The Past is a Better Guide to the Present Than Hopes for the Future

‘Sandwichman’ writes EconoSpeak (19 April) (‘Anals of the Economically Incorrect) HERE http://econospeak.blogspot.fr/2012/04/whats-mythology-for-anyway.html

“What's the Economy For, Anyway?: Why it's time to stop chasing growth and start pursuing happiness, by John de Graaf and David K. Batker, 2011. Bloomsbury Press.

“Here's something Sandwichman didn't know: "Hoover and Roosevelt (and their predecessors) had one thing in common. None entered office with a model or theory of how a national economy works.

Poor Adam Smith and the whole of political economy back unto the time of William Petty, when the enterprise was known as political arithmetick! Dr. Smith may have called his book Wealth of Nations but apparently it made no impression on the leaders of nations -- or at least on the presidents of one nation, the United States of America. They had no theory of how a national economy works. Not even an incorrect or misleading theory. None whatsoever.”

Comment

Authors of books who expect to impress ‘leaders of nations’ are likely to be disappointed, whatever the title of their books.  Adam Smith wrote his two books, 'Moral Sentiments', 1759, and ‘Wealth Of Nations’, 1776, for young students, some of whom might have aspired to become leaders of nations, and some of them certainly became politicians of some influence, but most did not reach such status.

 His books went through several editions up to his death in 1790, though both are still in print in various languages.  This looks impressive on one level, but far too few owners actually read what is in them, and most rely on quotations only, or not even that much.  Despite his non-readership, Adam Smith is a widely recognized name across the world.

I am surprised that Sandwichman expects “leaders of nations” to know something about “how a national economy works”.  I would be more than surprised that a leader of any nation knew how ‘a national economy works’.  I would be as surprised if any economist actually knew “how an economy worked”.  I would be beyond surprise if John de Graaf and David K. Batker knew how an economy works, especially given their focus on “happiness” as the appropriate objective for an economy, not GNP.

 I suppose these thoughts qualify me as “economically incorrect” though probably not in the sense meant by “Sandwichman”.  Economics is not a finished science; it’s an opinion, one of many opinions competing for attention.

Smith’s approach was more likely to produce better results than its alternatives.  It involved an historical method, called by his first biographer Dugald Stewart “conjectural history” (1793).  It studies the past, using the best information available, to form conjectures about how past events led to the present.  What happens is that each passing present provides knowledge about the approximate validity of earlier conjectures, thus sharpening better tools to arrive at better conjectures about successive presents.