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Redeeming Economics: Rediscovering the Missing Element (Culture of Enterprise) Hardcover – October 18, 2010
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“The scope of Mueller’s intellectual ambition in this book is truly astonishing, as is the scope of the research involved. . . . People should invest the time needed to read, absorb, and promote this important book.” —Jennifer Roback Morse, PhD, in The Family in America: A Journal of Public Policy
“Both Washington and Wall Street sorely need Redeeming Economics.” —Larry Kudlow
“Bold, interesting, and thought-provoking—a book that could fundamentally reground the discipline of economics and reorient the study of political economy.” —William Kristol, the Weekly Standard
“Mueller opens discussion on essential topics for people of all faiths, political orientations, and worldviews and does so in ways that probe the limits of rational choice and foster interdisciplinary conversation.” —Choice
“Mueller is that rarest of thinkers and writers: one who can make the ‘dismal science’ thoroughly engaging at a very human level—a man who knows his economics but never loses sight of people amidst a forest of data.” —George Weigel, Distinguished Senior Fellow at the Ethics and Public Policy Center
About the Author
John D. Mueller is director of the Economics and Ethics Program at the Ethics and Public Policy Center, and president of LBMC LLC, a firm specializing in economic and financial-market forecasting and economic policy analysis. Mueller’s articles have appeared in the Wall Street Journal, the Weekly Standard, the Washington Post, and the Harvard Business Review. He and his wife live in Washington, D.C.
Top Customer Reviews
Along the way, I have come to believe more and more deeply that a free economy is the path to prosperity and the only moral social system. (Footnote: our current system is very far from a free economy - I would characterize it as "crony capitalism", or "corporatism".) I found the Austrian school of economics to be the most intellectually coherent, and its critique of "scientism" to be especially relevant in the devastation caused, in part, by overreliance on quantitative models of human behaviour.
That said, Mueller is no Austrian, and views Austrianism merely as one branch of the neo-classical school, which is not unfair. His approach to economics is based on Aristotle, Augustine, and Aquinas (the three A's), and he argues convincingly that the synthesis of these three sources contains and supercedes current theory. Along the way, he demolishes Adam Smith's contribution, and shows it to be a step backward from what was already known to the Scholastic School (and what he in fact taught before he wrote Wealth of Nations). It was also a direct precursor to the work of Marx, because if the labor theory of value is true, as Smith asserted, then it logically follows that landlords and capitalists indeed do "expropriate" the "surplus value" from the workers. What Smith did was ignore and suppress the role of utility in creating demand and as an explanation of value, a factor that was not unknown to the three A's. This factor was rediscovered by Menger, Walras, and Jevons - the marginalist revolution - and this was the genesis of the neo-classical school, whose hegemony Mueller thinks is coming to an end. He expects it to be superceded by a neo-Scholastic revolution.
After the marginalist revolution we had a theory for production, exchange, and utility. There's still one equation missing, and that is the equation for "final distribution". Here is where Augustine comes in. Along with a preference ranking for scarce means, which is the driver of marginal utility, all human beings also have a preference ranking for ends - which are persons. And it is this preference ranking which controls the final distribution of goods and services. This is the "missing ingredient" in economic theory, and Mueller shows that it can explain much that currently remains a mystery to the economic profession.
Mueller is a vastly educated man, and the book is a delightful exposure to many aspects of intellectual history. I love the way he thinks and writes. His ability to integrate, summarize and compare systems of thought is exciting and a great pleasure to observe. I am enjoying waves of fresh insights into the human condition, and expect to use his framework to gain further understanding.
Meuller's argument is, at essence, that economists have looked into the same box of formulas and social philosophy and decided it's too difficult to manage all in one piece --so they've simply removed all the humans from their economic systems. This leaves them with very tidy systems with which to predict the future, but those systems turn out to be completely wrong because they've left out the only piece of economics that really matters, the people. Leaving people out economics almost seems like an absurd idea, but as the author explains the history of economic thought, you can see the reasoning behind the removal.
If you see people as mere "meat machines," who are not really capable of rising above their environment, this removal almost makes sense. But the reality is that humans are not, in fact, "meat machines," capable of being predicted and controlled through various market forces. Economics, then, comes down to a question of worldviews, like most other questions do -- the crucial question becomes why, not in the sense of "how," but in the sense of "purpose." What is the intent behind the individual's economic activity.
Returning to this question is ever more important in our current age, where we seem to think "big data" is somehow going to find the "ghost in the machine," or prove there is no ghost after all. That we are going to be able to use Moore's Law to overcome the barriers to explaining just what sort of "meat machine," humans are, thus validating all our fondest dreams of engineering a perfect society through technology. Meuller throws cold water on the face of the dreamer by showing that unless you account for love and relationship, two things "meat machines" don't have, you can't explain human economic activity.
The author's argument is that Adam Smith began with four economic principles garnered Aristotle, Augustine, and Aquinas --final distribution, production, exchange, and utility-- and reduced them to two by removing final distribution and utility. Economists discovered that utility was a necessary component in explaining pricing, so they have added it back into their formulas, but they have resisted adding final distribution back in because of it's human element. He then shows how this removal of the human has led to every failed economic system in the last 200 years, from Communism to the modern welfare state.
To test his theory, Meuller pits it against a recent paper that attempts to link abortion to the crime rate, and fails. The author finds the abortion rate is economically tied to the crime rate when the human as an independent moral agent is put back into the formula. The work in this section of the book is phenomenal in its scope and explanatory power. To show this, however, Meuller does dive into math of a sort that's probably going to glaze over the eyes of a large number of readers. The math he moved from the beginning shows up here, and carries on throughout the rest of the book.
It's well worth wading through, for this explanation of economic history is compelling and interesting, especially in tying economics to worldview in a solid and understandable way.
"This book unearths a forgotten piece of the puzzle that could prove to be the holy grail of modern economics." Edwin Feulner, president of Heritage Foundation.
This is not for the frivolous reader .
See an introduction by the author, John D. Mueller : on .isi.org/books/bookdetail.aspx?id=60260279-5db7-4061-9549-71356eb6c530