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A Translation of Modern Economics

By David R. FrancisDavid R. Francis is a financial columnist for the Monitor. / March 6, 1990



NEW IDEAS FROM DEAD ECONOMISTS: AN INTRODUCTION TO MODERN ECONOMIC THOUGHT by Todd G. Buchholz, New York: New American Library, 321 pp., $19.95

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WHEN Todd Buchholz was teaching a section of the introductory economics course at Harvard University, he was selected from the 30 other teachers of the course to receive an annual prize for outstanding teaching. His ability to be clear and interesting makes this a most readable book.

The first 30 or 40 pages come across as somewhat collegiate, sprinkled as they are with often-heard jokes on economics (which may be new to college students or those fresh to the subject) and some rather silly imaginary anecdotes meant to make a point. The effort to be bright and entertaining in dealing with what has been called the ``dismal science'' seems strained. But then Buchholz warms up. The humor and wit become more natural, the anecdotes more fitting.

The title of the book, of course, comes from the famous final passage of John Maynard Keynes 1936 masterpiece, ``The General Theory of Employment, Interest and Money'': ``[T]he ideas of economics and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.''

That is about as good a reason as any for a concerned citizen to be aware of the ideas of economists. Buchholz's book offers a basic knowledge of modern economics by reviewing the work of the world's greatest economists, from Adam Smith to Milton Friedman and beyond. By tossing in some information and stories about these personalities, the book becomes more juicy, less dry.

The author manages mostly to avoid the jargon and mathematics of economists. He ties old theories into present experience, making them relevant. He shows great common sense. He is not doctrinaire, nor, as far as one can tell, an adherent to any special school of economics. He is probably an ``eclectic'' economist, sweeping up ideas from the Keynesians, the monetarists, the supply-siders, and so on. That enables him to be relatively fair in dealing with theories that are often not only controversial among academic economists, but key elements in international and domestic political debates. His basic purpose is to teach economic history, not to impress his academic colleagues. Thus he uses short sentences and clear writing to explain what can be complex ideas. In short, this is a first-class book.

Buchholz has chosen to focus on Anglo-American tradition, with Karl Marx fitting into that slot, perhaps because of Marx's research and writing in Britain. This omits many brilliant economists. Nonetheless, that focus does cover the bulk of the world's most influential economists, either dead or alive. His chapters cover Adam Smith, Thomas Robert Malthus, David Ricardo, John Stuart Mill, Marx, Alfred Marshall, the ``institutionalists'' such as Thorstein Veblen and John Kenneth Galbraith, Keynes, Friedman and other monetarists, the Public Choice School including Nobel Prize-winner James M. Buchanan, and the advocates of ``rational expectations,'' especially Robert Lucas and Thomas Sargeant.

Buchholz reviews the intellectual battle from the 1950s through the 1970s between the neo-Keynesians, with their emphasis on fiscal policy, and the monetarists, who revived a recognition of the importance of money. He concludes that the struggle ended in ``a tie.'' That means economic policymakers must pay attention to both fiscal and monetary policy in their analysis of the economy - ``an automobile with four pedals - two accelerators and two brakes!''

Like many intellectuals, Buchholz laments the shortcomings of television in dealing with complex ideas. ``Good economics does not do well in fifteen-second `sound bites,' as media pros call them.''

In his final few pages, Buchholz tosses around some thoughts on the modern economy. One of them: ``Despite the lonely cries of extremists, we have learned that governments are not necessarily evil or good. They are neither saviors nor satans, although their policies at times have salvific or satanic consequences.''

Through a better knowledge of economics, an informed public can keep better tabs on the quality of many such government policies.