A Letter to Harper's

Regular EP podcast listeners will know, having pieced my background together over various shows — indeed, I tend to repeat some of these stories perhaps too much — that I was a graduate student in the economics department of the University of Chicago, that I passed the Ph.D. preliminary exam in the history of economic thought under the Nobel laureate George Stigler (who despite his visceral dislike for me told me I was his best student) and that, if I'd gone on for the Ph.D. in economics, would have written my dissertation on precisely the question of how it was that the term "economics" replaced "political economy," the latter expression dating from the days of Adam Smith, and why it is that that replacement still matters today.

If you're wondering, by the way, why I didn't finish the Ph.D. it's because, being mathematically challenged, I wrote all my exams in English and thus in two tries never managed to get through the Ph.D. core theory exam. My failure may also have had something to do with my fundamental disbelief in the postulates of price theory. Anyhow, I took the department's MA door prize and went on to other things...

Turning to Bigelow, he implies in his chronology that one of the greats in the history of economic thought, William Stanley Jevons, was talking about "economics" in 1871. This is not strictly true, by Jevons' own words. Jevons published his most important book, The Theory of Political Economy in 1871. The book is notable for Jevons' development of a utility theory of value (also independently discovered by two continental economists) which remains one of the cornerstones of modern neoclassical economic theory. Only in the second edition, published in 1879, does Jevons, writing a new preface, talk about substituting the term "economics" for "political economy," though he mentions also his desire to retain the existing title of his book, which he did. In that same preface Jevons credits two men for coining or adopting the term "economics": the Scottish economist Henry Dunning Macleod (whose 1873 work was titled Principles of Economist Philosophy) and, particularly, Alfred Marshall at Cambridge. Marshall's magnum opus, Principles of Economics — which he began writing in 1881 — did not appear until 1890.

Jevons probably could not have foreseen, back in 1879, that Alfred Marshall would go on to become the father of modern neoclassical economics, his emphasis on the combination of supply and demand curves, marginal analysis using calculus, and individual utilitarian preferences being sustained in an unbroken line through Milton Friedman to most of today's "free-market" economists. Nor would Jevons have predicted Marshall's other legacy, now almost entirely unknown: that he divested economics of its classical philosophical character. Why Marshall did so seems to me completely inconsistent with Bigelow's assertions about the primacy of Evangelical Christianity in defining modern economics.

In the late 19th century Cambridge was the leading center of the study of political economy in the English speaking world. And for generations, in the university's tripos system of examinations, political economy had been subsumed under the discipline of moral sciences. Thus political economy continually renewed its philosophical side — notably regarding questions of distribution — which it had possessed from Adam Smith through John Stuart Mill up to, indeed, the great moral philosopher and polymath Henry Sidgwick (Principles of Political Economy, 1883; The Scope and Method of Economic Science, 1885), who for a time as Knightbridge Professor of Philosophy oversaw the moral sciences tripos. Somewhere in the early to mid 1880s the Cambridge baton regarding political economy passed from Sidgwick to Marshall; by 1903 Marshall had acquired enough clout to finally free political economy from the moral sciences tripos and officially christen it "economics."

So while it may be true, as Bigelow contends, it is less than fully accurate to say that the term "economics" emerged in the 1870s. Only by the very late 1870s and early 1880s did "economics" became a (recondite) term of art for elite academic practitioners but even then it didn't really catch on until Alfred Marshall sanctioned it and the term wasn't found, as far as I can tell, in popular usage until the late 1880s or early 1890s. Nothing about this progression of academic thought, going by the important texts and the principals involved, had the slightest thing to do with Evangelical fundamentalism.

In contemporary economic discourse it seems as natural as simple arithmetic to use graphs with supply and demand curves. Yet it took about one hundred years from Adam Smith's first conceptualization of a supply curve through subsequent economists' conceptualizations of a demand curve for the two finally to be merged onto a single graph that shows supply and demand. Marshall's crowning achievement, his genius, was to pull together all such internal developments in the discipline for the first time, using mathematics as their foundation.

What, exactly, was the nature then of the transition between Sidgwick and Marshall, one may well ask? To my mind this is the key question. Sidgwick, now utterly obscure, was in his time a towering figure. Well connected, one brother in law the Archbishop of Canterbury, another (after Sidgwick's death) Prime Minister of England, Sidgwick himself had such a keen, lucid, and easily understood way of expressing himself that he dominated whatever subject he addressed. In his chosen field of moral philosophy (see Methods of Ethics, 1874), my view is that Sidgwick has yet to be surpassed, with many lesser, modern philosophers — such as G. E. Moore and R. M. Hare — actually marching Sidgwick's accomplishments backwards to less subtle, forced methods of reasoning. As sometimes happens, however, Sidgwick unfortunately left no gifted disciples and his memory was quickly consumed by lesser students. While alive, and this is where it gets interesting, I believe Alfred Marshall chafed mightily in Sidgwick's shadow. And I suspect that a large part of Marshall's gusto for throwing out philosophy in favor of mathematics and for changing "political economy" to "economics" had to do with their sub rosa rivalry.

Seizing upon the math, by the dawn of the twentieth century economists quickly realized their advantages over other social sciences. They could describe precisely, or pretend to describe precisely, things that society most values. They could be prescriptive without abandoning "objective standards," a delightful position to be in. And economics became a discipline with increasingly elastic boundaries, ready and able to poach on others' territory given a chance. To the extent, then, that economics has Evangelical characteristics — and it most definitely has — they seem to me sui generis.

In short, economics, as a discipline, lost a sense of its philosophical roots and any notion that it might need a philosophical base. What's left is, in my view, often a series of problematic tautologies which, regarding large swaths of social concern, remain uninformative. Like the law, economic theory is piecemeal and happenstance — different subsets of the discipline do not fit together with analytic precision (the theory of the firm, for example, and the theory of the individual) — yet like engineering it posits for itself certain mathematical rigor. Practitioners have, I believe, consciously exploited this ambiguity to gull the public into believing many things that simply aren't true.

Emotionally satisfying though it may be to ascribe our present confusion to nineteenth century Evangelical Christianity, to blame the Bible-thumpers, I just don't see it. More accurately, the problem rests with our perennial lack of curiosity regarding academic claims of authority.