A Concise History of Economic Thought: From Mercantilism to Monetarism

Published by EH.NET (January 2006)

Gianni Vaggi and Peter Groenewegen, A Concise History of Economic Thought: From Mercantilism to Monetarism. New York: Palgrave Macmillan, 2003. xvi + 339 pp. $105 (cloth), ISBN: 0-333-99936-3.

Reviewed for EH.NET by David Andrews, Department of Economics, SUNY-Oswego.

Two distinguished historians of economics, Gianni Vaggi of the University of Pavia and Peter Groenewegen of the University of Sydney, have collaborated on a new textbook, A Concise History of Economic Thought: From Mercantilism to Monetarism. The book is distinctive in its length and structure. The book, which including the bibliography and index has fewer than 350 pages, consists of 43 discrete accounts of individual economic authors included in 34 chapters divided between “Classical Political Economy” and “Modern Developments.” The accounts include basic biographical information and additional readings, so the descriptions of the ideas of each author are quite brief, often just a few pages. This brevity is achieved by narrowing attention to a few topics with which each author is “generally associated” (p. 4).

Despite the use of vignettes centered on individuals, the book points out many connections among thinkers and tells a coherent story of the development of the history of economics. It begins with the mercantilists, who contributed by establishing the wealth of nations as an object of investigation and by provoking critics who became proto-classicals. Physiocrats and others discovered or constructed the central concepts of classical political economy, including division of labor, capital, surplus and reproduction. Adam Smith put the pieces together into a general theory, which was refined by David Ricardo and found its final expression in Karl Marx.

The story then shifts directions as the authors argue that the Marginal Revolution involved a sharp discontinuity between Classical and Modern economics. The authors understand this discontinuity as a shift in emphasis rather than a movement from the incorrect to the correct or from the correct to the incorrect. They maintain that both classical and modern economics are important for understanding the economy today. The story of modern economics treats micro and macro separately. The micro story begins with the appearance of the marginal principle in exchange in the 1870s, with Jevons, Menger and Walras, continues with the development of the marginal productivity theory of distribution, and concludes with the controversies and complications in the 1920s and 1930s concerning costs and competition. The macro side of the story begins with pre-Keynesian monetary theory, continues with Keynes and Keynesian developments and concludes with Milton Friedman and monetarism.

Any textbook on the history of economic thought must be selective to some degree, but since this book is explicitly concerned to be concise, the problem of selection is particularly severe. The main criterion for the inclusion of an economic writer appears to be whether or not the writer plays a role in the authors’ overarching story of the (discontinuous) development of the history of economic thought. So, for example, the Institutionalists do not fit neatly into the story and are therefore excluded. Thorstein Veblen is mentioned only in passing and John R. Commons not at all. Similarly, there is no discussion of Friedrich Hayek, Ludwig von Mises, or Austrians after B?hm-Bawerk. On the other hand, there are full chapters on arguably lesser figures who do fit into the story such as Pierre le Pesant Sieur de Boisguilbert and Richard Cantillon, and sections of chapters on Dudley North, Fernando Galiani, Jean-Charles Simonde de Sismondi, Robert Torrens, Nassau Senior and J.H. Clapham. The requirements of the overarching story also appear to have led to some peculiarities, such as including John Stuart Mill in the section on the marginal revolution and locating Joseph Schumpeter among the pioneers of macroeconomics for his work on economic development. The range of authors covered is otherwise conventional.

The major advantage of this book is the ease with which readers can get an introduction to the ideas of important figures in the history of economic thought. The individual vignettes are of uniformly high quality. They display a vast knowledge of the history of economic thought, as might be expected from such accomplished authors. By contrast with many textbooks, the writing is also impressively clear and to the point. The judgments of which ideas are “generally associated” with each author are standard. Although it is not difficult to quibble over a number of points of interpretation, the same might be said of any other textbook in the history of economic thought. Marxists and post-Keynesians may be disappointed with the treatments of Marx and Keynes, but, again, this is likely to be true of any textbook.

The major disadvantages of this book all stem from the attempt to achieve the brevity and clarity that are the book’s strengths: the limited range of thinkers covered, the limited context within which each thinker is considered, and the relative neglect of historical contexts. (The authors do make some effort to highlight the historical context of the various authors, but this is extremely difficult given the brevity of each account.)

I believe this book will prove a very useful resource for teaching, as long as it is understood that the textbook will have to be supplemented with lectures and readings that provide the broader contexts. The additional readings at the end of each chapter are useful in this regard.

It should be noted that there is a certain amount of sloppiness in the book. There are a number of typographical errors and misspellings. This is particularly unfortunate in a book designed for students. Piero Sraffa seems to have fared the worst in this regard, appearing as Scraffa in the table of contents and Saraffa in the bibliography.

David Andrews’ publications include “Keynes, Ricardo and the Classical Theory of Interest,” European Journal of the History of Economic Thought (2000).