The Story of Economic Genius

The part on Alfred Marshall looks really interesting.

Roger Lowenstein gives Sylvia Nasar's new book, Grand Pursuit: The Story of Economic Genius, five stars in his review column.

Grand Pursuit retraces much of the same ground as Robert L. Heilbroner’s 1953 classic The Worldly Philosophers—which is to say, Nasar gives us Karl and Jenny Marx in their crowded London flat, Joseph Schumpeter, and, of course, John Maynard Keynes. Nasar is more idiosyncratic in her choice of subjects; she omits Adam Smith, almost entirely. On the other hand, she reclaims the lesser-known Beatrice Webb, a richly interesting and path-breaking Victorian who founded the London School of Economics and sold none other than Winston Churchill on the need for a welfare state.

… Marx comes off badly, yet his conclusion that society offered the masses little hope (short of revolution) was widely accepted. Only in a novel such as Great Expectations might the orphan Pip vault to the middle class; for the real-life masses, such advancement was “the stuff of pure fantasy.”

…This is Nasar’s setup for Alfred Marshall, who, though trained as a mathematician, was inspired by both Dickens and Marx to study how companies actually operated. “He did not doubt that the chief cause of poverty was low wages, but what caused wages to be low?” Marshall, who began his work in the 1860s, noticed a dynamic that Marx hadn’t: “Competition forced owners and managers to constantly make small changes to improve their products, manufacturing techniques,” and so forth. Over time, the improvements wrought greater productivity and higher wages. The significance of this idea for human progress cannot be overstated. The historian Arnold J. Toynbee later called it “the first great hope which [wage analysis] opens out to the laborer.”

Sylvia Nasar is the acclaimed author of A Beautiful Mind and most recently, Grand Pursuit: The Story of Economic Genius.

Read what you've been missing. Subscribe to Farnam Street via Email, RSS, or Twitter.