Keith Tribe has a message for the economics profession: words matter. Other than those who specialize in history of economic thought, most economists refer to the canonical works of economics second-hand. We rely on memories from undergraduate or graduate school, quotes from experts, or references from predigested sources. We repeat iconic interpretations with little thought or critical analysis. True enough, this may lead to hackneyed representations of luminary works. But Tribe seems to be arguing something else: by failing to read and critically engage original works, we lose insights that might be interesting and revealing.
Tribe warns us that there is no substitute for “paragraph by paragraph, chapter by chapter” (p. 7) consideration of how the arguments of Adam Smith, Karl Marx, Jean-Baptiste Say, Léon Walras, Alfred Marshall, or others actually unfold and “work.” Of course, careful consideration of what was going on at the time of the writing matters, as does the commentary of specialized scholars, but “one can do worse than to reread” (p. 9) the classical works.
One of the worst sins economists can commit when reading, quoting, or using the works of classical economists is to subordinate their thinking to issues we find of interest today. Tribe tells us that “by returning to the original argument we can regain a clarity that has been lost. … For the more that the past is assimilated to the present, the less thinking we have to do in seeking to understand the past” (p. 311). “Learning how to read canonical texts anew provides a way around the conformity that today’s conditions foster” (p. 312).
So how well does Tribe make his case? The outline of the book seems eccentric, more a collection of unpublished essays and research than a coherent, organized framework, yet the book delivers on its promise. Words matter: examining them can be fruitful. Details of the development of the ideas of economists of the past inform us today.
The book is organized along the following lines: after an introductory chapter, part I is entitled “Words and Numbers.” This contains two chapters. Chapter 2, “The Word: Economy,” is an essay on the history of the concept of the economy. Beginning with the ancient Greek oikonomia, which meant “household management,” Tribe gives us a detailed story of how we got to what economics means today, which is the study of prices, wages, incomes, and production in a mixed economy. Chapter 3, “The Measurement of Economic Activity … ,” chronicles the development of modern notions of economic measurement—particularly the British history of national income accounting.
This is followed by part II, entitled “Reading and Reception.” This section consists of two more chapters, both on Adam Smith. Chapter 4, “Reading ‘Trade’ in The Wealth of Nations,” is an essay about Smith’s treatment of international trade—and makes a claim, among others, that Smith did indeed understand David Ricardo’s idea of comparative advantage. Chapter 5, “Das Adam Smith Problem and the Origins of Smith Scholarship,” is an essay on the classic Smith problem in which Tribe again thoroughly examines the issue of the influences, or lack thereof, of the French Physiocrats and others on Smith’s thinking. He also offers a detailed treatment of the German Adam Smith commentaries and their influence on English thinking about Smith’s work.
This is followed by part III, entitled “Economics as Theory of Industrial Society.” Chapter 6, “Karl Marx’s ‘Critique of Political Economy’: A Critique,” the book’s longest, chronicles the development of the thinking of Marx. Tribe traces how Marx went from being a conventional reformer to the radical we know today. Central to this was Marx’s four-year-long synthesis of the political economy of the French socialists in terms familiar to the English theorists found in Lohnarbeit und Kapital. By Tribe’s reckoning, this was the high point of Marx’s thinking (p. 245). Das Kapital simply does not have the clarity and focus of Lohnarbeit und Kapital, despite the numerous scholarly attempts to read deeper philosophical, historical, and economics meanings into Das Kapital.
Chapter 7, “The Price Is Right,” outlines Walras’s contribution to general equilibrium theory and marginal analysis. Influenced by the work of his father, Auguste, and by the work of other marginalists such as William Stanley Jevons and Hermann Heinrich Gossen, Walras developed a theory of how the market process led to outcomes consistent with commutative justice. In Tribe’s words “[Walras] endogenised ‘fairness’ in exchange by relating the emergent market price to the utility schedules of all participating agents” (p. 287). “An exchange became ‘fair’ once a market price had formed, not before; justice adhered in this market process, not an allocation determined in advance by some given notion of just rewards … ” (p. 292). The general equilibrium theory of Walras was as much about normative economic issues as developing an elegant and complete way of describing economic activity.
Two issues Tribe raises intrigued this reviewer because they are relevant to his undergraduate pedagogy: the history of national income measurements, and the use of Adam Smith’s “invisible hand” reference in Wealth of Nations when teaching international economics.
It is rather standard to link the measurement of national income to the consumption, investment, government-spending framework found in the General Theory of John Maynard Keynes. Tribe reminds us, however, that when Keynes penned his book, the notion of national income accounts had “only very roughly been sketched out” (p. 90). Keynes undoubtedly drew on Alfred Marshall’s notion of a national dividend that was defined as the “net aggregate of commodities, material and immaterial, including services … ” (p. 93).
The problem with all this was not only the lack of an articulate and coherent measure of what these aggregate measures were, but the difficulty of finding the real-world data that corresponded to the best-constructed measures. Governments collected statistics that were used for the administrative purposes of the state (tax collection and spending), and not for the construction of consistent and comparable measures of aggregate economic activity. For example, the Runciman Committee was commissioned by the British government before the onset of World War I to discern how interdependent Great Britain was with Germany. They reported such factoids as Britain had “imported 16 million tons of goods from Germany and countries bordering the Baltics and exported just over 29 million tons of goods,” and that “over half of all the butter and margarine eaten (in Britain) come from here … ” (pp. 91–92)—data perhaps of use to a war planner, but hardly for national income accounts.
Tribe gives us a history of economic statistics from the seventeenth and eighteenth centuries, through Marshall’s notion of a “national dividend” and Arthur Cecil Pigou’s refinements of the concept. The British government support of developing comprehensive sets of economic statistics that met economic muster was sporadic at best. By 1913 a British economist-administrator, Alfred Flux, had managed to develop the idea of what we call a “final good.” In the early 1930s Colin Clark was well on task to eventually developing something that looks like a modern notion of national income. Nevertheless, his 1931 Economics Journal article includes a hand-sketched diagram of various national exports over time. It is no wonder Clark complained of the “disgraceful official statistics” in 1932.
Again, one cannot help but learn something from reading Tribe’s history of something as apparently mundane as national income statistics—one comes to appreciate the efforts necessary for their construction and their inherent limitations.
A second area of personal interest is Smith’s use of the “invisible hand” metaphor and international trade. For many years in “International Economics,” I have used Smith’s famous quote to introduce the case for free trade: “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage” (WN IV.ii.12, p. 130).
Tribe argues a careful reading of this passage juxtaposed with the way the passage relates to arguments Smith makes earlier in Book IV, Book III, and Book I, which makes it clear that Smith is making a pure opportunity-cost argument for free trade in the abovementioned quote. If this is correct, it implies that Smith fully understood Ricardo’s notion of comparative advantage. Smith’s quote is not just an introductory justification for free trade—but perhaps the most complete and coherent argument ever offered.
Only three paragraphs earlier, Smith uses the phrase “invisible hand”—his only use of the metaphor in Wealth of Nations. It has always seemed puzzling that this allegedly central metaphor of Smith’s is used by him to argue it leads tradesmen and capitalists to “the support of domestick industry” (WN IV.ii.9, p. 129). Isn’t Smith going to argue for free trade a few paragraphs on? Yet, this makes sense once it is recognized that Smith is debunking Thomas Mun’s notion that domestic trade is “sterile” in that it fails to expand the stock of bullion (WN IV.i.10, p. 127). A free-trade policy proposes to neither hinder nor support imports, exports, or domestic production.
Keith Tribe is a very careful scholar, documenting in detail his claims. To paraphrase a review on the dust jacket, the book reads almost like a detective novel. He keeps it lively, not arcane; he is witty and rarely tedious. The prose is interesting and engaging for both the specialist and generalist, and is bound to leave all its readers better educated. This is a book that can be read by non-specialists for enlightenment, enjoyment, and pleasure.
