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New Ideas From Dead Economists: An Introduction to Modern Economic Thought

Book Review

June 1, 1990


David Levy Vice President

New Ideas From Dead Economists: An Introduction to Modern Economic Thought

By Todd G. Buchholz
New American Library

A friend who teaches computer science once compared his teaching experiences at a large university to a smaller, liberal arts college. After introducing a new concept at the university, the most likely question from his technically oriented students was, "Will this be in the final examination?" When the same concept was introduced at the liberal arts college, the student reaction tended toward, "Interesting, we were just discussing something similar in history," or "That reminds me of yesterday's classics lecture."

Without a doubt, Todd Buchholz's New Ideas from Dead Economists will hold little appeal for the students on a straight line to their trade, and the opposite for whose who are learning to integrate the great ideas, like the students at the liberal arts college.

Of course, New Ideas from Dead Economists should interest an audience beyond the campus. As an entertaining account of the world's renowned economists' lives and ideas, it's the perfect book for a long plane ride or a weekend at the lake. Having done that, you would have responded to Lawrence Summers' imperative: "If you read one economics book this year, read this one.

Buchholz hopes his witty and substantive history of economic thought will compete successfully with Heilbroner's The Worldly Philosophers, and by doing that, he will have created the basis for a many-editioned annuity for himself.

Indeed, Buchholz has improved on the Heilbroner standard. New Ideas from Dead Economists follows the format of introducing the celebrated figures from the history of economic thought, telling briefly about their lives and the social and intellectual environment in which they found themselves, and then examining their ideas on the economy as they evolved. That examination usually extends to contemporary issues and reminds us that we've struggled with many of the same problems century after century.

Clearly, New Ideas is more readable than The Worldly Philosophers, due directly to the humorous examples that are liberally scattered throughout the chapters. Even Gilligan's Island from "popular culture" is used to demonstrate, uninsultingly, an otherwise complicated economic idea. It's rare and a pleasure to chuckle through anything economic.

Yet another agreeable aspect of New Ideas is that Buchholz sets the history of economic thought in the larger context of general intellectual history. His appreciation for and knowledge of the humanities is convincingly evident, and even though Buchholz claims the professions of economist and lawyer, he still has an obvious, impressive command of "high culture." In the chapter "The Stormy Mind of John Stuart" he weaves the biographical sketch by referring to Isaac Newton, Jeremy Bentham, Plato, Xenophon, Diogenes, Aristippus, Friedrich Nietzsche, Mozart, Puccini, Wordsworth, Coleridge, Auguste Comte, Hobbes, Max Weber, Alexis de Tocqueville, Beethoven, Michelangelo and Jimmy Durante.

Most every reader should find points of interest in the book. Naturally, the parts about the Federal Reserve captured my attention. Only a few pages into the introduction we learn that, "Most of our presidents have shown little grasp of economic principles. John F. Kennedy once admitted that the only way he could remember that the Federal Reserve Board controlled monetary policy, not fiscal policy, was that Chairman William McChesney Martin's name began with the letter 'M.' Apparently Kennedy couldn't have appointed Volcker or Greenspan to the post."

Another portion of New Ideas deals with the Rational Expectation school of thought. That chapter is germane to us at the Minneapolis Federal Reserve because the now well-known intellectual earthquake had its primary epicenter in our bank's Research Department. Rational Expectations is appropriately placed as the last chapter in the time line before the general summary.

In the chapter I favored on Adam Smith, Buchholz poked fun at people who wear/wore Adam Smith neckties. I could have been personally insulted, but knowing that it was intended as tongue-in-cheek, I took no offense. In fact, Buchholz at one time sported his own Adam Smith necktie. He abandoned it not because he no longer subscribed to the ideas it symbolized, but for aesthetics. Too much polyester.

Speaking with economists about the book, I learned that the history of economic thought is nearly extinct in the course of study for would-be economists. They say it's because only limited time exists to master the ever more complex tools of the trade. The sooner the students get to the high level mastery of technique, the sooner they are marketable. Knowing the history would be a nice touch, but just not that important. The focus is exclusively on the current debate.

It seems a pity. And one wonders, after reading New Ideas, if the intellectual giants who generated the great economic ideas didn't have at least one thing in common: a command of their own history. Perhaps, in addition to an active interest in the current debate, that's an essential requirement to rise above all the other technicians.

At any rate, if Buchholz finds time to write another book and he wants a more technical, non-historical appeal, then he need only change the word order of his title. It could be Dead Ideas from New Economists.