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1. Introduction.
My talk today will be devoted to the history of economic thought. If a presidential address delivered at a meeting of economic theorists was to deal with the history of our subject, this would hardly come as a surprise. It would in all probability be considered a sign of good taste and a welcome opportunity for the speaker to display his erudition. It might also be seen ‘as an innocuous respite from pushing back the frontiers of economic knowledge’ (Winch, 1962, p. 193). And it would, last but not least, be an occasion to recall the advances of the younger generations of economists over and above the older ones and, more generally, to exemplify the ‘progress’ in economic analysis. Seen from the Olympian heights of modern economics our predecessors look like dwarves, still visible, though, but dwarves nevertheless. They populate deep valleys, where there is little light and much darkness. I hasten to add that this picture is, of course, a caricature and that I have myself attended talks at meetings of economists in which the heritage of the past was not belittled and there were no signs of complacency or even arrogance. However, I have also experienced the opposite and it seems to me that the overall trend points in this direction. Against this background, a talk on the history of economic thought at a meeting as this one makes one hear the alarm bells ring. Indulging in narcistic introspection must be motivated by a bleak future of the subject.
There are indeed signs of this sort and they have been with us for a long time. Historians of economic thought are an endangered species and their natural habitat – faculties of economics – are becoming less and less hospitable. The marginalization of the subject has been going on for quite some time. Yet there are conflicting signals. It was only last year that we were confronted with the shocking news that History of Political Economy (HOPE), a distinguished journal in the field, was being removed from the Social Science Citation Index (SSCI). Shortly afterwards we learned that beginning with 2005 another specialist journal in the field, The European Journal of the History of Economic Thought (EJHET), was to be be covered by the SSCI. And in late spring 2006 we were relieved to hear that HOPE was reinstated for full coverage. If I am not mistaken, then, this is the first time that two specialist journals in the history of economic thought, EJHET and HOPE, are being indexed. In a discipline in which indexation in the SSCI has almost become the proverbial golden calf around which the profession dances, it is a question of survival to be included or not. It affects especially our younger colleagues without whom there won’t be a future for our subject. With two journals getting coverage, the situation now is much rosier than it was. Nevertheless, for reasons that hopefully become clear in what follows, I would not recommend anyone who starts an academic career now to become only an historian of economic thought. It seems to me to be much safer to have a second leg in economics. Walking with two legs is not only more comfortable but also less risky than walking with only one.
The composition of my talk is the following. In Section 2 I begin with a short discussion of the aim of economics and the history of economic thought. Then, in Section 3, I summarize some arguments questioning the usefulness of the history of economic thought by our fellow economists. Next, in Section 4, I turn to arguments in defense of our subject. The following two sections are designed to exemplify the usefulness of our subject. The quick reader might immediately jump to the concluding section. The first example, in Section 5, shows that there is no presumption that contemporary economic analysis can always be counted upon to contain everything that is worth preserving from past ideas. The section deals with the work of someone whom Paul Samuelson rightly dubbed a ‘giant historian of economics’. It is argued that Piero Sraffa was not only this, he was also a giant of economic theory. It is the unique blend of the two qualities that constitutes his distinctiveness as a scholar. The section deals with Sraffa’s re-interpretation of ‘the standpoint of the old classical economists’. The second example, in Section 6, shows that contemporary economic analysis need not always involve an unambiguous advance compared with older views on a given matter. The case chosen is a widely appreciated contribution to ‘new’ growth theory by one of its champions (Romer, 1990). It is argued that from the point of view of the history of economic thought it may be regarded as an example of ‘recombinant economic analysis’. All the basic ideas underlying Romer’s analysis have been around for quite some time. What is new is the way in which each one is expressed and the manner in which they are combined. Put in a nutshell, what is new is the bold attempt to formalize them within the framework of intertemporal macroeconomic general equilibrium analysis. This comes at a price, and some might argue that the price is very or even too high. Most important, while the classical authors saw that a major problem that the theory of accumulation and income distribution has to deal with is that of a growing heterogeneity and diversity of means of consumption and means of production, neoclassical authors take pains to bypass this crucial problem in terms of quite remarkable assumptions. Section 7 concludes that economics is too important a subject to be left exclusively to our fellow-economic theorists.
As early as 1962 Donald Winch expressed the view that ‘The subject [of the history of economics] can only survive if it establishes itself on a firm and independent footing’ (Winch, 1962, p. 203) – independent, that is, from the economics profession. While I have some understanding of, and sympathy for, this view, I believe that there are strong reasons to try to regain lost territory within the profession. The following therefore contains some suggestions as to how this could perhaps be accomplished.
Before I enter into a discussion of the main argument let me point out that the subtitle of my talk derives from a paper by Michael Ruse on how Darwin’s The Origin of Species was received and his ideas developed. Ruse distinguishes between two trends, one ‘bad’, the other ‘good’. The bad one he traces back to Herbert Spencer who tried to make evolution into a doctrine of progress, from the weak to the strong and from the not so good to the better. The main representative of the good trend is said to have been Darwin himself, to whom evolution was ‘a directionless process, going nowhere rather slowly.’ (Ruse, 1988, p. 97) There is a question mark also to the subtitle of my talk, and while I have views on which directions to search for an answer, I do not pretend to be possessed of one.