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The Economics Book: From Xenophon to Cryptocurrency, 250 Milestones in the History of Economics

Author(s):Medema, Steven G.
Reviewer(s):Emmett, Ross B.

Published by EH.Net (May 2020)

Steven G. Medema, The Economics Book: From Xenophon to Cryptocurrency, 250 Milestones in the History of Economics. New York: Sterling, 2019. 528 pp. $21.49 (cloth), ISBN: 978-1-4549-3008-2.

Reviewed for EH.Net by Ross B. Emmett, School of Civic and Economic Thought and Leadership, Arizona State University.

 

Here’s a fun game for lunchtime debate among economics faculty: what would you put on your list of the top 250 “milestones” in the history of economics? The Wealth of Nations, Das Kapital, and The General Theory? Okay, but what about ideas themselves, like the iron law of wages, or creative destruction, Arrow’s impossibility theorem, the median-voter theorem, and the Lucas critique? Since a lot of economic historians read these reviews, I should add one limitation: events in economic history can be included insofar as you can make the case for their influence on economic ideas or on the economics profession. So that would include the industrial revolution, the Great Depression, and the Cold War, right? And what about things that built the discipline of economics, like the invention of calculus, the National Bureau of Economic Research, the Cambridge Economics Tripos, computation aids from the Phillips machine to the personal computer, and the Nobel Prize?

You get the idea. In The Economics Book, each topic gets one page of text, plus one picture on the opposing page. What image would you juxtapose with Akerlof’s “The Market for ‘Lemons’?” A 1970s-era used car lot, of course. And for “the rational voter model and the paradox of voting”? Answer: women in India waiting in line to vote with their ID cards. The creation of the economics Nobel prize? A group photo of some of the 1969 Nobel laureates, including Jan Tinbergen, who shared the first Economics Prize with Ragnar Frisch. And lest you think that Medema’s team chose the easy way by looking just for photos of the people associated with the idea, school, event, etc., there are less than forty pictures of the individuals named in the volume. The other images come from a wide assortment that illustrate the ideas mentioned.

The arrangement is historical — appropriate to the “milestones” theme. The year, or approximate year for the earliest entries, is printed vertically along the left margin, allowing one to flip through pages quickly to a time period of interest. The first entry is Hesiod’s Work and Days, in which the author tells the myth of Pandora opening the jar full of curses from the gods, thereby releasing them, and condemning humans to have to work hard to acquire food and other good things. Of course, the theme is scarcity: the relation between the wants and needs of humans relative to the available resources to fulfill them. Medema nicely ties scarcity to the origin of economics, by pointing out that the organizational context within which we originally fulfilled our needs and wants — households (oikos) and custom/law (nomos) provide the etymological origin of economics. Confirmation comes three entries later with Xenophon’s Oeconomicus. Another three entries and we have traveled 1900 years to Aquinas, noted for both his consideration of justice in exchange and for the common early concern about usury. Another thirty-one entries later and we’re up to 1776 and the publication of The Wealth of Nations. With five entries devoted directly to themes from Smith’s great work, we are left with just slightly more than two hundred entries for the remaining two hundred and thirty-three years until 2009, the date for the final entry, on Cryptocurrency.

Many will be happy to see Adam Smith remain “both the Adam and the Smith of systematic economics” (Boulding 1969, 1) with more than double as many mentions (approximately thirty) as any other author. Those who follow include David Ricardo and Paul Samuelson with twelve, Robert Malthus and Maynard Keynes with ten, and Alfred Marshall with nine. You might be interested to know that Karl Marx just edges out Milton Friedman (six to five mentions). There are thirty-two entries on specific texts in economics: not just Smith’s The Wealth of Nations, Mill’s Principles of Political Economy, Marshall’s Principles of Economics, and Keynes’ The General Theory. Texts from alternate traditions find their space here: Marx’s Das Kapital, Luxemburg’s Accumulation of Capital, Veblen’s Theory of the Leisure Class, Berle and Means’ The Modern Corporation and Private Property, Hayek’s Road to Serfdom, Galbraith’s The Affluent Society. I could go on with various combinations of entries, but you can do that yourself. I might add that Medema’s “Notes and Further Reading” at the end of the volume is worth consulting for the references, and those interested in using the entries in economics or history of economic courses should see his website at Duke: https://sites.duke.edu/sgmedema/files/2019/11/The-Economics-Book_NOTES_10_31_19.pdf.

The treatment of each theme is wonderfully done, although as we get closer to today’s economics, the entries collapse the work of several scholars into one general treatment. While this is generally done effectively, some of the potential disagreements and differences are masked. Historical perspective is, of course, lacking on work done in the past several decades. But couldn’t that historical perspective allow older authors to be combined as well: why not Hesiod or Aristotle with Xenophon, for instance? But these are small complaints in a generally excellent volume.

But we should ask what might be missing? I’m sure Medema could give me a list of his next fifty items, and he probably had to make hard choices, given the range of the types of entries the volume includes. Here are my next ten suggested entries, listed in chronological order: 1841 — Das Nationale System der Politischen Ökonomie (F. List)*; 1850 — The Broken Window Fallacy (F. Bastiat); 1933 — The Chicago Plan (H. Simons); 1957 — Technological Change and the Diffusion of Innovations (date based on “Hybrid Corn: An Exploration in the Economics of Technological Change”) (Z. Griliches); 1969 — The Nirvana Fallacy (H. Demsetz), 1974 — World System Theory (I. Wallerstein)*; 1979 — Transaction Cost Economics (O. Williamson); 1984 — The Economics of Religion (L. Iannaccone); 1999 — Development as Freedom (Amartya Sen)*; and 2011 — Field Experiments (E. Duflo and A. Banerjee)*.

Does the book serve a useful purpose other than adorning the coffee-tables of economists’ homes and departmental offices? The price tag keeps the book well inside the range of supplemental texts for history of economic thought courses. One could enliven and enrich discussion with selections from The Economics Book in an introductory level economics course. Dare I say that students might connect better with introductory economics with the judicious addition of readings and short assignments based on the book? Reading through it reminded me of not only the great hits of economic thought, but also of all the ways economics is connected to the issue we humans face every day.

* The asterisked items are one that expand upon the single entry on “Development Economics” that Medema uses to collect the work of several scholars.

Reference:

Boulding, Kenneth E. 1969. “Economics as a Moral Science.” American Economic Review 59 (1): 1–12.

 

Ross B. Emmett is the author of “Reconsidering Frank Knight’s Risk, Uncertainty, and Profit” (The Independent Review, 2020).

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