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Economics Evolving: A History of Economic Thought

Author(s):Sandmo, Agnar
Reviewer(s):Bethune, John J.

Published by EH.NET (July 2011)

Agnar Sandmo, Economics Evolving: A History of Economic Thought. Princeton, NJ: Princeton University Press, 2011. viii + 489 pp. $45 (paperback), ISBN: 978-0-691-14842-7.

Reviewed for EH.Net by John J. Bethune, Department of Economics, Barton College.

It is always a pleasure to read comprehensive contributions to the history of economic thinking.? I especially enjoy the variety of approaches taken and some of the nuances used by the various authors.? Economics Evolving, by Agnar Sandmo (professor emeritus of economics at the Norwegian School of Economics and Business Administration) is a work that should occupy a place on the shelves of anyone interested in the development of economic ideas.

The book contains nineteen chapters and each concludes with a section recommending further readings.? This permits the interested reader to delve further into a particular subject and is an important feature for a text that covers such a vast amount of material.

The first chapter addresses several questions concerning the purpose of the book.? These include defining economics, the reasons for studying its history, how such a study might be presented, and the existence of the history of economic thought as a special field within the discipline.? All of these topics are given interesting and thought-provoking treatment, but the one that especially interests me is the discussion of the various styles used to present such a history.? Sandmo notes that there are several ways to present a history of economics, but ultimately boils the various approaches down to the two extremes, referred to by Mark Blaug, as relativism versus absolutism.? As noted in my review of undergraduate textbooks in the Journal of Economic Education (Spring 1992) few texts are able to achieve either extreme through their entire discussion of the evolution of economic thought, but most will certainly lean one way or the other.? Sandmo states that his preference is for an emphasis on the internal dynamics of the science, which implies a more absolutist approach, but he does note the need for covering events of the day when it is clear that these are factors influencing the evolution of thinking in economics.? For the most part I find the approach he takes to be true to his statements, which is not always the case, with Schumpeter?s magnum opus being an obvious example.

In approaching the history of economic thought, where to begin is always a consideration.? Sandmo states that he will begin with the work of Adam Smith.? This does leave out considerations for the rich prior history of the discipline, but it is not an uncommon starting point.? The author also devotes the entirety of the second chapter to broad coverage of early developments in economics, moving from biblical times, through the scholastics, mercantilism, Cantillon, Hume, Quesnay and the Physiocrats, Turgot, Bernoulli, and Condorcet (the latter two would be in keeping with the absolutist nature of the text?s stated approach).

Chapter 3 is on Adam Smith and begins with biographical background, thus diverging from the absolutist method.? A discussion of The Wealth of Nations dominates the analysis of Smith, which would be expected.? The summary is concise and would be a good introduction for someone not familiar with the work of Smith.

The next two chapters cover the works of Ricardo, Malthus, and John Stuart Mill.? Though some biography is included for each, the presentation of the important ideas developed by these thinkers is thorough and in-depth.? Ricardo?s works are particularly of interest, especially the developments that address the theory of rent, international trade (comparative advantage), and taxation.? Mill?s contributions to philosophy are also noted with respect to utilitarianism and the rights of women.

The next chapter is the obligatory lengthy coverage of Marx.? While Sandmo tries to focus on the economic elements in Marx?s thought, much biography and political theory is present.? Given the core beliefs and accepted theories of modern economists, it is difficult to understand how so much can be written on Marx?s economic theories.? This is especially true when an absolutist approach is taken, an approach that views the development of economic thought as a steady progression from error to truth.? Given the role Marx has played in world history, the extended coverage is somewhat justified.

Ensuing chapters cover the range of economists and schools of thought that would be expected, with special attention given to contributors that developed more formal and stylized models.? This sets the text apart from similar works in that thought creators such as von Thunen, Cournot, Gossen, and Dupuit are covered extensively as forerunners to the marginalist revolution.? Also, Walras is given a separate chapter from Jevons and Menger.? As we approach the modern era, some names not found in a typical text are discovered, such as von Stackelberg and Zeuthen.

Chapter 14 addresses the competing ideas of which economic system is most efficient by presenting the arguments of von Mises, Lange and Lerner, Schumpeter, and Hayek.? It is evident that Sandmo is more sympathetic to the approach taken by Lange and Lerner than the less formalized contributions of the others.

The chapter on Keynes properly focuses primarily on The General Theory, and it is generally an excellent interpretation.? Keynes? other writings and his originality are also briefly discussed.? The fathers of econometrics are identified as Frisch and Haavelmo and they are the topic of the next chapter.? ?Modern? economic theory is identified with the post-war efforts of Hicks, Samuelson, Arrow, and game theorists von Neumann and Morgenstern.?

The final chapter devoted to content addresses Friedman?s critique of Keynesianism, Solow?s growth theory, general contributions is the area of public finance, and the response of Buchanan through the development of public choice analysis.

The concluding chapter, to some extent, returns us to the topics contained in the opening chapter, which is a general discussion of economics.? This time the focus is on economic imperialism versus multidisciplinary approaches, increased formalization and the adoption of more empirical approaches concerning the questions of the day, and the question concerning how much economists agree on fundamental issues (apparently we do not).

Economics Evolving (excellent title) is an enjoyable and detailed presentation of the history of our profession.? The focus is on the thoughts of individuals and, while schools of thought are broached, they are not central to the presentation.? Historical background is presented and considered, but it is the development of economic thoughts that are at the heart of this analysis.

John J. Bethune is Professor of Economics at Barton College in Wilson, North Carolina. jbethune@barton.edu

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative