09 Tapia Bookreview.Indd

Tapia REVIEW Adam’s Fallacy—A Guide to Economic Theology, by Dun- can Foley. Cambridge, MA: Belknap Press/Harvard University Press, 2006. $25.95, cloth. 288 pages. José Tapia I enjoyed reading Adam’s Fallacy as used a different approach. Adam’s much as if I were reading a book of Fallacy has almost no citations. fiction. This is an excellent book Foley tells us in his own words how on the ideas of economists and the earlier and modern economists have way they developed over the last understood and explained economic three centuries. Though Foley says problems. We are told in the preface in the preface that he intended this that the book is “an attempt to ex- book as a general presentation of plain the core ideas of economists” economic ideas for the cultivated from the point of view of the author, reader, it is likely that most of his and not “a book on the history of readers will come from the group he economic thought proper,” though mentions in his dedication, “For my its historical perspective is “a happy colleagues.” way to organize a complex set of It is likely that some but not many ideas into a coherent and understand- noneconomists will read this book. able story.” The reader is warned that In spite of its being a great presen- this is Foley’s “own take on econom- tation of interesting material, the ics,” in which he exploits “the great historical arrangement and the depth figures in the history of political with which theories are presented economy shamelessly” for his own will dissuade many lay readers from ends (p. xii). wading far beyond the first pages. Foley begins with a discussion Those with a serious interest in social of the classical economists, Smith knowledge, however, will probably and Malthus, as well as Ricardo. The make it to the end. title Adam’s Fallacy is a kind of pun, In books on the history of eco- linking the concept of foundation to nomic thought, it is common to cite two Adams, one from the garden of old authors profusely,1 but Foley has Eden and the other from the Scot- JOSÉ TAPIA teaches social science at the University of Michigan. He thanks Paul Mattick and Jackie Murray for comments and criticism. Challenge, vol. 51, no. 2, March/April 2008, pp. 110–120. © 2008 M.E. Sharpe, Inc. All rights reserved. ISSN 0577–5132 / 2008 $9.50 + 0.00. 110 Challenge/March–April 2008 DOI: 10.2753/0577–5132510209 Reviews tish school of political economy. economists who, for instance, deny The illustration on the dust jacket the possibility of improving the hu- reinforces the image, superimposing man condition through public pol- the face of Adam Smith on a bitten icy. There are some positive aspects apple. of Malthus, however, that are often Foley goes into great detail on the overlooked. On one hand, he was the ideas that have come into present- first author in political economy to day economic thought from Adam clearly articulate the issue of natural Smith. For Foley, as for many oth- bounds to human society. This puts ers, the most important idea of this Malthus in direct connection with Smithian legacy is that of the invis- modern ecological views, generally ible hand, which assumes or rather critical of capitalism, although it asserts the emergence of acceptable also aligns him with quite different and efficient common-good out- right-wing currents that are properly comes from the ethically question- referred to as neo-Malthusian. able pursuits of private interests in On the other hand, in spite of the market. This “separation of an Malthus’s reactionary stance re- economic sphere,” says Foley, “with garding the possibility of human its presumed specific principles of progress, he did explain disease and organization, from the much messier, death in terms of biology and natu- less determinate, and morally more ral causes, rather than attributing problematic issues of politics, social them to the Almighty’s will. The conflict, and values, is the founda- view that disease and death were tion of political economy and eco- directly determined by the Divinity nomics as an intellectual discipline. was still quite extended in Malthus’s Thus to my mind Adam’s Fallacy is time—just twenty-five years before the kernel of political economy and his birth, Johann Süssmilch had economics” (p. xiii). We see from published in Germany his celebrated the start that a major component of Proof for a God-Given Order to the Foley’s argument is the ethical inad- Changes in Male and Female Births equacy of those schools of economic and Deaths and the Reproduction of thought that agree with the basic Human Populations. For Malthus, the Smithian principle that the pursuit way nature is set (by God) makes it of individual economic interest is impossible to improve society by, not ethically wrong because it leads say, reducing famine, but it was not to common good. his view that each death and birth is On Malthus, Foley says one of his decided by God alone. Surprisingly major contributions was to bring little attention is paid in Adam’s Fal- mathematical reasoning to economic lacy to environmental issues—in this thought (p. 48), but overall, Foley is respect Foley is a true follower of the not sympathetic to him. It is indeed tradition in economics and does not difficult to be sympathetic to Mal- take much advantage of Malthus to thus, unless you are one of those discuss such matters. Challenge/March–April 2008 111 Tapia After the classical economists, nalities” and “opens the door to Foley moves on to Marx—I will re- widespread government interven- turn to this later—and then in the tion” (p. 172). This may be true from last hundred pages of the book to a theoretical point of view—for in- marginalism, Veblen, Keynes, and stance, one that makes a fine distinc- modern neoclassical views. Though tion between the neoclassical and perhaps this is too much material Austrian schools in economics—but to be treated in just a third of the it seems to be a biased assessment if book, it is clear that Foley’s interest is it refers to mainstream economics. much more focused on old political From Friedman to Greenspan to Mc- economy than on recent economics, Closkey (not to mention economists perhaps because he believes that, in from other countries), the economic the end, not much was contributed profession has been deeply commit- by the marginalist revolution. ted to the rejection of government Some figures worthy of discussion intervention. Even the major tenets are ignored. Nicholas Georgescu- of Keynesianism are viewed with Roegen, for instance, is a major suspicion in economics depart- author and an isolated figure in ments controlled by neoclassicals. modern economics who challenged And economists like Paul Krugman, economic orthodoxy from angles Joseph Stiglitz, and Amartya Sen, that were almost wholly ignored who to some extent disagree with the by the classics, including a strong neoliberal consensus—though in no concern with the real meaning of sense question capitalism—are often “wealth” and the relation between considered by mainstream econom- nature and humanity. That he is ics as vicious leftists. (On the occa- not even mentioned in a book in sion of Amartya Sen’s receiving the which we find such names as Lytton Nobel Prize in economics, I heard Strachey, Oskar Lange, and Enrico the famous theoretician of interna- Barone seems very much related tional trade Jagdish Bhagwati saying to Foley’s view that environmental on National Public Radio that Sen’s problems present no Gordian knot interventionist views on economic for the present economic system to policy are to be repudiated because solve. For instance, he believes that they help perpetuate poverty.) the extension of property rights to In a review of Adam’s Fallacy, environmental assets and some tin- Robert Solow criticized the book for kering with pollution markets can lacking “mechanics.”3 For Solow, lead to a feasible solution for global economists must be much more warming.2 concerned with specific “mecha- Foley asserts that modern neoclas- nisms” (such as those that explain sical economics “is not committed the price of beer or the balance of to laissez-faire policy: it supports payments) than with big issues like intervention in cases of monopoly, “the future of capitalism.” To dis- incomplete information, and exter- cuss in depth this idea of Solow’s 112 Challenge/March–April 2008 Reviews would require going into what is garbage. That is inherited knowledge the utility of economists for so- from Francis Edgeworth and other ciety, or rather what is the utility fathers of economic science. of economists for those in society Foley’s presentation of Marx’s who decide where it is worthwhile ideas is nuanced and dispassionate, to put money. At any rate, it is though sympathetic. He explains in a clear that “mechanisms” are im- particularly illuminating way Marx’s portant to understand economic ideas on the fetishism of commodi- processes, but schools of economic ties and discusses with insight major thought strongly disagree on what issues posed by Marx’s rejection of the important mechanisms are. utopian designs for “the socialist For instance, mainstream econom- kitchens of the future.” Foley may ics often emphasizes decreasing be unfair to Marx in saying that from returns to scale and perfect com- the point of view of non-European petition in order to argue that “in traditional societies (Inca statism, Af- equilibrium,” profits are zero. Het- rican tribal communities?), “Marx’s erodox views often point to such form of socialism might be almost mechanisms as economies of scale indistinguishable from capitalism in and increasing returns to scale to its broad outlines” (p.

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