A History of Economic Ideas II

Toward the latter part of the book, I realized this book is really a dictionary and not suitable for a quick reading. It is impossible to obtain a clear picture of the development of economic ideas, as I had originally hoped. The ideas were too broad and too complex to summarize, and they did not develop in a linear fashion.

Here is the quick rundown from mercantilism. Immediately followed was the classical tradition, pioneered by Adam Smith. Other prominent figures included Jeremy Bentham, Thomas Malthus, David Ricardo, John Stuart Mill and Karl Marx. Then there was the marginalists and opponents theory represented by Alfred Marshall, Max Weber and others. Finally, it came to contemporary economics with luminaries like John Maynard Keynes. Published in 1959, it did not include Milton Friedman, whose influence was minor then.

Though the history of economics remained a blurry picture, I came to realize several things unrelated to economics. First, Karl Marx. His theory appeared peculiar and out-of-place among all other theorists. Yet reading the chapter about him was the easiest for me. Thesis, antithesis, synthesis; base, superstructure, class struggle, surplus value, negation of negation, change of quantity into quality – I grew up with these phrases, and this system was adopted to interpret history, politics, sociology, international relations. And Marxism was the only philosophy we learned.

I now remember those exact paragraphs in which class struggle was the sole explanation of a social change. How during the Ming dynasty, preliminary capitalism emerged in China and was supposed to negate feudalism. How social development followed the progression of slavery/serfdom to feudalism, to capitalism and finally socialism – the ultimate human destination. Even out of classrooms, people talked about superstructure and debated how soon socialism would negate capitalism. Everyone knew the evil of capitalism by heart, though no one ever stepped into capitalist land. Marxism was THE truth. There was nothing else. But how absurd! Marx was only one of the hundreds or thousands of theorists, and his ideas were peculiar at the least. How cruel it was to enslave, poison, distort the mind of a whole nation by one doctrine!

John Stuart Mill's story inspired a different thought. His father, James Mill, educated the younger Mill by exposing the child to good associations and protecting him from bad ones. Greek at 3, Latin at 8, logic, philosophy and political economy at 12. When he was 14 years old, before he set out a tour to France, his father warned him "he might find that he knew things his contemporaries did not know." His father also warned there was no reason for pride because it was the result of his superior education. Any other child would do just as well if he was raised the same way.

The superior training brewed crisis. In his early twenties, Mill struggled to find meaning to life: "it occurred to me to put the question directly to myself: suppose that all my objectives in life were realized; that all the changes in institutions and opinions which you are looking forward to, could be completely effected at this very instant: would this be a great joy and happiness to you? … an irrepressible self-consciousness directly answered: No! At this my heart sank within me." I've heard several stories of prodigies who did not fulfill their promises and ended sadly. It seems the foundation of life should be a healthy and natural psychological development. Any attempt to "mold" mind would fail.

Another somewhat shocking comment to modern readers: "To him (Adam Smith), all European countries, except Holland, and the entire reminder of the world, except China, were underdeveloped." In the late eighteenth century, China was perceived as developed. What a strange idea! Another ancient civilization in Asia, India, had been falling under the control of the East India Company. But in the early nineteenth century, Joan Stuart Mill wrote that if China was to improve further, "it must be by foreigners." Mill was no prophet. China was ready for grabs after being defeated during the first Opium War, and since then "confidence" was to be out of the Chinese dictionary.

Robert Lekachman, A History of Economic Ideas