We Are What We Read (I Think)

Mark Thoma and rjs sent me to Open Economics, where Kasey Dufresne provides English doctoral students' assessments of economics doctoral students' required reading:

I was talking to some English PhD students today, and when the conversation turned to economics they were dismayed to learn that no one in “top” economics departments ever read Marx, much less understood any of his theories. Then I was caught off-guard when I was asked, “so what thinkers do most students in economics programs read?” The student just assumed that we must read someone. But as far as I can tell, and the answer I gave, was “none.” The training of economists in the “top” programs does not entail any reading of books.

My first reaction was: top economics departments? You think this only applies to "top economics departments?" My second reaction was: you mean English PhD students understand Marx's theories? Could I get one of them to explain coherently the labor theory of value, please? Or if not explain it, point me to a reliable way of identifying the value of labor as opposed to the value of capital across all the production processes that exist today (under my naive assumption that incentives matter so there probably has to be some return to capital if we're hoping to deploy it in a way that serves us all well)? My third reaction was: OK, so how much time have those English PhD candidates spent reading non-Marxist economics?

My guess is very little for all the reasons Dufresne cites, not least that the mathematization of economics has rendered much of what we do incomprehensible to English majors. Dufresne's post reminded me of how I came to read both more on economic theory and the history of economic thought and more on topics traditionally viewed as outside of economics.

As a new Assistant Professor, I had been dutifully traveling across campus once a year to a Divinity School to deliver a single lecture in a course for Masters of Divinity students on work and vocation. The questions I routinely received indicated that the students were very familiar with Marx, at least the class consciousness, class struggle Marx, but completely unfamiliar with, say, Adam Smith or Amartya Sen.

I remember shocking them once by suggesting that Walmart was not all bad. My point was that consumers benefit from lower prices. It frees up money to be spent on other things or saved for children's education (for example). It's true that I then went on to point out that dumping your employee's health insurance costs on taxpayers and local hospitals' charity care as well as any distributional effects should be included in the final calculations of net benefits. But I also pointed out that on the plus side Walmart's $4/month generic drug program has been a boon to the poor and near-poor uninsured and to those who provide care to them. It's not entirely clear that Walmart is irrevocably on a journey to the dark side of the Force.

What was remarkable to me was that they had not considered possible positive aspects of market activity (free or otherwise). Don't get me wrong. I'm no defender of Walmart, but I expect that if someone is going to read Marx, they should also read the other "side." Otherwise, we risk throwing out the baby with the bathwater so to speak. 

As a result of my brief forays to the Div School, I was eventually offered an adjunct appointment and an opportunity to teach a tutorial one summer. In it, I and four very bright, inquisitive, open M.Div. students explored "social justice" aspects of economic thought and theory.

One of the best parts of the course (and one of the major challenges) was figuring out how to relate economic thought to Christian thought in nuanced ways, when I had only a very superficial knowledge of Christian thought (and, at that time and maybe still, a very superficial knowledge of economic thought).

I developed a topic called "Loaves and Fishes" that explored efficiency-equity trade offs (see Uwe Reinhardt's third piece on Arrow's Uncertainty and the Welfare Economics of Medical Care for a sense of that discussion). The topic title reflected what I consider to be one of the most efficient allocations ever reported: five loaves and two fishes used to feed a multitude. We had readings and discussion about the ways that markets, when they work, allow us to feed more people with less.

There was a topic called "Water into Wine" in which we discussed the ways in which commercial exchange using a (money) numeraire allowed anyone to "change" the money-metric equivalent of a case or two of Italian sparking water into a not-too-shabby bottle of wine.

Another topic called "As you do to the least of these..." covered and critiqued economists' conceptualizations of altruism, Smith's concept of sympathy or fellow feeling, and Sen's distinction between deontological commitment to another's well-being and a more egoist conceptualization of altruism derived from interdependent utilities. We also discussed Rawl's difference principle, of which the students were already well aware, because it seemed to fit so well with the topic title (and it gave me an opportunity to discuss some of the economic aspects of it).

We concluded with readings on trade liberalization, globalization, and microfinance, for which I'm still looking for a clever title. If I ever teach the tutorial again, I'm going to add a topic called Moneylenders in the Temple, that deals with finance and uses the "Temple" as a metaphor for the public interest or the social fabric.

It was really striking how little my M.Div. students knew about economics or how economists think about the world or about the potential benefits of efficiency or (and this is most important, I think) about markets and market failure. They had no clue how to have a meaningful discussion with anyone who was wedded to a free market ideology (think members of their future Vestry or Board of Elders on whom they will depend for their salaries and their advancement in the church hierarchy). I don't mean to imply that such discussions can always be meaningful, but my own experience has been that one must be pretty conversant in both the benefits that may accrue from market exchange, the characteristics of markets under which the benefits may be realized, and the ability to recognize a market failure when it occurs (as it frequently does), if one is to have any hope of holding up the other end of that conversation.

It was also surprising how they had all formed opinions about Adam Smith without ever having read him. I suppose this is not so surprising given that many card-carrying economists have done the same (myself included up until about 10 years ago). By the end of the course, I believe I had helped them to develop a more informed view of a man who almost certainly did not believe that self-interest was all that was required for a moral life or a moral society.

A year or two later, I was offered an adjunct appointment at a business school, to teach MBA's about ethical aspects of economic thought and theory. None of the MBA candidates (except for one Eastern Orthodox priest) had heard of John Rawls, but they were all pretty sure they knew everything they needed to know about Adam Smith, self-interest, and (I'm sorry to say) Ayn Rand. You can get a sense of the overarching theme of the course by reading my essay on The Market for Morals. We also read, write, and talk about market failures and how they facilitate the exploitation of the unsuspecting by the less than ethical. (See my essays here  or here, for example.) Or the more mundane problems of monopoly power or private interests not aligning with public interests (here and here, for example). In addition, we cover several case studies. The Ford Pinto case with it's unethical use of cost-benefit analysis is always a shocker for them as is Dennis Gioia's personal account of it. I also present Roy Vagelos' exemplary and successful effort to produce a cure for river blindness for a population that would never be able to justify the costs or investment. Vagelos points to an oft-overlooked positive side-effect of ethical firm behavior: employee morale. Merck also attributed favorable trade relationships with Japan (before 1994) to their ethical decision to help the Japanese manufacture Streptomycin to treat tuberculosis after WWII. (This isn't an unqualified endorsement of Merck, we also cover the Vioxx episode that is so very well described by Steve Ziliak and Deirdre McCloskey in their book, which I use as a basis for a discussion of ethical aspects of statistical inference and uncertainty in decision-making.)

I have since changed institutions and now have a joint appointment at a different b-school. I'm in the process of revising the b-school course syllabus, which I think is why Dufresne's blog post captured my attention. None of us read enough outside of our own field and that includes English PhD candidates who presumably understand Marx better than Econ PhD candidates (or me). It certainly includes me. I'm reminded of this every time I prepare for this course.

What I have found by venturing outside my "comfort zone" is that there is a remarkable wealth of literature within economics, much of it published prior to, say, 1980, along with a lot of more recent work, especially since the financial crisis. One benefit of the financial crisis IMHO is that it has shaken us up and opened us up. That may have very long-lasting positive effects for us all. There is also a rich, rich literature in the history of economic thought and in journals that combine economics with philosophy and/or ethics. And I've discovered books. Books are often where creative, thoughtful people write about stuff that for various reasons won't make it into journals.

This is a very exciting time to be an economist who is interested in ethics and who would like to see markets (when they work) remain the basis of our economy. I only wish I had more time to read or could go back and do it all again, but with more attention to history and economic thought.

Comments

[Scott M.]

The third link may be the most interesting to you.

http://www.rationalrevolution.net/articles/capitalism_economy.htm

http://www.rationalrevolution.net/articles/capitalism_property.htm

http://www.rationalrevolution.net/articles/capitalism_wages.htm

http://www.rationalrevolution.net/articles/capitalism_culture.htm

[Simon Halliday]

Thanks Maxine, I enjoyed this post. My wife and I have had lengthy discussions of this problem, specifically the interpretation of economics and economic structures outside of economics. In her MA in Art History, for example, they studied some Marx (and commentary on Marx) and Marxian interpretations of Art History. But, they didn't read the stuff that Marx was initially critiquing in Capital, nor did they read the more recent manifestations of Marx and Labour Theory of Value - Braverman's Labor and Monopoly Capital for example. I subsequently suggested that she (and others, if they were so inclined) at least read a bit of Adam Smith - maybe some relevant passages in TMS and WoN. Then, as you suggest, others like Sen, Rawls, maybe even Nozick. Or throw in some (former?) analytical Marxists like the late Gerry Cohen, Jon Elster, or Philippe van Parijs. Any of these people might give a different approach to Art Theory (and, in English, literary theory) than one based only on Marxist theories of the economy and class. (I am overstating the problem a bit, I think, but the point remains).

[The Barefoot Bum]

I'm not an English PhD student, and I don't know that I can explain *the* labor theory of value, but I think I can take a stab at coherently explaining *a* labor theory of value:

http://barefootbum.blogspot.com/2010/08/labor-theory-of-value.html

[The Barefoot Bum]

Oh, and I've read Marx *and* Smith (Yves and Adam) *and* Rawls. :)

[The Barefoot Bum]

(I apologize for not combining my comments) I changed my intended major from economics to political science precisely because I realized that economics PhD students don't actually read a lot of books.

[The Raven]

As I understand the labor theory of value it is based in the idea that people pay people for commodities, so that, ultimately, what "creates" value is human time, effort, and attention, which Marx summarized under the term "labor."

Marx's own introduction to his theory of value may be read at:
http://marxists.org/archive/marx/works/1867-c1/ch01.htm
It seems straightforward enough, though without the more recent visualizations that economists use for explanations it takes some effort at understanding. I've wondered if Marx perhaps used but did not publish sketch graphs. But the answer to that question would probably required a trip to the GOPB in Moscow and, not being an academic economist or historian with a research budget, I will not be answering that question any time soon.

[Rich C]

Maxine,

Umm ... I realize you're an econ Ph.D. and so not expected to know the history of economics, but do you really not realize that Adam Smith originated the labor theory of value? That David Ricardo employed essentially the same value theory as Smith? Say what you will about Marx, and the enthusiasm non-economists have for Marx, but you end up looking a bit of a fool for criticizing people for not reading Smith when you yourself have not read Smith closely enough to recognize that he employs a labor theory of value!

[Steve K.]

It seems petulant to be annoyed that English PhD students are surprised that economists in top programs don't even read one of the most influential classical economists, and then you criticize them for...not being economists?

Of course they can't fully explain all of Marx's theories and probably haven't read all of the economic literature, that's not their specialty. It's completely reasonable to criticize economists for not having any sense of the history of economic thought, that's supposed to be part of their specialty.

[Maxine Udall (girl economist)]

Rich C,
I was thinking that since we're no longer a nation of deer hunters and beaver trappers, the answer(s) to my question might be a bit more complex than in Smith's time. It seemed to stump Ricardo who was facing an increasingly complex economy where capital (both physical and financial) and international trade were playing greater roles in exchange and in production processes, but maybe I got that wrong, too. As to looking a bit of a fool, I fear I'd have to give up blogging and resign my job if that were something that bothered me. I'll count on you to let me know though. :-)
Thanks for your comment.

Steve K,
NEVER annoyed with English PhDs. After all, they know how to write and speak well and will one day save us all. Simply wondering how well they really understand Marxist theory, since that was the assertion on the blog I was responding to. It may well be that English PhD's spend more time reading Marx than I give them credit for. My main point remains that none of us (any of us) read enough outside of our own fields. Thanks for your comment. :-)

Scott M and everyone else, thanks so much for your comments and the links. Always appreciated.