Skousen The Big Three in Economics - Smith, Marx, Keynes (Sharpe, 2007)
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The BIG
THREE in
ECONOMICS
OTHER ACADEMIC BOOKS BY MARK SKOUSEN
The Structure of Production
Economics on Trial
Dissent on Keynes
(editor)
The Investor’s Bible:
Mark Skousen’s Principles of Investment
Puzzles and Paradoxes in Economics
(co-authored with Kenna C. Taylor)
Economic Logic
The Power of Economic Thinking
Vienna and Chicago, Friends or Foes?
The Compleated Autobiography by Benjamin Franklin
(editor and compiler)
The BIG
THREE in
ECONOMICS
ADAM SMITH
KARL MARX and
JOHN MAYNARD KEYNES
MARK SKOUSEN
M.E.Sharpe
Armonk, New York
London, England
Copyright 2007 by Mark Skousen
All rights reserved. No part of this book may be reproduced in any form without written permission from the publisher, M.E. Sharpe, Inc.,
80 Business Park Drive, Armonk, NewYork 10504.
Library of Congress Cataloging-in-Publication Data
Skousen, Mark.
The big three in economics : Adam Smith, Karl Marx, and John Maynard Keynes / Mark Skousen.
p. cm.
Includes bibliographical references and index. ISBN-10: 0-7656-1694-7 (cloth : alk. paper) ISBN-13: 978-0-7656-1694-4 (cloth : alk. paper)
1.Economists—History. 2. Economics—Philosophy. 3. Economists—Biography.
4.Smith, Adam, 1723–1790. 5. Marx, Karl, 1818–1883. 6. Keynes, John Maynard, 1883–1946. I. Title.
HB76.S58 2007 |
|
330.15092’2--dc22 |
2006020466 |
Printed in the United States of America
The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences Permanence of Paper for Printed Library Materials,
ANSI Z 39.48-1984.
~
BM (c) 10 9 8 7 6 5 4 3 2 1
Dedicated to
The Big Three in my life, My editor, my friend, and my wife,
Jo Ann Skousen
Contents |
|
Introduction |
ix |
Photos follow page 104 |
|
Chapter 1. Adam Smith Declares an Economic Revolution |
|
in 1776 |
3 |
Chapter 2. From Smith to Marx: The Rise and Fall of |
|
Classical Economics |
46 |
Chapter 3. Karl Marx Leads a Revolt Against Capitalism |
64 |
Chapter 4. From Marx to Keynes: Scientific Economics |
|
Comes of Age |
105 |
Chapter 5. John Maynard Keynes: Capitalism Faces Its |
|
Greatest Challenge |
133 |
Chapter 6. A Turning Point in Twentieth-Century Economics |
163 |
Chapter 7. Conclusion: Has Adam Smith Triumphed Over |
|
Marx and Keynes? |
191 |
Bibliography |
219 |
Index |
231 |
About the Author |
243 |
vii
Introduction
Duringthepastthreecenturies,threeeconomistsstandoutasarchetypes, symbols of three distinct approaches to economic philosophy. In the eighteenth century, Adam Smith, a student of the Scottish Enlightenment, expounded a “system of natural liberty” (what we might term a liberal democratic order consisting of an unfettered market and limited government), and elucidated how a nation flourishes and advances the standard of living of its citizens. In the nineteenth century, the German philosopher Karl Marx attracted and inspired workers and intellectuals whofeltdisenfranchisedbyindustrialcapitalismandsoughtradicalsolutionstoinequality,alienation,andexploitationoftheunderprivileged. Finally, in the twentieth century, the British economist John Maynard Keynessoughttostabilizeacrisis-pronemarketsystemthroughactivist fiscal and monetary government policies.
The Pendulum and the Totem Pole
The stories and ideas of theseBigThree economists aretold in context of a larger history I have described in greater detail in The Making of Modern Economics. In the introduction to that work, I describe two possibleapproachestowritingaboutthelivesandideasofeconomists, what I term the spectral versus the hierarchal approach.
The most popular method of analysis I describe as a pendulum, by which historians place each economist somewhere along a political spectrum, from extreme left to extreme right. FigureA illustrates the pendulum approach used in many economics textbooks.
The Pendulum Approach to Competing
Economic Theories
Simple though it is, I see several problems with the spectral approach. First, it treats Karl Marx andAdam Smith as coequals, that is,
ix