Archive for March, 2007

Back in Business

One of the problems of writing Knowledge and the Wealth of Nations had to do with deciding how to deal with the many realms in which parallel discussions had gone forward about the same time. What to say about the related work in international trade?  In industrial organization? In growth accounting? In economic history? In the law schools?  The business schools? Consulting firms? The Society for the History of Technology?  The History of Science Society?
How central to understanding what had happened was the argument over the significance of the QWERTY keyboard? How important for the reception of the new work were the subtle antipathies toward of Chicago, London, and Cambridge, Mass? What significance attached to the rival achievements and competing claims on our attention of Peter Drucker and Michael Porter? Of Jane Jacobs and Manuel Castells? Of John Kenneth Galbraith and F.M. Scherer? Of Janos Kornai and Peter Albin? Of Jonathan Hughes and Thomas Hughes? Of Daniel Bell and Alfred Chandler? Of Brian Arthur and Nicholas Negroponte? Of Dale Jorgenson and Zvi Griliches? Of Richard Nelson and Sidney Winter? Of Julian Simon and Peter Bauer? Of Mancur Olson and Edward Prescott? Of William Ethier and Xiaokai Yang? Of Karl Shell and William Nordhaus? Of Philippe Aghion and Peter Howitt? Of Nathan Rosenberg and Joel Mokyr? Of Douglass North and Ronald Coase? Of Richard Easterlin and Ester Boserup? Of William Baumol and Edmund Phelps?  Not to mention Arthur Laffer and Robert Mundell, those bold “supply-siders” who argued that cutting taxes would automatically lead to faster growth?
For the most part, I solved these problems by ignoring them, in order to concentrate on the adventure of high economics. As I saw it, the really interesting story was one about mathematical (or formal) reasoning and natural language. As a graduate student in the 1980s, Paul Romer had approached the problem of economic growth straightforwardly, seeking to account for the ubiquity of falling costs. In the end, the equations that Rome wrote took a fundamental new distinction, between rival and nonrival goods, and placed it at the center of economics, with far-reaching implications for policy. This was, as I saw it, the main line of advance.
In his Principles of Psychology, there is a terrific chapter (XXI – “The Perception of Reality”) in which the philosopher William James divides the world into various “sub-universes”of meaning –  the world of sense, of physical things; the world of science, as conceived by the expert; the world of abstract truths, of ethical, aesthetic, metaphysical and mathematical propositions; the world of “idols of the tribe,” of prejudices and illusions common to the community; the supernatural worlds of  various religions; the worlds of individual opinion, “as numerous as men are”; and the worlds of sheer madness and vagary.  Everything that is could be assigned to one world or the other, wrote James. “The popular mind conceives of all these sub-worlds more or less disconnectedly; and when dealing with one of them forgets, for the time being, its relations to the rest.” The task of the philosopher is to determine the relation of each sub-world to the rest.

Journalism is one way of bringing into register multiple realities within the various sub-universes of everyday life. Prizes are another. Still another is collision between law and economics. There is always philosophy. The last words, of course, in each succeeding generation, belong to the historians.


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