a blog

by Josh Nicholas

The giants of economics were humans, too.

Grand Pursuit by Sylvia Nasar is a tough book to describe. I've alternately been calling it a series of economic biographies, and a sweeping history of political economy. The blurb refers to it as a "survey" of the characters that shaped economics.

I'm not sure any of these really get at what makes it so wonderful.

Nasar, who previously wrote A Beautiful Mind (which is not only a great movie but a fantastic book), has weaved together both the lives and ideas of the giants of economics. From Malthus and Riccardo, right up to Amartya Sen.

The first third of the book is straight up biography. Of Marx, Marshall, Webb, Fisher and Schumpter. Each chapter it's own little world.

Nasar beautifully builds a story of progress, of theory and worldview. From a world of harsh limits to entrepreneurial magic, from zero to positive sum, and back, from theories that resembled simple mechanics, to intricate and complex biology.

But it's the little vignettes of their lives that really make the book pop.

"Marx never did step outside. He never bothered to learn English well. His world was restricted to a small circle of like-minded émigrés. His contacts with English working-class leaders were superficial. He never exposed his ideas to people who could challenge him on equal terms. His interaction with economists... whose ideas he wished to demolish, was nonexistent... Astonishglingly for the best friend of a factory owner and the author of some of the mos impassioned descriptions of mechanization's horrors, Marx never visited a single English factory - or any factory at all until he went on a guided tour of a porcelain factory near Carlsbad, where he took the waters toward the end of his life."

These little glimpses, the events that shaped their focus and reactions, really ground ideas that often feel abstract. They explain the blind spots and short sightedness that can be maddening in retrospect. These were people, not robots, whose theories and ideas were born out of lived experience and necessity.

"From the age of eight, he commuted daily by omnibus, ferry, and foot through the most noxious manufacturing districts and slums bordering the Thames. Marshall had been looking into the faces of poor people all his life."

Another thing you can't fail but notice is the sheer fortune. That, until Sen, they were exclusively white. And almost all were either independently wealthy or married into it.

"Beatrice's identity was shaped by having been born into Britain's "new ruling class," and her mind by having been "brought up in the midst of the capitalist speculation" and "the restless spirit of big enterprise." As the historian Barbara Cain notes, Beatrice distinguished her class not by wealth but by the fact that it was "a class of persons who habitually gave orders, but who seldom, if ever, executed the orders of other people."

In the second and third parts of the book, the narrative switches. Rather than characters in self-contained chapters, the story hinges on the big events of the 20th century - the world wars, the depression, the rise of international institutions and decolonialism. Characters weave in and out of the narrative, based on their links, intellectual and personal, to events and each other.

"World War 1 destroyed globalisation, disrupted economic growth, severed physical, financial, and trade links, bankrupted governments and businesses, and led weak or populist regimes to rely on desperate measures that were supposed to head off revolutions but just as often hastened them. When the war was over, the victors as well as the vanquished were crippled by colossal debts and subjected to vicious attacks of inflation and deflation."

Against this backdrop some of the magic and mystery of their ideas disappears. Joseph Schumpeter, for instance, is widely lauded nowadays for "creative destruction" and an emphasis on entrepreneurialism. But this seems less like a flight of genius and more a position of necessity when you consider he was the Austrian finance minister in 1919.

The country had been devastated by war, stripped of empire, and was faced with a blockade and dwindling reserves. With few resources at his command, it's understandable Schumpeter put his faith in an X factor.

"[Schumpeter] believed that a shrunken Austria had the means to recover economically. His deepest conviction was that nations' resources matter less than what they did with what they had. As long as entrepreneurs were allowed to create new enterprises, the financial system was functioning efficiently, and there were not too many barriers to trade, society could regenerate itself. He rejected the popular assumption that economic viability depended on vast territories, huge populations, and natural resources."

Of course the elephant in the room here is Keynes. But he, too, gets brought back to earth with stories.

"For most of his twenties, Keynes was Britain's resident expert on obscure currencies. Thinking about currencies got him into the habit of thinking about economies holistically instead of focusing on "trade" or "labor" or "industry" in isolation, and taught him how to draw salient conclusions from a handful of indicators. It also gave him a feeling for which government actions exerted systemic effects, like those of the moon on tides, instead of effects on a particular industry or group.

None of this should take away from their brilliance. But it's refreshing to get away from economics as received wisdom, or mathematical laws of nature, and into a world of messy identity and politics. Grand Pursuit is undoubtedly one of the best economics books I've ever read.