classes around the world for granted – and the irksome objection that all valuable contributions have been incorporated into present-day research – these insights will go past us.

Two prominent examples are Mises' revolutionary framework as well as Keynes' alleged refutation of Say's Law. Mises first presented his fully-developed thinking in 1940 through Nationalökonomie, a work that was mostly ignored because of the war as well as the fact that it was published in German. By the time the English version Human Action came out in 1949, the profession had firmly moved on along Keynesian/Hicksian aggregate demand-lines; Mises was never refuted, just ignored. His path-breaking contributions of praxeology, calculation in money prices and the integration of money and value theory was left behind rather than disproved – generations of economists simply moved on and got swayed by lesser theories (Hülsmann beautifully tells this story in his 2007 biography of Mises, Mises:The Last Knight of Liberalism).

The other example is Keynes' so-called 'refutation' of Say's Law: Nobody who spends more than ten minutes investigating this claim (clearly excluding Krugman) can seriously believe that Keynes refuted anything; instead, he simply resurrected long-since disproved and refuted ideas, and a whole generation of economists took it on faith that Say and sound economics was out, Keynes and inflationism was in. Rothbard's introduction to his monumental contribution to HET is on-point:

There can therefore be no presumption whatever in economics that later thought is better than earlier, or even that all well-known economists have contributed their sturdy mite to the developing discipline. For it becomes very likely that, rather than everyone contributing to an ever-progressing edifice, economics can and has proceeded in contentious, even zig-zag fashion, with later systemic fallacy sometimes elbowing aside earlier but sounder paradigms, thereby redirecting economic thought down a total erroneous or even tragic path. The overall path of economics may be up, or it may be down, over any give time period. (p. x)

To untangle all of this, we need to study our intellectual predecessors. Boettke and co-authors conclude the following in their 2014 article (p. 538):

In a world where the evolution of ideas is lumpy and not a continuous straight line, reading classic works in economic thought [...] can prove to be a necessary input into our efforts as workaday economists. The history of thought is one way, among several ways, of doing contemporary theorising.

Their proposed criterion is thus fairly simple (p. 539):

are the ideas of a Smith, a Ricardo, a Say, a Mill, a Keynes, a Hayek, a Friedman, etc. still in possession of evolutionary potential for the purposes that we theorists today are trying to tackle? If so, then they are part of our extended present; if not, then it is best to leave the examination of those works to the historian.

Studying the history of economic thought is out. We should bring it back in.

Reprinted from Life of an Econ Student.

Joakim Book

Why We Read Dead Economists