2017, Books, Non-Fiction

Economism: Bad Economics and the Rise of Inequality (2017) by James Kwak

I agree with a lot of the author says but I’m not sure I like the way he says it. In fact, this feels a little bit like a book I would write, albeit with better sources – a rant about the spread of an idea from someone who is does not have a background in the subject area. I think Kwak is mostly correct about what he says, but it would help his case with the other side if he was an economist and actually demonstrated his arguments in the language of economics rather than just citing studies.

But I think my biggest problem, or at least one of my biggest problems, is how, as a historian of ideas, he treats ideas as causal. (I am guilty of this myself which is probably why I hate when other people do it.) Kwak’s history of “economism” is all about the people who propagated the ideas. To use the language of Economics 101 against him, he focuses entirely on the supply side and ignores the demand side. It feels as if he is arguing that, without Hayek et al., and without their fans in the media and politics, and without CEOs championing these ideas, they wouldn’t have taken hold. I’m not sure I buy that. Are we supposed to be believe that the reaction to stagflation would have been entirely different without a culture of free market fundamentalism on one side of the political spectrum? I guess that’s plausible but Kwak entirely ignores questions like that. If he honestly believes that reactions to economic problems of the last 40 years would have been different, it would help to argue the case.

And, like so many of these books, it’s so US-centric. One way the case could be made better is if he compared say, the US and the UK, or the US and Canada, or the US and Australia, and showed how different political cultures had different outcomes. (There are similarities and differences and they might prove illustrative, given how much more popular “economism” is in the US.)

The book is just too short to cover these things. And that’s a huge problem because it feels like Kwak is just preaching to the choir. But his stated goal is that he wants to change minds. And we’re presented with something that I fear will utterly fail to do so. I can just hear the criticisms: “He’s not an economist!” “People have agency! They don’t believe everything they’re told!”

Despite that, I do think he’s mostly correct, many American people believe the world (mostly) boils down to a fake, simplistic supply/demand curve, and they’re 100% wrong about that.


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