Robert L. Heilbroner Philosophers of This World Great Economic Thinkers: Their Lives, Era, and Ideas

This is the seventh edition of the book, first published in 1953. It turns out that today "Philosophers of this world" is much older than I myself was when working on the text. Given the absolutely amazing vitality of this adventure, undertaken during my student years, I will allow myself to briefly outline the history of the book's birth, after which I will move on to the important changes made especially for this newest and, I suppose, the last reprint.

In the early 1950s, I was in graduate school and made my living by publishing in various publications, and when necessary or convenient, I moved away from economic topics. After reading one of my texts, Joseph Barnes, then a senior editor at Simon &; Schuster ”, invited me to have a snack, and at the same time to discuss possible topics for the book. None of my suggestions were outstanding. When the salad arrived, I realized that the first dinner with the publisher would not bring me a contract to publish the book. But Barnes was not so easily bewildered. In response to his question about classes at the New School for Social Research, I excitedly began to describe the work of a wonderful seminar led by the inimitable Adolph Lowe, about which the reader will learn more in the future. So I found my item - it became clear to both of us before the waiters had time to bring dessert. Immediately after completing the next lesson, I hastened to tell Professor Lowe about my decision: I was going to write a history of the development of economic thought.

Lowe - typical of the breed of true German scientists - was horrified. "You can't do that!" - he announced in such a tone that there was no doubt that he was right. But I was absolutely convinced that, in fact, I could very well - as I have already written elsewhere, this feeling was an amazing product of that mixture of self-confidence and self-deception that is the hallmark of graduate students. Finding time between writing for various magazines and studying, I produced the first three chapters and, not without fear, showed them to Professor Lowe. We must pay tribute to this great man (he remained my most benevolent critic until the very end - and he died at 102), - after finishing the reading, he said: "You must do this!" What I - with his help - did.

When the book was already ready, it became necessary to name it somehow. I knew perfectly well that the word "economy" on the cover would immediately scare away potential buyers, and desperately went through alternatives. While I was tormented by doubts, there was a second fateful dinner, this time with Frederick Lewis Allen. Allen was the editor-in-chief of Harpers magazine, with whom I regularly collaborated, and his extraordinary kindness to me, coupled with his willingness to help, I will never forget. I mentioned my difficulties in passing and added that I was thinking about calling the book Philosophers of Money, although I feel that “money” is not quite what we need. “You wanted to say, Philosophers of this world,” Allen corrected me. “I'm paying for lunch,” was my answer.

The publishers were much less satisfied than I was, and after the book, to their amazement, began to sell well, they proposed to rename it Great Economists. Fortunately, the name has remained the same. Probably, they were driven by doubts about the ability of buyers to digest the words "of this world" (indeed, in thousands of student papers, this expression was somehow distorted). Or maybe they foresaw difficulties like the one that I only learned about many years later. A student who entered his college bookstore wanted to find a book. The name of the author flew out of the head of the young man, but if his memory serves him, it was called "Lobsters from this sea."

Years passed, and the circulation of "Philosophers of this world" exceeded the wildest expectations. The book is said to have prompted thousands of unsuspecting victims to take an economics course. I am not ready to take responsibility for all the suffering he has caused, but I was extremely happy to hear from many economists that it was my book that first piqued their interest in the subject of their current passion.

The new edition differs from all previous ones in two ways. First, as before, a fresh look at my own text allowed me to catch errors that inevitably arise at the stage of the manuscript or become obvious as a result of recent research in this area. I also took the opportunity to change the emphasis to reflect the development of my views on certain issues. By themselves, these changes are quite insignificant and will most likely be noticed only by specialists. Their importance is not so great as to require a new edition. But another change is very, very important. For a long time, I wondered if the lack of a cross-cutting theme would not harm my book, if it could not be possible to connect individual chapters in a more convincing way, relying not only on the chronological sequence of the appearance of wonderful people and their interesting ideas. Finally, a few years ago, I became firmly convinced that such a link should be a change in the concepts, or “visions,” that underlie the great minds' analysis of the past functioning of our society. In the middle of the 20th century, a similar idea occupied the imagination of Joseph Schumpeter, one of the most inventive philosophers of this world. Until recently, I did not even think about such an approach to the subject. Perhaps the fact that Schumpeter himself, for one reason or another, did not use his find in the study of the history of economic thought, can serve as an excuse for me.

I will not embark on a discussion of a new view of the evolution of philosophy from this world directly in the preface - in the same way, the author of detective stories does not announce the name of the murderer on the first pages of the book. In the course of our story, we will talk more than once about the role of the worldview of individual people, but only after reaching the last chapter, we will be able to properly discuss the relevance of this approach for our time.

In this connection, I would like to make the last remark. Having already looked into the table of contents, the reader could be puzzled to discover that the final chapter is titled like this: "The end of philosophy from this world?" The question mark indicates that this is not a gloomy forecast, but also ensures that changes in the nature of the subject of our study cannot be avoided. We will talk about possible options for such changes in the final part of the book, which I mention here not at all in order to pique the interest of the reader. The fact is that only at the end of the road, in other words - today, these changes have a significant impact on the subject and meaning of economic thought as such.

But let's not get ahead of ourselves. Let me lastly thank my readers, especially students and teachers, who have studied the book so thoughtfully that they sent in many letters with additions and corrections, as well as expressions of support or disagreement. Both are equally valuable to me. I hope Philosophers of This World will continue to serve as a ticket to the exciting world of economics for book publishers or lobster hunters, as well as individual brave men who dare to join the ranks of economists.

Robert L. Heilbroner New York, NY

July 1998

This book is about a handful of people whose fame is strange. From the point of view of school history books, they were nothing: they did not command armies, did not send people to death, did not rule empires, and rarely participated in making decisions that influenced the course of history. Some of them achieved a certain fame, but none became a national hero; some were openly attacked, but none was considered an enemy of the state. And yet, what they did was often more important to history than the deeds of statesmen basking in the rays of glory, shocked the world more than the passage of huge armies across borders, brought more benefits and misfortunes than royal decrees and laws.

When Robert Heilbroner passed away a few years ago, obituaries reported the death of a prominent American economist and sociologist. But millions of grateful readers around the world knew him primarily as the author of "Philosophers from this World" - an amazing story about the fate and ideas of the titans of economic thought. It is also surprising because the total circulation of Heilbroner's book amounted to several million copies, clearly refuting the myth that economics is a gloomy and uninteresting science. In the pages of The Philosophers, great theories coexist with descriptions of the fanciful antics of their authors; The figures that seemed to be the characters of historical works acquire their unique outlines. The eternally absent-minded Adam Smith and grumpy Karl Marx, the brilliant David Ricardo and John Maynard Keynes changed our world, and the story about them will hardly leave indifferent both students and those who have wanted to learn more about economics all their lives, but were afraid to look into fat ones, volumes crammed with formulas.

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Philosophers from this world. Great Economic Thinkers: Their Lives, Era, and Ideas Heilbroner Robert Louis

10. End of philosophy from this world?

The preface warned of a possibly unpleasant ending to our journey. It might seem that the title of this chapter only confirms these concerns. But I would like to remind the reader that the word "end" can be understood in two ways: how completion anything or goal achievement... Starting a conversation about the usefulness and prospects of the subject, whose name was so aptly suggested to me at the moment when I finished the book, but did not know what to call it, we must not forget for a moment about this duality.

From which side to approach a difficult task? I think it's wiser to go back to the beginning and remind yourself and the reader of the true subject matter of economics. Of course, we are not talking about a simple discussion of figures, forecasts and official statements of the authorities, which are full of daily newspapers. In addition, economics is not only about supply and demand curves familiar to any student. At its core, economics is a knowledge system whose purpose is to shed light on how it works, and therefore on the problems and future of the complex social machinery we call economics.

Until now, perhaps the main distinguishing feature of such attempts at explanation has been their amazing variety. The monarch and Marshall clerk, led by the mercantilists, the society of perfect freedom of Adam Smith and the society of Veblen engulfed in industrial sabotage, can hardly be imagined as links in the same chain. Nevertheless, in the final chapter, I will try to look at the apparent confusion from a different angle and, instead of noticing superficial differences, I will focus on identifying the general structure.

It does not hurt us to recall the problems discussed in the second chapter. We have said that humanity managed to survive for the first 99% of its time on earth thanks to the traditions laid down in the practice of hunting and gathering, but this set of rules and taboos can hardly be called "economics". The same applies to the much more complex and inventive systems that emerged in the third and fourth millennia BC, the societies that built cities, irrigation systems and great pyramids. As we have seen, from now on, human everyday life was governed not only by time-tested traditions, but also by a hitherto unknown power of planning.

There may not have been a more dramatic era in history, but is it necessary to involve "economic" ideas to explain or understand the upheaval brought about by the emergence of the plan? I do not think. For example, one of the central elements of the economic apparatus has always been prices and their changes, but the blocks hewn out during the time of the pharaohs had no price, and it is hardly possible to stick a price tag on the pyramids themselves. Indeed, the planned organization of life has brought about many amazing changes. But it did not give rise to absolutely new forms of organization of production and distribution, for the analysis of which we might need economic science.

What preceded the emergence of this way of perceiving life and the functioning of society? In the same chapter, we talked about how medieval traditions and feudal planning gave way to a new social order, and it was difficult to explain its essence using the existing methods. After a certain time, this order will be called capitalism, the way of organizing our material activities - the economy and the new explanation is economics.

I won't go into too much detail on the changes capitalism has brought about. First, the organization of production and distribution of the material goods necessary for society now positively depended on the desire of people to get rich. The reader may note to himself that the striving for enrichment has never been considered worthy, and even more so, has not met with universal approval. In the case of kings - yes, of course, with seafarers - maybe, but with representatives of the lower strata of society - in no case.

Second, capitalism provided the market with the ability to command the direction of production and distribution using both the carrot and the carrot. This practice was absent not only in the days of hunters and gatherers, but also in those cases when the direction of society was determined at the top. The emergence of goods necessary for life as a result of the competitive process of buying and selling is unparalleled in other devices of society.

Third, capitalist society for the first time voluntarily submitted to two sources of power, private and public, and the power of each had its own limits. The power of society, that is, the state, has the power of coercion and adopts laws, but does not take on the daily chores associated with the production and distribution of goods. These troubles are the prerogative of profit-seeking individuals who produce what they want, hire those who agree to receive appropriate remuneration under the given conditions of work, and do without everyone else, but cannot command the labor force in the same way as the pyramid builders, or physically punish careless workers, which the feudal lord often did.

It is these three historical innovations that underlie the worldview of each of the great economists. Descriptions and prescriptions change as an increasingly fluid economy gets rid of the yoke of tradition and deprives planning of the right to command its own activities, but no matter how different Smith is from Keynes, and Keynes from Schumpeter, the defining element of the view of every thinker's life is the concrete social -economic formation. Philosophy from this world was born of capitalism and cannot exist outside this system.

What does all this have to do with the two semantic shades of the title of this chapter, namely the probable end of science and the achievement of the goal by the economy as such? To deal with the first possibility, it is necessary to notice a major change in the way economists communicate their thoughts. It first manifested itself in the fact that more and more often the process of buying and selling was portrayed in abstract terms; perhaps it all started with Edgeworth, his discourse on pleasure, pain and the Arithmetic of Happiness, and also with Thünen and his "fair reward" - the heroes of the seventh chapter. By the time Marshall entered the arena, pretty graphics were looking at us from the pages of many books; Keynes used algebra extensively to describe his findings.

Surprisingly, the ever-increasing role of mathematics is not the main distinguishing feature of the current stage of economic development. In the conditions of the latest technologies, data in numerical form occupies a special place. The industrial economy produces and needs a volume of quantitative data that was not imaginable before the advent of high-speed manufacturing and instant communication. Today, the economies of individual countries are more dependent on each other than the workers at Adam Smith's pin factory, and with this dependence, both existing volumes and the demand for new information are growing on an unprecedented scale. That is why modern economics cannot do without statistics and mathematics. Without them, we would hardly be able to reduce the output of millions of individual firms to one number - Gross Domestic Product, or calculate another indicator of interest to us - the Price Level, in other words - the average price of a myriad of goods and services presented in the economy. This does not mean that mathematical models help us make the best decisions in the light of the floods of information falling on our heads: if econometrics - a recently fashionable combination of statistics and economic theory - is famous for it, then at least not for the accuracy of its forecasts. In any case, we have no choice but to use mathematics in its various forms to simplify the analysis, for the sake of which, in general, economics exists.

There has been a lot of talk about it lately, but mathematization is not the big change that this chapter is about. Mathematics fills economics, formalizes its conclusions and is established as its favorite way of expressing thoughts, but the two disciplines are unlikely to be confused. In my opinion, a much deeper and more important change should be considered the recognition of a fundamentally different concept as central to the whole of economic science and, consequently, the departure from the scene of the old concept. In the new vision, economics is a Science, and its seemingly inextricable link with Capitalism remains in the past.

Let me support this observation with excerpts from two recently published textbooks: Principles of Economics by N. Gregory Mankiw and Economics by Joseph Stiglitz. Both authors are respected by their colleagues in the profession, and their books are not only the richest sources of useful information, but also examples of clarity and accessibility. Let's consider them from the point of view of my assumption. Here is a quote from the introduction to Mankiw's book:

Economists try to treat their subject with the objectivity inherent in other scientists. They approach the study of economics in the same way that a physicist approaches the study of matter, and a biologist approaches the study of life around him: they build theories, collect data, and then analyze this data in an attempt to confirm the validity of their own theories.

We will definitely talk about the pursuit of pseudoscience, but first let's figure out whether the economy really does not have to be inextricably linked with capitalism from now on. Let us turn to Stiglitz's two-volume work for the answer. His answer is extremely simple: the word "capitalism" does not appear on any of the 997 pages. There is simply no room for capitalism in the two-volume introduction to economics.

Selective citation often raises suspicions of bias, and deservedly so. Well, I could direct the skeptical reader to the nearest library for the American Economics Review, the main journal of the American Economic Association, or the Economics Journal, its British counterpart. I think if a skeptic had compared issues before the 1950s and the last ten years, he would find that there has been a noticeable increase in the number of references to "scientific method" lately, and the word "capitalism" appears less and less. You can argue about the details endlessly, nevertheless, I will venture to put forward several explanations for the changes that have occurred.

Let's talk about science. There are at least several reasons why the very concept of science has gradually become an integral part of the baggage of the economist. The first and rather convincing reason is this: students of economics, just like those who study nature, first of all look around in search of patterns in behavior that would lead to the discovery of "laws" - most likely the crown of any scientific activity. In the absence of the laws of attraction, we could hardly explain (or predict) the orbits of planets or the trajectories of aircraft. A natural question arises: is it possible to find some kind of laws of economic behavior?

I specifically say "some kind of laws" because the behavior of individuals is certainly much more complex and less predictable than the whims of objects moving in space. As soon as the price of clothes goes up, in all likelihood, the volume of purchases will decrease, but this will not happen if our attention is attracted by colorful advertising. At the same time, few would deny the existence of a general relationship between product prices and demand from buyers: when prices change, the amount of demand changes, and, as a rule, in the opposite direction.

Moreover, a similar relationship between motivation and outcome can be found in the case of our income and expenditure on consumer goods or in the change in the interest rate and investment costs of a business. It turns out that economic behavior is marked by a pattern that is inconceivable for other spheres of public life like politics. It is no less surprising that, depending on whether we act as sellers or buyers, the same changes usually lead to diametrically opposite consequences. This is what distinguishes economic interactions from any others. The dual impact of changes in price on the behavior of market participants makes it a successful way of organizing society, a unique mechanism within which economic behavior can be viewed as a natural and balanced process.

Therefore, it is hardly surprising that people assumed quite early on that the market system was related to the natural processes studied by science. Why such a comparison was extremely attractive, and there is no need to explain. If economics became a real science, our ability to predict the course of events, as well as to influence it, would increase markedly. Of course, economics would help us master our own future no more than physics allows us to control the force of gravity, but, without a doubt, we would have a better idea of ​​the consequences of changes in the work of the economic system, which means we could choose more reasonable options. Why, then, does the increasingly clear desire to see economics as a science not arouse our approval?

There are two reasons for this. Marshall drew attention to one of them. Highly appreciating the scientific nature of some aspects of economics, he nevertheless warned that "economics cannot be compared with exact sciences like physics, since it deals with a subtle and constantly changing subject - human nature." We are confidently talking about the existence of chemical and physical laws that explain the behavior of electrons and mesons, but we must not forget about the tangible difference between the "behavior" of these natural elements and living people, which are the subject of study of social sciences. When scientists refer to the behavior of electrons when explaining the phenomenon of light, no one assumes that each electron "makes a decision" about whether to move or not. On the contrary, speaking about the phenomenon of price changes, economists also analyze the behavior of sellers and buyers and cannot but admit that what happened is a consequence of the fact that all individual market participants decided to do this and not otherwise. In short, aside from purely physical reflexes, behavior cannot be viewed in isolation from the concept of "own desire" and the associated completely unpredictable tendency to change decisions on the fly. As for the elements of physical nature, they "behave" in a certain way for many reasons, but we know one thing for sure: the behavior of these particles is not due to their own "decision".

Consequently, inaccurate use of the word "behavior" can lead to a confusion of two fundamentally different things - the basic element of our conscious existence and that which has nothing to do with conscious existence. If economics were a science, then we would be assigned the role of simple robots, capable of choosing a reaction to an increase in prices no more than a particle of iron to a nearby magnet.

The second objection, though it may seem quite different, is in fact the flip side of the same coin. And the thing is that the social life of mankind by its nature is very dependent on politicians... In other words, moving from hunting and gathering to living according to a plan, each society creates different kinds of categories in accordance with the availability of privileges: aristocracy and slaves, classes and castes, the rights of owners and the powerlessness of the poor arise. From which it clearly follows that capitalism is not an exception to the general rule. What decides the fate of such an important economic process as the distribution of wealth and income - contradictions in society or the power of attraction? Taxes, inheritance rights, the existence of sweatshops - are all these manifestations of irrefutable laws of nature? Or are they still extremely changeable products of the socio-political environment in which we live?

This question is closely related to Mankiw's assertion that economists "try to treat their subject with the inherent objectivity of other scientists." But what does it mean to be "objective" about inherited wealth or extreme poverty? Does this mean that such situations only reflect the fundamental properties of society and therefore should be taken into account in the same way as a scientist takes things visible through a telescope or microscope for granted? Or maybe, with accurate information about our own preferences regarding the functioning of society, we could distance ourselves enough to take a neutral position? In this case, is it permissible to call the discoveries "scientific", despite the fact that the objects of our study are generated not by nature, but by society?

Of course, this cannot be done. Of course, scientific methods find their application in economics, especially when it comes to the problem of the most conscientious way of collecting and analyzing data necessary for economic research. But when it comes to practical recommendations, it would be strange to imagine our advice as something predetermined by the structure of society - it, unlike nature, does not obey iron laws. Moreover, if we recognize the existence of power and obedience in all stratified societies, then we automatically deprive our explanations of the objectivity inherent in the study of nature. At best, we will offer an analysis of the processes taking place in society in terms that are usually used to describe nature. If such pseudoscience really prevails in economics, then it must be admitted: in this case, the era of philosophy from this world will come to an end.

Now is the time to return to interpreting the word "end" as the destination, the final goal of any discipline. If economics is not a science about society, then what can it give this society in the end?

My answer is that the goal of economics is to help us better understand the reality of capitalism that surrounds us. It is most likely that it is in this environment that our common foreseeable future will take place. For many years I have defended the advantages of democratic socialism, and it is not easy for me to make such a statement. Nevertheless, given the experience of building socialism in the twentieth century, it is difficult to expect its rebirth into a more attractive form in the next century. It seems that the coming decades will be a rather difficult period in the history of mankind, which means that even the possibility of building socialism in less developed countries (where its onset is most likely) carries the potential for political megalomania, bureaucratic inertia and ideological intolerance.

Without a doubt, capitalist societies will suffer from various conflicts and live in tension. Environmental threats, and above all global warming, oblige us not only to resist climate change in the poorest countries of the planet, but also to fulfill a much more difficult task: to reduce emissions into the atmosphere of substances that these hazards create, and here we are talking about developed countries. Add to this, on the one hand, the alarming proliferation of nuclear weapons, and, on the other, ethnic, racial and religious hatred, and it becomes clear that the capitalist system is far from protected from everything. Finally, globalization is gaining momentum; being born within individual economies, it reaches the supranational level and threatens the independence of the wealthiest of them. In short, the rich capitalist world should look into the near future with the same apprehension - but perhaps less despair - as the poor pre-capitalist and pre-socialist countries.

If all this is so, then why do we need those pictures of the world and the accompanying analysis that economists offer us? Obviously, the economy is not able to offer anything in terms of political leadership, diplomatic intrigue and raising the morale of the population - and it is these factors that will play a critical role in deflecting the threat of collapse from the capitalist society. Despite this, philosophy of this world has a unique ability: by sharing its vision of the world, it is able to help some capitalist countries get through the coming decades with minimal losses.

I want to draw your attention to the word "some". Once again, I will briefly recall the distinguishing features of capitalism: the pursuit of capital, imposing restrictions on market dominance, as well as the distribution of power between two interconnected but independent sectors, private and public, which can be very useful, but can also be harmful. To this list, however, it is worth adding the ability to adapt and introduce innovations, which creates a whole range of opportunities for capitalism - depending on the intensity of capital accumulation, the degree of freedom given to the market to carry out its activities, as well as on the location of the boundary between private and public. ... Therefore, despite their outward similarity, we are dealing with a whole set of capitalist societies... To be convinced of the validity of this statement, it is enough to look at the huge gap between socially successful (more than economically) Scandinavian countries and exemplary from an economic point of view, but catastrophic, from the point of view of an ordinary person, American capitalism. For example, payments to the heads of the largest American corporations are twice as high as in France and Germany, while the social mobility rate of the poor in America is almost two times lower than in French and German and almost three times lower than in Sweden. The first part of the comparison points to a culture built around greed, the second to the degree of indifference of society to its problems. This combination demonstrates the lack of flexibility required by any country that would like to protect itself as much as possible from surprises in the coming decades, and even more so one that is trying to set an example for everyone else.

A reborn philosophy of this world is able to find its usefulness precisely for these social aspects of capitalism. Economic analysis by itself cannot serve as a torch illuminating our path, but an economic view of things is quite capable of telling about ways to increase purposefulness, increase flexibility and develop social responsibility, so necessary for any capitalist structure. In a word, in the face of impending difficulties, the real goal of philosophy from this world is the realization of such a need, and then the search for possible variants of capitalism, successful both in the economic and social dimensions.

Undoubtedly, they will object to me that the implementation of such an all-encompassing program will require the emergence of new, unusually strong politicians. I will also be told that the knowledge necessary to form the picture of the world of interest to us actually belongs to other areas - from psychology and sociology to political science.

Yes, of course, all this is true. Economics will not save a country in the absence of serious leaders, but leaders will not do anything alone, without the help of economists, no matter how clearly delineated the scope of their subject. It is clear that the new economy will have to borrow a lot from other areas of societal research. If we want philosophy from this world in the 21st century to keep the bar set by it in the 19th and 20th centuries, it must become deeper and expand the circle of its own interests, especially in comparison with its present, frankly sad state. Bearing in mind that the word “end” in the title of this chapter has two meanings, I dedicate my book to this hopeful image of tomorrow's philosophy from this world.

Chapter 10 Changing the Corporate Philosophy of Remuneration The former IBM had very strict remuneration policies; I think most of them stemmed from the management philosophy of Tom Watson Jr., the man who founded the great IBM company in the 1960s and 1970s. Because

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