On a visit to the London School of Economics in 2008 as the financial crisis unfolded, the Queen famously asked a group of academics a simple but daunting question: why did no one see it coming?
In the wake of the credit crunch, trust in the ability of economists to foresee and solve problems has been in short supply. As the economics profession enters its latest bout of self-criticism and faces up to new challenges such as the digital revolution and the rise of the BRICs, it might usefully draw upon some lessons from the past.
A timely and succinct new book by Dr. Linda Yueh sets out to do just that. In a methodical but ambitious approach, Yueh looks at twelve contemporary challenges facing the world economy, ranging from low wages to trade deficits, each through the lens of individual ‘Great Economists’. “Who better to help shape our economic future”, she asks, than the likes of Adam Smith, Joseph Schumpeter and Friedrich Hayek, whose ideas had formed the foundation of economics itself?
Each chapter develops in a similar fashion, with a pithy summary of the life and times of famous thinkers followed by a discussion of how their ideas can inform a particular current issue. The approach risks being formulaic but Yueh’s academic and journalistic background clearly shows through in the fluent way she combines biographical vignettes with complex theories. This method is particularly helpful for shedding light on lesser known economists such as Joan Robinson.
Yet the book’s structure is often as constraining as it is innovative and the subjective choices of both economists and issues can sometimes appear questionable. The chapter on Keynes and government stimulus feels staid given the argument over investment versus austerity has been hotly debated since 2007. Yueh’s decision to consider what Karl Marx might make of China’s economic development similarly feels a missed opportunity. Would the gig economy, which gives workers control over their own economic lives, have been a more illuminating subject?
There is also a lack of dynamism in Yueh’s overall conclusions. Despite its reputation as the ‘dismal science’, economics has always held the potential for radical change. These thinkers rewrote the economic rules in their day but in this analysis they have little new to offer. Confronted with globalisation, Trumpism and Brexit, Yueh states that most of the great economists would “strongly advocate for a continuing process of liberalisation” to produce growth, reiterating ideas that are increasingly under scrutiny in this age of populism.
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Nonetheless, as a broad and accessible overview of the lives and ideas of prominent economic thinkers, Yueh’s book is a useful addition to the field. Its strongest sections make important connections between historical figures and modern decision-makers, such as the chapter detailing former Chairman of the Federal Reserve Ben Bernanke’s interest in Irving Fisher’s debt-deflation hypothesis.
Bernanke, an academic who described himself as “a Great Depression buff, the way some people are Civil War buffs” before being in the hot seat during the 2007-8 financial crash, is living proof that those who do not learn history are doomed to repeat it. For that basic point alone, The Great Economists may prove to be an important primer for future policymakers and politicians.
‘The Great Economists: How Their Ideas Can Help Us Today’ is available from Penguin for £20.00