They don’t make economists like they used to

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I’ve finished reading Will Baumol’s (1952) Welfare Economics and the Theory of the State. It’s a short and seriously impressive book, essentially pointing out that if you assume individuals do not either influence each other’s preferences or affect each other’s profits then you conclude that individual maximization delivers the most efficient outcome and the role for the state to restrict or co-ordinate activity is minimal. The laissez faire argument is inherently circular. However, social influence on preferences is pervasive, production by individual firms is interlinked when there are any economies of scale, and externalities in production and consumption are common. The book anticipates – briefly – much of the work done in the following decades in social choice theory, public choice, and Ostrom-style institutional political economy.

What makes it all the more impressive is that (a) it was Baumol’s PhD thesis and (b) he had read historical works including those in French and German – the book cites Petty, Say, Bastiat etc. He apologizes for not being able to read Italian. Clearly, Baumol was exceptional even for his time and surely was a serious miss by the Nobel committee; but I can’t imaging today’s PhD students ever dreaming of looking at any ‘history of thought’ texts, or (at least for the Anglophones) thinking it might useful to have a foreign language. They don’t make economists like they used to. Reform of the undergraduate curriculum has real momentum now (at least outside the US); time to turn our attention to the graduate courses?

6 thoughts on “They don’t make economists like they used to”

  1. He’d also started his publishing career well before finishing his PhD. His article that I know best is a short piece from the 1946-7 volume of the Review of Economic Studies.

    (Economists do live a long time.)

  2. As you go back in the past you lose more of the detail because the records are either not there or if at all long buried in an archive. I recently read a book about Captain Cook’s vessels, the writer looking at their history. Inevitably, he needed to study what was known about ship ownership and use in the 18th Century. It dawned on me that the extent and nature of water transport in that period seem to have been largely forgotten reduced to to general statements and the recent dominance of interest in one sector, the slave trade, a minority activity. One implication is that what the “economists” of the period were thinking and what was actually happening are in two different worlds.

  3. Mainstream economists have little incentive to reform undergrad curriculum. After all, they have been teaching and producing that sort of stuff all along. For those folks, a minority in the profession, who do want to change, they are under pressure from the majority–if you do not conform, you get ostracised or miss the opportunity to get promoted. I am a PhD candidate in economics, I realised that either I conform or leave academia. Since I am really skeptical of the sort of research they are doing, I have decided to leave. So this is a vicious spiral. But I am happy a lot of creative stuff is going on outside the academe.

    • The undergraduate reform is happening, if a bit slowly. I know PhD candidates can feel like they’re jumping through hoops with their dissertations in terms of what’s considered the norm; combined with how tough it is to get an academic job and then promoted, this is not a happy situation.

  4. My favorite piece of Baumol trivia comes from his principles text: he taught wood sculpture at Princeton.

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