Economics

The King’s Philosophers, subtitled The Economists and the Rationalization of Power is expected to be in press by 2016 under pen name Warren R. B. Dixon. The book is a commentary on the political influence of the economic profession, particularly in the United States during the Twentieth Century. Below is an excerpt. Some references are noted to an extensive bibliography that is omitted here.


|When Francis Dances With Me|[1]

A true grasp of the state of theory in the 1920s would be acquired by anyone going to the work of Francis Ysidro Edgeworth. In the middle of that decade, he published a three-volume collection of his scientific papers. Typically, an economist of today will recall Edgeworth as a pioneer of mathematical economics, which he was, but he was also far more than that. The most untoward remark that Kenneth Galbraith ever made was that every race but the Irish had produced great economists.[i] Edgeworth was both great and Irish. He led the uneventful life of a preoccupied scholar, but he was strange enough for his life to attract our attention. We can think of him as a learned gentleman to the manor born, that manor being an Irish estate, and given to a quiet life of the mind, including deep thought about economic phenomena. More truthfully, he endured a long and struggling obscurity in London. He probably would not have made it without the modest personal funds that sustained him. He made it eventually on his merits, but aided by a certain sycophancy. He complements Marshall less than beautifully. Known as Marshall’s man, he probably got that way through subservience, for he was the more brilliant and original of the two, simply unfavored by the bitch-goddess.

Much of subordination may have been due to his personality. Schumpeter calls him “unleaderly.” He was diffident to a fault, eccentric in conversation, and something of a joke as a teacher. A great mind does not an instructor make. Consider the mumble-fumble pedagogy of Niels Bohr and Ludwig Wittgenstein. Teaching dies from an instructor’s contempt toward it or from a deadbeat attitude toward its opportunity costs. For whatever reason, talentless and dead teaching can be a by-product of genius. If we may believe some of his students, that was the case with Edgeworth, whose bizarre behavior in front of a blackboard they ridiculed. Perhaps it made his teaching better. I knew an anthropologist who would lecture while standing on top of the desk, and a lady historian who sometimes delivered lectures while lying flat on her back on a table. The weird behavior supposedly galvanized the students to attention. If Edgeworth was a bad teacher, it appears not from arrogance or contempt for his audience. He had a reputation for warmly encouraging the young and extending courtesy and kindness to the ordinary.

An absent-minded bachelor, he was never a lady’s man. He resembled Adam Smith in being a beau only in his books. The one instance we know concerning his gender outlook is that he hit on Beatrice Potter, she who would later become famous among economists as Beatrice Webb. We may wonder what affect it would have had on the researches of the Fabians if she had not, more or less, laughed in his face. Francis and Beatrice Edgeworth might even have improved the Fabian literature. The man who co-invented the Paretian Optimum, was no Pareto (who despised the weak and ridiculed cripples). Neither was he a socialist, but if we turn to such forays as his “Equal Pay to Men and Women for Equal Work,” or his “On the Relations of Political Economy to War,” we find a rational humanitarian outlook and a high sense of fairness. His mathematics did not, as was so often the case among American high theorists, divorce him from the poor or from the common citizen. We cannot imagine Edgeworth preaching Reaganomic redistribution. Of course, the mainstream economists of Great Britain during the Marshallian era followed a humane tradition. Edgeworth was running with the herd.

In his inaugural address at Cambridge in 1889, he said of mathematics that for an economist it was useful but not strictly necessary, which overstated the case. Listen a moment to how he handled it: “The idea of reducing human actions to mathematical rule may present itself to common sense as absurd. One is reminded of Swift’s “Laputa,” where the beef was cut into rhomboids and the pudding into a cycloid, and the tailor constructed a very ill-fitting suit by means of rule and compasses.”[ii] He then tells us that economic empricism is a matter of rough statistical approximation and the economath has no numbers at all, just functional relations. To Edgeworth the use of mathematics in economics was for clarification. “For example, in the case of international trade the various effects of tax or other impediment, which most students find it so difficult to trace in Mill’s laborious chapters, are visible almost at a glance by the aid of the mathematical instrument.”[iii] That kind of remark would occur often over the years, even from that quintessential mathematical economist, Gerard Debreu, whose endorsement virtually made it received doctrine. As another eminent example, Karl Menger’s naïve faith would extend it to every corner of economics. Even where it was unnecessary, if it were used “surely fewer unintelligent things would be said.”[iv] That outlook became a standard positivist illusion infecting the professional journals with mathspeak.

Edgeworth duly recognized that the “mathematical instrument” also sometimes lead to new insights. We find him making such comments as, “That the factors of economic equilibrium are simultaneously determined is a conception which few of the literary school have received.”[v] The reader may recall that Hicks was to make a similar remark later. The Walrasian gremlin came early and stayed late among the abstractionists, who were slow (or never) to recognize that their new insights were sometimes outsights, a word that needs coining among theory’s Mandarins. His inaugural address appears in the second volume of his collected papers. It is the first of eight articles on mathematical economics that, as a whole, illustrate more clearly his philosophy as to the uses of economath than did his Laputa comment. He shares the attitude later expressed by Nemchinov, an attitude more fêted than practiced—but argued with a hammer in the present book, namely that it has a necessary but auxiliary function. Edgeworth had managed his inaugural address with an offstage mathematical appendix. This Irishman was good at economath, spoke it well, and showed a creative flare in the science of statistics to which he contributed signally. Surprisingly, his mathematics was self-taught.[vi] That proves, in spite of his reputation as an eccentric instructor, he must have been a wonderful teacher when his student was a genius.

A more aggressive defense of the mathematical economist may be found at the first part of Mathematical Psychics. Marshall commented concerning Edgeworth in a review of that book, “It will be interesting, in particular, to see how far he succeeds in preventing his mathematics from running away with him out of sight of the actual facts of economics.” Over a century later, Werner Hildebrand would reply, “It is not the mathematics which is running away with Edgeworth but his love for the classics. Edgeworth's arguments satisfy today's standard of rigor.” Of course they do. Marshall, however, was referring to relevant approximation to real world situations and solutions. Hildebrand is on the high theory high horse of scholasticism. Note the change in attitude, not only from pragmatism to scholasticism but from respect to disrespect for a Renaissance education as having anything to do with economists.[vii]

Hildebrand’s comment repeats an old libel on Edgeworth’s writing style. He is readable enough in many of his papers, even for an educated general audience. Still, unlike Marshall, he was never widely read. To explain his unpopularity, some have thought him weak at prose. Au contraire, he has a meditative writing style, adorned with literary and historical references, true, but that should not bother the educated reader. The general perception, however, is that he wrote like an Enigma Machine. In the old Victorian way in which any gentleman had a little Latin and less Greek, he did not deign to translate foreign remarks. His educated readers would know, of course, the continental and classical tongues. He would not insult them by footnoting French, or whatever, into English. He never addressed hoi polloi, wrote usually for the profession, but often enough was communicating with a presumed intelligentsia. We have a sense, in studying Edgeworth, of being in contact with an older tradition of better educated economists. He is a relief from ukelele virtuosos, so common today in the profession. The more innocent reader may browse among his papers pleasantly enough, but would probably be wise to stay away from his monograph on Mathematical Psychics, which was a product of his brilliant and self-confident immaturity.[viii] The mature Edgeworth resides in his 1925 collected papers, edited carefully by Edgeworth himself.[ix]

Economists mainly remember him today for his technical devices, especially the contract curve that mathematizes two-party conflicts, or for his éclat in such flashes as the “paradox” in which a tax on a commodity can, under certain circumstances, cause the price to fall. Or better yet, the “Edgeworth conjecture” that an economic system is perfectly determined as the number of agents approach infinity. It was for that reason that we previously noted that the entrepreneur disappears in perfect competition. The Paretian Optimum could be as accurately called the Edgeworth Optimum. We could string a necklace out of such Edgeworth pearls. Much fuss has been made about his analysis of the relation between market and non-market economic organizations and its implications for game theoretic analysis. Since 1959, Edgeworth market games, using the contract curve at its “core,” has extended Edgeworth’s conjecture by way of game theory all the way to compatibility with general equilibrium.[x] Peter Newman, in his radiant re-editing of Edgeworth, thinks both Marshall and Jevons failed to understand the significance of Edgeworth’s conjecture or that it dovetailed with the equally conjectural Walras.[xi] Perhaps so, but Marshall in particular was expressing the fear that a mathematical pandemic was incubating. That plague did come finally to the neoclassical castle, like the masque of the red death. After all, game theory is a game played by game theorists.

Edgeworth’s papers contain a better and broader mind than that. Probably not one economist in a hundred reads Edgeworth today, even though he is available in excellent reprints. He was a prodigious writer.[xii] Even so, his writings are less consulted than the novels of the old aunt he remembered (if at all) from his Irish infancy. Maria Edgeworth’s stories are still reprinted and sometimes even read (having been discovered by feminists) while the Edgeworth papers are museum pieces to be visited by people like the present author, who even enjoys his maligned prose (as, by the way, did Keynes, Schumpeter, and Stigler, finding it charming and addictive). Even so, some attention has been paid lately and we may even hear of the Edgeworth Revival.

[1] Title of a 1921 popular music hit, words and music by Benny Ryan and Sol Violinsky.

[i] Galbraith’s precise statement was: “all races have produced notable economists, except the Irish.” He is so quoted in the Britannica. Mark Blaug noted that Galbraith had said this in his 1981 television series called “The Age of Uncertainty.” Blaug asked, “Had he forgotten the names of Cantillon, Longfield, Cairnes, Leslie and particularly Edgeworth?” Right on! See Blaug (1986), p. 71.

[ii] Edgeworth (1925), 2, “Application of Mathematics to Political Economy,” p. 274. Note that the comment about Laputa fits many an economist of today. Since Edgeworth seriously edited his 1925 papers, the unedited address, because of its significance, may also be found in Newman (2003), pp. 270-310, under the fuller title “Points At Which Mathematical Reasoning Is Applicable to Political Economy.”

[iii] Ibid., p. 274

[iv] Waismann (1951), p. viii in the 1959 edition (to which Menger wrote the introduction). Perhaps the reader should note that Karl Menger is a renowned mathematician and the son of the great economist, Carl Menger.

[v] Edgeworth, op. cit., p. 297.

[vi] Perhaps it is relevant that Sir William Rowan Hamilton (he of the Hamiltonian) had been close to his family in Ireland and that later Jevons was his friend.

[vii] Marhall’s comment occurred in Academy (1881) and Hildebrand’s in European Economic Review (1993). Just in case we get too relaxed about Edgeworth’s genius, it is amusing to note what Walras thought of it all: “I have been particularly impressed by one thing, and that is that economists who are mediocre mathematicians, like Jevons, have produced excellent economic theory, whereas some mathematicians who have an inadequate knowledge of economics, like Edgeworth, …talk a lot of nonsense.” This remark appeared in a letter written in 1990. This has a double humor in that Walras himself would hardly frighten a real mathematician.

[viii] For the patient reader whose curiosity is aroused enough to try Mathematical Psychics, a précis of the work can be found in Newman (2003), pp.xxxvi-xiv. It is a good appetizer.

[ix] Some truly excellent papers are missing from the 1925 collection. They may be found in Ibid.

[x] The reference is to Shubik (1959). For a well-turned non-mathematical commentary, see Gordon (2000), which is an undergraduate paper from a student of E. Roy Weintraub. Posted at http://www.econ.duke.edu/Journals/DJE/dje2000/gordon.PDF (accessed in February, 2000).

[xi] Newman (2003) p. xlv-xlvi.

[xii] According to Peter Newman, Edgeworth’s prolific mind generated in all “four books, 172 articles, pamphlets and notes, several of them in multiple parts, at least 173 book reviews, and 132 entries in Palgrave’s original Dictionary of Political Economy….” Newman (2003), p. xiv. See Alberto Baccini’s “A Bibliography of Edgeworth’s writings,” Ibid., Section VI.