The seminal history of classical political economy. I read this in November 2018 but I’m posting it before several others that I finished earlier precisely due to its foundational character.
I could try to lay out a synopsis of the whole thing, but it’s really just a chronological history of the biggest names in economics, and since I’m already so behind on these writeups, I’ll just note a couple of observations.
First, I found it interesting to note that the original Utopians were mostly members of the upper class:
It may strike us as odd that the idea of gain is a relatively modern one; we are schooled to believe that man is essentially an acquisitive creature and that let to himself he will behave as any self-respecting businessman would. The profit motive, we are constantly being told, is as old as man himself.
But it is not. The profit motive as we know it is only as old as “modern man.” Even today the notion of gain for gain’s sake is foreign to a large portion of the world’s population, and it has been conspicuous by its absence over most of recorded history…As a ubiquitous characteristic of society, it is as modern an invention as printing. (21-22)
I think it’s a good axiom that a book of political economy or theory of economics that doesn’t contain some form of the above is at worst mistaken, and if written anytime in the last 2 and a half centuries, dogmatic propaganda.
The Utopians were reformers of the heart rather than the head. Their heritage is to be found in the welfare ideals of the New Deal of Britain or Scandinavia rather than the ‘scientific’ conviction of the Russian Soviets…the ‘utopia’ was not merely a matter of idealistic ends; it was also a key to the means. For, in contradistinction to the Communists, these were reformers who hoped to persuade the members of the upper classes that social change would be for their ultimate benefit…Utopia-builders had existed since Plato but it was not until the French Revolution that they began to react to economic as well as political injustice…the Utopians wanted…a new society in which Love Thy Neighbor could somehow be made to take priority over the mean gouging of each for himself. (109-110)
Heilbroner seems to have been pretty much a lifelong socialist. I actually heard of this book reading the comment thread in an article on Reason, the Libertarian website, which talked about Heilbroner’s own struggles reconciling socialism with civil liberties. I found it interesting to contrast that view (overstated I believe by the libertarian author who cited it,) with the passage below in which he talks about the same issue from another angle:
…there was nothing inevitable in the physical sense about Marx’s vision. The Marxist prediction of decay was founded on a conception of capitalism in which it was socially impossible for a government to set wrongs aright; intellectually, ideologically, even emotionally impossible. The cure for capitalism’s failings would require that a government would have to rise above the interests of one class alone – and that, as Marx’s doctrine of historical materialism revealed, was to assume that men could free themselves from the shackles of their immediate economic self-interest. (150-151)
Bastiat, who makes a cameo here, is a darling of the libertarians. This was the first I’d heard of him, or at least the first summary of his writings I’d encountered. Heilbroner in this work doesn’t seem to regard him as seriously as some of his other interlocutors
[Bastiat] is a very small figure in the economic constellation…his function, it seems, was to prick the pomposities of his time; but beneath the raillery and the wit lies the more disturbing question: does the system always make sense? Are there paradoxes where the public and private weals collide? Can we trust the automatic mechanism of private interest when it is perverted by the far from automatic mechanism of the political structure it erects? (165-166)
The chapter on the American Gilded Age was illuminating, very similar conditions obtain today, on a global scale:
Very few of the heroes of the Golden Age of American had much interest in the solid realities of what underlay their structure of stocks and bonds and credits…US Steel…had real assets of some $682 millions, but against this had been sold $303 millions of bonds, $510 millions of preferred stock and $510 millions of common stock. The financial company, in other words, was twice as “big” as the real one and nothing more lay behind its common stock than the intangible essence of “good will.” In the process of creating these intangibles, however, J.P Morgan and Co. had earned a fee of $12,500,000, and subscription profits to underlying promoters had come to $50,000,000. Altogether it cost $150,000,000 to float the venture…for thirteen years steel rails were quoted at $28 a ton, whereas it cost less than half of that to make them. In other words, the whole gain in technological unification was subverted to the end of maintaining a structure of make-believe finance. (214-215)
plus ça change…
But there is a danger that in our system there will develop a new lower class that will not be lifted up on the general advance. The tenant farmers…the inhabitants of bypassed areas…the discouraged…families caught in the “culture of poverty” and above all the Negro, victim of decades of oppression that is not yet ended – all these fail to respond to the rise of the economy because they are not in the economy. Their poverty is social rather than economic. (268)
There are economists that say this today, but it’s not part of the political discussion in any meaningful way.
The question of whether private property is crystallizing into a kind of latter-day feudalism is obviously of prime importance for any appraisal of the future (271)
One of the things that most impressed me about this book (and the other work of Heilbroner that I picked up in response to it,) is its cool-headed and even-handed descriptions of the various schools here, (and considerations of the real problems, as he sees them, of social science in the other work.)
Heilbroner manages to keep his own biases and perspectives held back enough to grant a full and fair picture. In this day and age in US politics, when a ‘centrist’ is basically defined as ‘Republican, but cool with gays and abortions,’ can we even conceive of a centrist socialist?