By Way of Introduction

When a book takes a long time to appear, especially a book on an intrinsically controversial subject, it wants a word of explanation as to why it took so long. Knowledge and the Wealth of Nations: A Story of Economic Discovery is scheduled to be published by W.W. Norton & Co. on May 22, a little less than twelve years after it was formally begun.

It had its beginnings in a newspaper series in The Boston Globe in 1994, which in turn stemmed from a still-earlier attempt to tell the story of the “new” growth economics in a book.

The early 1990s, however, turned out to be a very busy time. In those days, newspapering had the senior claim. Rather than sit any longer on what seemed an important and exciting story, I decided to put it in the paper in a lengthy series of Sunday columns.

Exactly how lengthy? That’s what the editor of paper wanted to know, one afternoon when he stopped by for a chat with my section editor and me, in the vicinity of week seven.  Oh, forty, probably, no more than forty-two. 

Sigh. Then I suppose we’d better put a logo on it.  And so we did — “The More Worldly Philosophers.”

I blush to look back on those columns now.  They were unmistakably a work in progress, a thoroughly provisional kind of truth. And yet the broad outlines stand up well enough.   

“The Fall and Rise of Technical Economics” announced the headline of the first column. It began, “There’s a widespread feeling among the general public that economics somehow has failed to make enough sense of the world. Markets as a social system have triumphed everywhere in the last few years, but informed laymen make jokes, disparage Adam Smith, invoke forgotten prophets, mock the mathemaical formalization of modern, university-based economics. Even many of its prominent defenders say that economics needs to be more practical, empirical, policy-oriented, if is to be persuasive.” 

It concluded, “In the last ten years, however, this has begun to change.  New theories have appeared with new tools to give them rigor, not unsusceptible to empirical testing, but not crucially dependent on it for rhetorical effect either. Mostly these developments have to do with new ways of thinking about institutions and technical change. They offer techniques for analyzing matters about which economics formerly had little to say. And they hold out the promise of creating (eventually) a far higher degree of consensus among experts.”

And who were these shakers? The second column offered a glimpse ahead.  “Robert Lucas, a deep-thinking Chicago iconoclast with a soft spot for economic psychology. Paul Romer, a mild-mannered Deadhead [that is, a fan of the band The Grateful Dead] with a knack for bringing ideas into unexpected juxtaposition. Paul Krugman, a high-intensity Asimov fan. Elhanan Helpman, an Israeli theorist with a knack for collaboration.  Gene Grossman, the shy representative of a famous economics family. Robert Barro, a brash Caltech whizkid with a perch on the editorial page of The Wall Street Journal. Lawrence Summers, a wunderkind with two famous uncles. Gregory Mankiw, a precocious professor who gave up competitive sailing for economics. Michael Porter, a business school hotshot who turned his insights into money and power into money and poer instead of economic fame.

“Just behind them there is a second rank of interesting and substantial figures: a donnish, peripatetic Indian.  A severe woman executive of the World Bank. A woman whose father’s own contribution to growth economics was unwisely overlooked, and her husband. A rebellious young man with a certain resentment of his Singapore childhood. An angry and isolated Irishman from Belfast. A Brazilian-French mathematician with a penchant for the farthest frontiers.  A Russian emigre to Cambridge and Chicago suddenly giving advice at the highest levels – to the Russian government. A Californian who learned his first economics managing a supermarket. They have no politics in common; they range in convictions from liberal to conservative.”

There are words I would change here and there. Grossman is not shy. The Irish scholar from Belfast – W. Brian Arthur – is no longer angry, having found a home at the Institute in Santa Fe. But for the most part, the roster is intact, though many others have been added . The telegraphic characterizations stand up well enough. The series trailed off to an uninspiring conclusion, but not before correctly predicting that 1994 would be the year that the Royal Swedish Academy of Sciences would choose to honor game theorist John Nash.

So why did it take so long to tell the story?

The answer, as near as I can tell, is that it took a long time to strip the story down to its essentials — the longer while it takes to write a shorter letter.  When economists brought knowledge into their explicit discourse, the change itself was so profound, and its consequences so pervasive, that the profession itself has only just begun to recognize its dimensions.  So many people participated in the the making of this revolution (for it is not too much to call it that), before and after, that it was difficult to know who to put in and who to leave out. Many persons tried to change economics without success. Inumerable deeply interesting stories didn’t make the cut.   

So, in establishing this page to further discussion of the book, I thought I would use it as best I could, at more or less weekly intervals, to create something of a feather-edge for the story that I have chosen to tell, among all the other important stories in the tapestry that is modern social science — not just economics, naturally, but the various fields that border it.  The “donnish, peripatetic Indian” – Amartya Sen – having played an important part in the reception of growth theory in the 1970s, has continued to soar ever since, but dropped out my story for the most part.  The “severe woman executive of the World Bank” – Anne Krueger – receded in importance in my tale, though she is still there. Barbara Spencer, daughter of the Australian economist Trevor Swan (1918-1989)  whose contribution to growth economics was sometimes “unwisely overlooked,” appears nowhere in the book (though her husband, James Brander, is briefly mentioned). Yet as a professor at the University of British Columbia, Spencer continues to continues to publish cutting-edge work in the economics of industrial networks. Spencer is a good symbol of the adventure of “normal science,” the orderly entension of the scope and precision of economics by highly-qualified professionals, that forms the indispensible background to the story in the book. There are many, many more such persons.

Let’s see how well I succeed in elaborating the story of Knowledge and the Wealth of Nations.   

 

Comments (1)

1 Comment

  1. Tom Moran Said,

    May 12, 2006 @ 10:37 pm

    Just finished the book. Very interesting and illuminating. You point out the importance of mathematical language, while, of course, writing a “literary” book. As a former math major I’d appreciate a pointer to a description in/of the math involved.     TM

     
    I’m not aware of a gloss on the nonconvex analysis of romer’s thesis, which is one reason I didn’t attempt anything myself in the book.  Martin Weitzman has a book just out called Income, Wealth and the Maximum Principle in which he develops a “standard” version of dynamic optimization techniques for economic problems, using mainly calculus at the level of an advanced undergraduate undergraduate.  But the background of convex analysisis from which the departure too place probably is not what your interested in.  I’ll call around and see if I can elicit a proper answer.            DW

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