Friday, March 11, 2011

In Memory of a Journeyman Economist

Paul Rubin posts (10 March 10) a moving account of the life of Jack Calfee (HERE) who died recently, aged 61. It is an account of what may be called, in the best traditions of our professional respect, the professional life of a journey-man economist, whose interests included advertising, markets for health, including pharmaceuticals, tort law. Follow the link for a biography of which any economist would be proud.

Jack Calfee, in Memoriam by Paul Rubin”

“The overarching theme of his research is that Adam Smith’s “invisible hand” works not only through prices, but also through information and through other subtle and non-obvious benefits of free markets.”

“In addition to his scholarly work Jack wrote innumerable policy papers and articles, and testified both before Congress and before regulatory agencies. Many of his policy articles appeared in AEI publications, but there were also op-eds in the many newspapers and magazines. Indeed, Jack’s final publication, an analysis of the costs of the Massachusetts health plan appeared posthumously in the Wall Street Journal, one of many publications in that newspaper.”

“everyone in America will be harmed because we have lost a wise and knowledgeable defender of the benefits of markets when they are under sustained attack.”


Comment
I have had no knowledge of Jack Calfee or his work before reading Jack Rubin’s account. He appears to have been a sound professional economist of whom it would have been a privilege to know, like several others whom I have met and grew to admire over the years, while stressing that I have not always agreed with them all professionally. The Republic of Letters is people by many citizens with whom we have our mutual professional differences – but these always should and must be separate from our admiration and love (a too rare ingredient of appreciation) of them.

Paul Rubin’s appreciation of Jack Calfee included this sentence:

“The overarching theme of his research is that Adam Smith’s “invisible hand” works not only through prices, but also through information and through other subtle and non-obvious benefits of free markets.”

I would agree with much of the sentence – and would have conveyed such a thought to Jack Calfee direct if I had known him – with a caveat on behalf of Adam Smith’s Lost Legacy.

Yes, markets are guided “through prices”, always the most visible aspect of markets, and yes they are also guided “through information and through other subtle and non-obvious benefits” and I would hope that more economists could be seen to emphasise that truth in their work.

But that does not account for Smith’s use of the 17th and 18th-century popular “invisible hand” metaphor, which was not applied to “markets” or “prices” by Smith and neither were his two uses of the invisible hand metaphor about the “benefits of free markets” in general (even remotely). There is a legitimate doubt about whether Adam Smith related the metaphor to markets at all.

This is the modern conundrum that has arisen from inventing a wide role for a ‘significant and more interesting” metaphor to suit modern thinking (and it must be said, including certain extreme ideologically motivated views of markets), which also rests on the shaky foundations of mis- (and non-reading) of Smith’s careful words. Alternatively, we could say, applying another metaphor used by Adam Smith, that the modern notion of the invisible hand is ‘suspended on the Daedalian wings’ of a post-late-19th-century literary inventions rather than the limited historical accuracy of the original context in either Moral Sentiments or Wealth Of Nations.

Jack Calfee appears to have done a great deal of interesting and useful work on regulated markets in modern North America, for which he should be rightly remembered. WE should bear that in mind in the coming weeks.

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