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Laissez-Faire , No. 33 (Sept 2010): 54-57

Adrián Ravier

When Giancarlo Ibarguen asked me togive a lecture on the importance of histo-ry of economic thought in education, thefirst thing I thought was, “Who couldever argue that it was not important?”

Which reminded me of a post in the

personal blog of Gregory Mankiw, theauthor of Principles of Economics , a text-book that has sold over a million copiesin seventeen languages. Mankiw repliedto a student who had requested his opin-ion about Human Action , a treatise oneconomics written by Ludwig von Misesand published in 1949. His answer wassincere: “I have not read the book.” Eventhough he had not read the book hesomehow tried to justify himself by im-mediately adding: “Things written more

than twenty or thirty years ago are usuallyassumed to be irrelevant.” 1

Gregory Mankiw and the Whig Theoryof the History of Science

I think what Mankiw meant by thisstatement is that relevant theories andideas are already incorporated into thebody of knowledge to be passed along tograduate students in economics.

It turns out, then, that Mankiw seemsto be a defender of the Whig Interpre -

1See Gregory Mankiw, Austrian Economics ,in Greg Mankiw’s Blog (April 3, 2006).

tation of History 2 that counts among itsmain proponents at least two Nobel prizewinning economists: Paul Samuelson 3 and George Stigler. 4 The conceptions of those economists fit exactly the descrip-tion of what Murray Rothbard called inthe introduction to his History of Eco-

2As originally outlined by Herbert Butterfieldin 1931. See Herbert Butterfield, “La inter-pretación Whig de la historia,” in Miguel deAsúa (ed.), La historia de la ciencia: Funda-mentos y transformaciones (Buenos Aires:CEAL, 1993), pp. 125-33.

3Paul A. Samuelson, “Out of the Closet: AProgram for the Whig History of EconomicScience,” History of Economics Society Bul-letin , 9 (1987): 51-60, and “Keeping Whig

History Honest,” History of Economics So-ciety Bulletin , 10 (1988): 161-67.

4George Stigler, “The Process and Progressof Economics,” Journal of Political Econo-my, 91 (Aug 1983): 529-45.

Adrián Ravier (aravier@ufm.edu) obtained hisPh.D. in Applied Economics from the Univer-sidad Rey Juan Carlos (Madrid), and is aVisiting Professor at the School of Business,Universidad Francisco Marroquín (Guate-mala). This article is adapted from a paper

presented at the annual meeting of theAssociation of Private Enterprise Education(APEE), Guatemala, April 5-7, 2009. Theauthor wishes to thank Giancarlo Ibargüen forinviting him to participate in the panel titled“Capitalism and Education” that he personallycoordinated.

The History of Thought in the Education of

an Economist

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nomic Thought “the Whig theory of thehistory of science,” that is, the belief thatmodern economists have read, assimilat-ed and integrated the whole body of knowledge elaborated before them, andtherefore the evolution of science always

follows an ascending, progressive andlinear course.

This “continual progress, onward-and-upward approach was demolished for meand should have been for everyone,”Rothbard explained, “by Thomas Kuhn’sfamed Structure of Scientific Revolutions .Kuhn paid no attention to economics, butinstead, in the standard manner of philos-ophers and historians of science, focusedon such ineluctably ‘hard’ sciences asphysics, chemistry, and astronomy.” 5

In a few words, Kuhn—who talkedabout science in general but who neverseemed to take note or be even aware of differences between natural and socialsciences—explained that science does notnecessarily follow a progressive and up-ward course. The far more common stateis rather to maintain and reinforceemerged paradigms, even though theoret-ical degeneration and staleness are themore likely outcomes.

Following Kuhn’s line of thought,Rothbard reached a similar conclusion:“For it becomes very likely that, ratherthan everyone contributing to an ever-progressing edifice, economics can andhas proceeded in contentious, even zigzagfashion, with later systemic fallaciessometimes elbowing aside earlier butsounder paradigms, thereby redirecting

economic thought down a totally errone- 5Murray N. Rothbard, History of EconomicThought , vol. 1, Economic Thought Before

Adam Smith (Aldershot, England: EdwardElgar, 1995), p. 24.

ous or even tragic path. The overall pathof economics may be up, or it may bedown, over any given time period.” 6

Natural Sciences versus Social Sciences

It is not necessary to repeat here the simi-larities and differences that a great manytheoreticians of the Austrian School haveidentified between physics, chemistry orbiology on the one side and economicscience, on the other.

What I would like to add is that evenwhen the theoreticians of natural sciencesare well-versed in the philosophy of sci-ence or in the history of scientificthought, they are not used to the study of the evolution of ideas through their origi-nal sources. A modern physicist can safe-ly assume that a modern textbook or trea-tise on physics will include the most im-portant past and present advances of hisfield. It is for this reason that in physics itis usually not necessary to expect thereader to be acquainted with originalsources.

Why then, in economics, are we in-clined to go to the original sources? Caneconomists trust that the author of a mod-ern book or treatise on economics, likeMankiw, has assimilated and integratedall the essential knowledge previouslyavailable? 7

I think the answer is no, and the histo-ry of economic thought has plenty of ex-amples where interpretations are so con- 6

Ibid .7In the same vein: Can we believe that PaulSamuelson was right when he said, in 1988,that “my graduate students do know morethan Ricardo and Marx”? (“Keeping WhigHistory Honest,” p. 165).

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fusing that one simply cannot trust theinterpretation of a third person and usual-ly has to turn directly to the source.

Take the case of the famous “Say’sLaw,” which was at the heart of classical

economics until John Maynard Keynes’sGeneral Theory of 1936. It can be shownthat the Keynesian reading of Say is ei-ther wrong or misleading or both. JuanCarlos Cachanosky made a convincingcase that Keynes may have never readSay himself. His understanding of Saycame from reading John Stuart Mill. 8 It isimportant to remember that Keynes didnot quote Say even once when rebuttinghis famous law of markets, which itself isa good reason to doubt Keynes’s know-ledge of classical economics.

In the same sense, how many differentreadings do we have of Keynes’s work?The neoclassical synthesis is one of manybut does it really summarize his ideasadequately? The most orthodox followersof Keynes suggest that it does not. Shouldwe advise our students then, not to readthis original text that was written over 60years ago?

I think the answer is again a clear no.In economics, research is fundamentallydependent on the interpretation of origi-nal texts for several reasons. 9

8See Steven Horwitz, “Say’s Law of Markets:An Austrian Appreciation,” in Steven Kates(ed.), Two Hundred Years of Say’s Law: Es-says on Economic Theory’s Most Controver-

sial Principle (Northampton, MA: EdwardElgar, 2003), pp. 82-98.

9The interpretation of texts is also essential inthose sciences that Rothbard before called“hard.” The critical point is that they are notas “hard” as people used to think.

Mathematical Formalization versusVerbal Logic

One avenue of escape for those who, likeMankiw or Samuelson, accept the Whigtheory of the history of science is to argue

that different or even opposing interpreta-tions of writers such as Say or Keynes isdue to the verbal method of exposition.Both Say and Keynes wrote in prose,which for the practitioners of mathemati-cal formalization lacks rigor and can easi-ly fall prey to pervasive ambiguity of exposition.

Thus, according to physicists andmathematical economists, mathematicalformalization avoids multiple interpreta-tions and forestalls confusions while ide-as expressed and discussed in a merelyverbal logic clearly do. When the theoret-ical findings are expressed mathematical-ly it is easier to pass them on, to check them and rebut them through an experi-ment. Mathematical logic and experimen-tation, according to this view, contributedenormously to major breakthroughs andsuccesses in science.

This is probably why Samuelson as-sures us that “[i]nside every classicaleconomist is a modern economist tryingto get out,” identifying a “modern econ-omist” as one that uses modelling andmathematical formalization. 10 Next, heclaims that “it seems to me that with alittle midwifery sleight of hand, one can

10Following the same line, as Winch pointsout, in the 1950s and 1960s Samuelson evenwent so far as to claim that economists who

were unable to follow the mathematical revo-lution after World War II were the ones whotook refuge in the history of economicthought (Donald Winch, “Intellectual Historyand the History of Economic Thought: APersonal Account,” History of Economics

Review , 50 [Summer 2009], p. 4).

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extract from Adam Smith a valuablemodel.” 11

Samuelson’s neoclassical synthesis isa case in point. His interpretation of Keynes’s message, though mathematical-

ly rigorous and (probably exactly for thisvery reason) quite popular, is by nomeans without its fair share of controver-sy. In my opinion, the dominance of mathematical formalism has a significant-ly adverse bearing on economics becauseit condemns it to static models of equilib-rium, where the unreality of the assump-tions leads us to study a world whichdoes not exist.

Economics versus Political Economy

Significantly, Mark Blaug, a well knownhistorian of economic thought, made thepoint, contrary to Samuelson, that eversince economics became an independentscientific discipline, two different trendshave lived in it: on the one side, thosewith mathematical inclination, and on theother side, those with a philosophicalspirit. 12

We think the first group represents Economics , attracted by mathematicalformalization, experimentation and theuse of econometrics. The second grouprepresents Political Economy , attractedby political philosophy and the need to goback to the history of economic thinking

11See Paul A. Samuelson, “A Modern Theo-

rist’s Vindication of Adam Smith,” American Economic Review , 67 (Feb 1977): 42-49.

12See Mark Blaug, The Methodology of Eco-nomics (Cambridge: Cambridge UniversityPress, 1990), Chapter 3.

for important but lost insights. 13

Final Reflections

In concluding, let us go back to the initial

question: Should the history of economicthought play an important role in the edu-cation of an economist? It depends. If thestudent wants to be a technocrat, publish-ing articles in the most prestigious aca-demic journals and be in the mainstream,possibly for him the history of economicthought would be a waste of time. In-stead, it would probably be more helpfulto learn matrix algebra, mathematicalanalysis and econometrics. But if the stu-dent wants to become a serious thinkerand research real problems that still re-main unresolved, then there is no otherway than to spend considerable time andeffort on research in the evolution of ide-as.

13Though Blaug would include in this grouponly Classical economists, we think that weshould add also the Austrian School of Eco-nomics, the School of Public Choice and the

New Institutional Economics. See M. Krause,G. Zanotti and A. Ravier, Elementos de eco-nomía política (Buenos Aires: La Ley, 2007),pp. vii-ix, and Ricardo Crespo, La economíacomo ciencia moral (Buenos Aires: Educa,1997), Chapter VI.