On Classical Economics

Of course, Sowell begins with Adam Smith. What is it about Quesnay and the physiocrats in general that disqualifies them from the "classical" period?

This is a good book, but you need to have a good understanding of economic thought before jumping in. Sowell is as good as it gets in trying to digest and simplify such material, but it took me a long time to get through it.

A very interesting read, but a lot of the terms weren't explained so this book isn't for people who don't know anything about economics.

It would be nice to have a succinct, clear explanation of the history of economic thought. This isn't that book. Sowell spends way too much time quoting the classical economists and jumping from topic to topic and date to date. It reminds me a little of a high school student's first attempt at writing a research paper. Instead of really taking the time to understand, organize, and summarize the material, Sowell seems to just regurgitate prior economists' written material in long strings of quotes. Here's a random excerpt from the bottom of page 70 to the top of 71, I quote at length within the brackets:

[The "intensity" of demand was defined as "the sacrifice which the demanders are able and willing to make in order to satisfy their wants. It is this species of demand alone which, compared with the supply, determines prices and values." The meaning of an increased demand in these terms was clear:

"Now this willingness, on the part of some of the demanders, to make a greater sacrifice than before, in order to satisfy their wants, is what I have called a greater intensity of demand. As no increase of price can possibly take place, unless the commodity be of such a nature as to excite in a certain number of purchasers this species of demand, and as this species of demand must always be implied whenever we speak of demand and supply as determining prices."

Samuel Baily phrased Malthus' theory even more directly in modern terms: "A disposition to give more for the quantity actually taken, or to buy more at the same rate" -- a shift outward of the demand schedule. Supply was similarly regarded by Malthus in schedule terms, as the "conditions of the supply," meaning the cost of production.]

Yes, that whole second paragraph was a block quote. That example illustrates the problem with so many quotes: it's impossible to follow the specific points being made, let alone the larger one. What the hell are any of those sentences actually saying? I found myself asking that question a lot.

Also, if 73% of a work is someone else's words, can it be considered original? There are 192 words in the excerpt above, 140 of them are from quotes. This example is by no means extraordinary. I'd be willing to guess that 40-50% of this entire book consists of Sowell cutting and pasting quotes from others. The other half is filler and set-ups to or explanations of the quotes. He also uses the exact same block quote on pages 85 and 123. He repeats another block quote on pages 29 and 116. Ridiculous and disappointing, especially from T-Money Sowell, one of my favorite authors.

The table of contents shows that Sowell starts with the classical economists' take on social philosophy, follows it with their views on micro and macro economics, then their methodology, and ends with random chapters on Sismondi, John Stuart Mill, and Marx, as well as a concluding chapter. It's so difficult to follow the layout even within a chapter that I won't retain much. This wasn't a project the author conceived, wrote, and published all in one effort--and it shows. This is more a jumbled collection of unrelated essays thrown together to fill a book. That approach is fine when each essay is discrete and unrelated to the others such as Sowell's much better "Controversial Essays". The problem arises when you try to pretend they are all related without any additional rewriting or tying-in of themes. Sowell salvages the effort somewhat with his final chapter in which he gives a summary of trends and themes. It is a welcome addition to this lackluster book because he avoids most of the quoting and uses his own words, which, as always, prove more than adequate.

Another major problem with this book is definitions and jargon. Apparently, few of the classical economists could agree on even some of the most basic and frequently used words such as revenue, demand, output, income, cost, and others. Richard Jones and Sismondi both deliberately did not give clear definitions to their words, I guess because they felt it limited their "inductive spirit" or killed the inquiry into the subject. So how is someone 200 years later supposed to understand what each author meant? It's difficult material and would be extremely time-consuming to sift through it all. Presumably, Sowell has spent a lifetime doing exactly that sort of sifting. Too bad he didn't deliver a concise summary of the definitions or topics. In fact, he directly contributes to the confusion! He discusses Say's Law 8 times before giving an explanation of the 6 major propositions involved with it. He never does give a layman's definition or take the time to explain its overall importance despite using the term literally dozens of times throughout the text. A "general glut" isn't explained until page 114 despite being used numerous times before that. "Hegelian" is never explained at all. I had to wikipedia it and learn about Georg Hegel on my own. Doesn't it make sense to explain a term when you FIRST use it? Sowell even admits that "classical" is a term without wide agreement. He defines it basically as the economists starting with Adam Smith and ending before Keynes; i.e. Smith is included, Keynes is not. It's the economists that rejected mercantilism and before the neo-classical or modern economists like Keynes. Without a common understanding of words, communication is nearly impossible. This book is filled with what Scientologists would call MU's (misunderstood words).

The jargon criticism isn't entirely Sowell's fault. It's a complicated subject with many different topics and issues. It is his fault that he didn't illuminate the subject well for casual readers. Only economic historians or those with an unusually devoted love of econ will enjoy this book or find it useful. To be fair, maybe if I read all the authors Sowell discusses or re-read this book, I might get more out of it. However, a cost/benefit analysis indicates to me that I should do neither.

Points that I learned as best as I can remember them:

1. The classical economists were by no means "conservatives". They challenged the orthodoxy of mercantilism often to their personal detriment.

2. The classical economists were generally for free-trade, classical liberalism, laissez-faire, and little government intervention.

3. Several of the classical economists were minorities. Adam Smith,
James Mill, John Stuart Mill, David Hume, and J.R. McCulloch were all Scottish at a time when "the whole wise English nation...will love to mortify a Scotchman." David Ricardo was of Jewish ancestry, and Jean-Baptiste Say was a Huguenot.

4. Say's law basically says that supply creates its own demand.

5. Mercantilism held that wealth was a fixed quantity throughout the world and that it was represented in gold. This encouraged mercantilists to insist upon a situation of net exports and that wealth was essentially competitive. This naturally led to a repression of wages, promotion of imperialism, and even slavery. Mercantilists only considered the wealthy or the property-holding classes when they spoke of a nation or wealth. They didn't consider the population at large. Adam Smith changed this conception into the one most people hold today, which is that a nation includes the population at large, and wealth refers to real goods and income.

6. Classical economists attacked slavery as a losing venture because it lacked the incentive of self-interest for the worker. Moreover, it focused on appropriating wealth instead of creating it. Smith believed that slave owners would only support it out of pride or some mental deficiency because it did not make sense economically.

7. Classical economists, particularly Smith, opposed deficit spending. They saw the heavier taxation made necessary by the large national debt as a disincentive to efficient production at home and a reason for some capital to move abroad. Ricardo and Smith both believed that deficit spending increased the danger of "wantonly" going to war. They both thought that if people had to immediately bear the full cost of war through taxes, there would be no (or at least much fewer) wars.

8. Nassau W. Senior started the shift from cost of production theories of value to utility theories of value. The latter is much more common today and holds that the marginal utility determines price.

9. Physics is a deductive science while chemistry is experimental. Economics is a combination of both. Group behavior is different than individual behavior, so one can't just study individuals and expect the same results from groups.

10. Malthus held that populations of people have a "tendency" to outpace subsistence or the food supply necessary to support the population. Tendency could have two possible meanings here. 1. Historical data reveals that populations actually do outpace subsistence. 2. It's theoretically possible that populations could outpace subsistence. Which did Malthus mean? Evidently he initially tried to claim the former. When empirical evidence contradicted this claim, he switched to the latter. (Maybe this is why some of these economists were loathe to clearly define their terms? It removes the wiggle room and makes some of their claims inaccurate.) And what does the latter really tell us? It's theoretically possible that populations could outpace subsistence, but many things are "theoretically possible." Admittedly, I haven't read Malthus, but this claim that is a non-claim seems worthless. In the movie "Expelled: No Intelligence Allowed" Ben Stein indicated that this type of Malthusian thinking was partially responsible for the holocaust.

11. Marx didn't think that capitalism would implode on itself from some major recession or economic failure. Rather, he thought that producers were always guessing at how much of which goods to supply and would inevitably guess incorrectly. This would lead to business cycles of increasing breadth (not depth or severity), and the working classes would finally revolt when their numbers were great enough.

12. The history of economics, like the history of ideas generally is shaped by great men, the masses, and circumstances. Sowell argues that some well-known economists contributed little to the lasting body of accepted knowledge while others, who contributed much original content are largely ignored. For example, Sowell says that Sismondi and Augustin Cournot are unfairly dismissed despite significant contributions way ahead of their times. John Stuart Mill and Karl Marx are much better known but contributed little or no lasting economic knowledge.

13. John Stuart Mill's "On Liberty" is widely misunderstood to be a call for general liberty for all men. Sowell believes it is more specific and elitist in that Mill urges liberty from social convention (as opposed to governmental legislation) for the greatest minds so that they can be free to explore and invent new ideas. They would then impress those ideas upon the masses.

14. Marx is widely misunderstood because few people take the time to understand him on his own terms. In other words, people don't fully appreciate the times in which Marx lived and the fact that he relied heavily on the Hegelian (from the German philosopher Georg Hegel) framework and logic. Words like "negation" and "contradiction" have very specific meanings for Marx that differ from our common understanding of them. Also, his three part "Das Kapital" builds on successive approximations. The assumptions he uses in vol. 1 are simplified, and he doesn't believe them to be true in reality. Vol. 3 contains all the complexities he believes exist in reality but it wasn't published until years after his death even though he wrote all three parts as a whole. One must read all of Marx to fully understand him, not just some parts.

15. John Stuart Mill was a prodigy and a genius. He was also devoted to Ricardo and an elitist. Sowell says, "He was like a track star running against the clock instead of against another track star. He was never pushed--either by the criticism or the competing theories of comparably able contemporaries--to reach his utmost potential." His own arrogance caused him to dismiss economists of his time who were toying with the idea of marginal utility. His stature in the field caused many to disregard the marginal utility economists for decades and delay the development of that theory. It would later re-emerge and gain acceptance while Mill and Ricardo's ideas would fall out of favor.

16. Marx's contributions to economics were limited. His appeal goes to something more primal or fundamental than reason. He is certainly an important figure, but not for his economic thinking, which empirically has not stood the test of time.

Memorable quotes:

"There cannot be a greater security for the continuance of peace than the imposing on ministers the necessity of applying to the people for taxes to support a war." - Ricardo

"Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it." - Adam Smith

"Yet, jarring as the phrase may be, from the standpoint of the economics profession Marx was, as Professor Paul Samuelson called him, 'a minor post-Ricardian.'"

"In the long run there are always people of comparable stature."

"Contributions depend not only on what was offered but also on what was accepted, and there is no major premise, doctrine, or tool of analysis in economics today that derived from the writings of Karl Marx."

"While free market economics is regarded by many today as an old conservative idea, it was in fact one of the most revolutionary concepts to emerge in the long history of ideas. For centuries, landmark intellectual figures from Plato to Machiavelli had discussed which principles wise thinkers might propose to guide personal, social, and political actions or which policies wise leaders might impose for the benefit of society in various ways...Even today, many have not yet grasped the full implications of self-equilibrating interactions or have not been able to accept the humbling thought that their own presumably superior wisdom and virtue might be superfluous, if not damaging."

Be careful of books published on university-labeled publishing houses!
Reviewed in the United States on March 2, 2019
Verified Purchase
I have read now, all told, probably about two dozen of Thomas Sowell's books-- and they were all very good.

That is, until this one.

I actually purchased the book about 8 years ago, and it sat on my shelf for all of that time.
I tried to pick it up once several years ago, and could not get interested after about 50 pages. The same thing happened all over again when I picked it up several years later.

This book is probably for somebody who has finished an entire degree in Economics at a reasonably reputable University - - and that means that he will have read some of all of the pantheon of dead economists that are discussed here. It may even be that it is for a master's-level student.

But, it is not for the intelligent public, and that is because these debates are just too esoteric and the authors have been dead for too long for most people to know anything about.

The label on which this book was published (Yale University Press) was a giveaway of how intensely boring it would be. I don't think I have ever come so close to PERISHING OF BOREDOM, and nary a book by this author have I put down without finishing it.

Had that I known that 8 1/2 years ago, when I first purchased this book!

Most of Thomas Sowell's books are published by Basic Books, and so he is a known quantity to them and a predictably well-selling author for them. It's a publishing house mainly aimed at the intelligent public-- People who may not have been trained in a given topic, but would like to learn more about it and are not opposed to reading about "smart stuff."

But, this book was too boring even for them. (I myself have a persistent dilettante's interest in Economics, but this book was not suitable for a person like me.)

Verdict: NOT recommended. This is the first Thomas Sowell book that I have EVER given that recommendation.

A walk-through of the history and development of classical economics. Enough said. Sowell has better books out there.

Not exactly a page turner but very educational though Sowell's Basic Economics is probably an easier read and better choice for most. I have no doubt that many political and governmental philosophies would quickly fall out of favor, having been exposed for the unsustainable frauds they are, if more people understood the fundamentals of basic economics.

I would recommend this book for anyone who believes that (or wonders if) increased taxation, whatever the justification, results in increased prosperity for a government or it's people.

"Economics is a study of cause-and-effect relationships in an economy. It's purpose is to discern the consequences of various ways of allocating resources which have alternative uses. It has nothing to say about philosophy or values, anymore than it has to say about music or literature."
— Thomas Sowell (Basic Economics: A Citizens Guide to the Economy, Revised and Expanded)

"“The fact that the market is not doing what we wish it would do is no reason to automatically assume that the government would do better.”"
— Thomas Sowell

http://pro-libertate.net/20110914/175...