Author Archives: Diane Coyle

What economic history do economists need to know?

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There’s an interesting VoxEU column by Coen Teulings about the economic history economics students ought to know. The list is terrific for learning about economic growth and development, including for example Jared Diamond’s classic [amazon_link id=”0141024488″ target=”_blank” ]Guns, Germs and Steel [/amazon_link]and Paul Bairoch’s [amazon_link id=”B009NO0MH0″ target=”_blank” ]Cities and Economic Development[/amazon_link], as well as more recent entries like Acemoglu and Robinson’s [amazon_link id=”1846684307″ target=”_blank” ]Why Nations Fail[/amazon_link]. However, there are some obvious omissions – David Landes’ [amazon_link id=”0349111669″ target=”_blank” ]Wealth and Poverty of Nations[/amazon_link], Joel Mokyr’s [amazon_link id=”0691120137″ target=”_blank” ]Gifts of Athena[/amazon_link], [amazon_link id=”0691090106″ target=”_blank” ]The Great Divergence[/amazon_link] by Kenneth Pomeranz, not to mention some straightforward histories of the Industrial Revolution such as Bob Allen’s [amazon_link id=”0521687853″ target=”_blank” ]The Industrial Revolution in Global Perspective[/amazon_link]. There are some less obvious omissions too – James Scott’s [amazon_link id=”0300078153″ target=”_blank” ]Seeing Like A State[/amazon_link], maybe?

[amazon_image id=”1846684307″ link=”true” target=”_blank” size=”medium” ]Why Nations Fail: The Origins of Power, Prosperity and Poverty[/amazon_image]

Economics students certainly need to have more history included in their courses – I would favour weaving it in as well as offering separate courses, because much as students claim to want to study economic history, I’m not at all sure they walk the talk in large numbers. However, the list in the VoxEU column is only one strand of economic history. For industrial organisation courses, for example, what’s needed is business history. The Mokyr book might feature, but so also Alfred Chandler’s [amazon_link id=”B00BR5MIXY” target=”_blank” ]The Visible Hand[/amazon_link], or his [amazon_link id=”B00L6K91RG” target=”_blank” ]book about DuPont[/amazon_link], say, or a terrific book I read recently about Bell Labs, Jon Gertner’s [amazon_link id=”1594203288″ target=”_blank” ]The Idea Factory[/amazon_link].

[amazon_image id=”1594203288″ link=”true” target=”_blank” size=”medium” ]The Idea Factory: Bell Labs and the Great Age of American Innovation[/amazon_image]

I’m sure there are lots of other good suggestions out there – both books, and how to weave economic history into economic teaching. This summer I’m finalising my Public Policy Economics course to teach at the University of Manchester in the autumn so econ history suggestions for that are especially welcome.

Fact and fiction

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With a brief holiday after my NZAE conference and then 24 hours of travel back from Australia to the UK, I managed to read two chunky books as well as the others described in my last post.

One was [amazon_link id=”0007213964″ target=”_blank” ]The Pike [/amazon_link]by Lucy Hughes-Hallett, the biography of the extraordinary Gabriele D’Annunzio. It educated me about the Italian role in the First World War – something unsurprisingly not much covered in the centenary materials here in the UK – and the way the aftermath paved the way for Mussolini. I’d known next to nothing about D’Annunzio before reading this prize-winning biography. He was an extraordinary character, and the story is supremely well told in this book, which while clearly based on exhaustive historical research indeed reads like a novel.

[amazon_image id=”0007213964″ link=”true” target=”_blank” size=”medium” ]The Pike[/amazon_image]

The other was Donna Tartt’s epic novel, [amazon_link id=”0349139636″ target=”_blank” ]The Goldfinch[/amazon_link], a nearly 900-page page-turner. It’s a novel with an economics lesson at its heart. The protagonist, Theo, goes into the antiques trade. He observes: “I also learned a lesson; a lesson which sifted down to me only by degrees but which was in fact the truest thing at the heart of the business. It was the secret no-one told you, that in the antiques trade there was really no such thing as a ‘correct’ price. Objective value – list value – was meaningless. … An object – any object – was worth whatever you could get somebody to pay for it.” An excellent lesson in applying behavioural insights to pricing antiques follows. The entire novel is about value, both market value (at its most brutal, in the criminal world as well as the antiques trade) and inherent or moral value.

[amazon_image id=”0349139636″ link=”true” target=”_blank” size=”medium” ]The Goldfinch[/amazon_image]

The right kind of free markets

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As I’m travelling, I’ve been doing a lot of frivolous reading – [amazon_link id=”1781681678″ target=”_blank” ]Altai[/amazon_link] by Wu Ming (fabulous), [amazon_link id=”1847084826″ target=”_blank” ]Secrecy[/amazon_link] by Rupert Thomson, John Le Carre’s [amazon_link id=”0241965187″ target=”_blank” ]A Delicate Truth[/amazon_link] (oh dear, he’s lost the use of shades of grey in character), and in non-fiction Mary Beard’s [amazon_link id=”1781250499″ target=”_blank” ]Confronting The Classics[/amazon_link] (very interesting and enjoyable), [amazon_link id=”0099584255″ target=”_blank” ]Italian Ways [/amazon_link] by Tim Parks (funny, and all-too-plusible about Italy) and, just finished, Jesse Norman’s [amazon_link id=”0007489641″ target=”_blank” ]Edmund Burke.[/amazon_link]

[amazon_image id=”0007489641″ link=”true” target=”_blank” size=”medium” ]Edmund Burke: The Visionary who Invented Modern Politics[/amazon_image]

I’ve found this very interesting, especially the last chapter on what light reading Burke can shed on the philosophy shaping modern political debate, namely liberal (UK sense) individualism and its counterpart in economics, the neoclassical free market model. The book argues that the assumptions of self-interest and individualism in economic models have spilled outside their proper domain of technical economic analysis: “What starts with an economist’s assumption ends up as a deep cultural pathology.” There is furthermore the loss of the basic trust uniting the generations, Burke’s famous point about the “partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.” Those who are to be born, in particular, cannot participate in the free market,

The book concludes: “Burke offers a profound critique of the market fundamentalism now prevalent in modern society. But he does so not from the left of the political spectrum but from the right. … Understood conservatively, markets are not idolized but treated as cultural artefacts mediated by trust and tradition. Capitalism becomes, not a one size fits all ideology of consumption but a spectrum of different models to be evaluated on their own merits. Burke would note the extraordinary greed and self-dealing seen over the past decade by the modern nabobs of banking and finance in a series of cartels disguised as markets…”

I haven’t read much by Burke, and that little over 30 years ago. I rather suspect he’s an author one approaches differently with age and experience. Anyway, Jesse Norman’s book was a great (re-)introduction.

Women’s work

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This morning I gave my talk on “What we mean when we talk about ‘the economy'” at the NZAE conference. One of the issues I touched on was the production boundary (also discussed in [amazon_link id=”0691156794″ target=”_blank” ]GDP: A Brief But Affectionate History[/amazon_link]).

This was also discussed at one of the parallel sessions yesterday in the description by Caroline Sanders of Marilyn Waring’s 1988 book [amazon_link id=”0802082602″ target=”_blank” ]Counting for Nothing: what men value and what women are worth[/amazon_link] – retitled If Women Counted for the more sensitive US market. I hadn’t been aware of Waring’s book previously but it evidently covers the production boundary question when it comes to domestic work and also the services derived from natural resources. Caroline and co-author Paul Dalziel have a new e-book of their own out, inspired by Waring, [amazon_link id=”B00KV4O9IY” target=”_blank” ]Well-being Economics.[/amazon_link]

[amazon_image id=”0802082602″ link=”true” target=”_blank” size=”medium” ]Counting for Nothing: What Men Value and What Women are Worth[/amazon_image]

Another book suggestion on the measurement question, recommended by Professor John Creedy, is Paul Syudednski’s history of GDP, T[amazon_link id=”0814704069″ target=”_blank” ]he Income of Nations.[/amazon_link] – apparently rather rare.

Inequality and value judgements

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I’m attending the annual conference of the New Zealand Association of Economists, and the first keynote was a terrific presentation by Professor John Creedy on inequality, or to be precise the history of economic thought on inequality and the light that sheds on the current resurgence of interest in distribution.

His starting point was the classic Tony Atkinson paper, On The Measurement of inequality. It was published in 1970, another time when inequality was a salient issue, and the talk moved onto [amazon_link id=”0674000781″ target=”_blank” ]Rawls[/amazon_link] and Sen as well. The theme was that any measure of inequality – income or wealth? Individuals or households? Gini coefficient or Atkinson’s own measure, or the simple 10/90 ratio? – incorporates some implicit value judgements. For example, do you care about individual well-being because of a principle of anonymity – who you are shouldnt matter to evaluating your distributional status? If so, then the Gini isn’t an appropriate measure because it depends on rankings of individuals relative to others. If you look at the 10/90 ratio, as [amazon_link id=”067443000X” target=”_blank” ]Piketty[/amazon_link] does, you’re saying the middle four fifths of the distribution isn’t relevant.

Prof Creedy ended cited Lionel Robbins’ famous [amazon_link id=”B001037AGS” target=”_blank” ]Essay on the Nature and Signifiance of Economic Science[/amazon_link], to the effect that economics can’t avoid making value judgements but its contribution is to shed a clear light on what the judgements are. Or at least, ought to be, but too rarely is. The word of caution about understanding the value judgements embedded in specific measures of inequality is timely given the fact that everybody from New Zealand to New York is talking about it now.