Tomas Sedlacek, Economics of Good and Evil
Abridged and edited for readability
*There is no idea, however ancient and absurd, that is not capable of improving our knowledge… Anything goes…
-* Paul Feyerabend
Man has always striven to understand the world around him. To this end he was helped by stories that made sense of his reality. From today’s standpoint, such stories often seem quaint—much as ours will appear to the generations that follow. However, the secret power of these stories is profound.
One such story is the story of economics, which began a long time ago. Xenophon wrote around 400 BC that “even if a man happens to have no wealth, there is such a thing as a science of economics.” Once upon a time, economics was the science of managing a household, later a subset of religious, theological, ethical, and philosophical disciplines. But, little by little, it seems to have become something quite different. We may sometimes feel that economics has gradually lost all of its shades and hues to a technocratic world where black and white rule. But the story of economics is far more colorful.
Economics, as we know it today, is a cultural phenomenon, a product of our civilization. It is not, however, a product in the sense that we have intentionally produced or invented it, like a jet engine or a watch. The difference lies in the fact that we understand a jet engine or a watch—we know where they came from. We can (almost) deconstruct them into their individual parts and put them back together. We know how they start and how they stop. This is not the case with economics. So much originated unconsciously, spontaneously, uncontrolled, unplanned, not under the conductor’s baton. Before it was emancipated as a field, economics lived happily within subsets of philosophy—ethics, for example—miles away from today’s concept of economics as a mathematical-allocative science that views “soft sciences” with a scorn born from positivistic arrogance. But our thousand-year “education” is built on a deeper, broader, and oftentimes more solid base. It is worth knowing about.
It would be foolish to assume that economic inquiry began with the scientific age. At first, myths and religions explained the world to people, who ask basically similar questions as we do today; today, science plays that role. Thus, to see this link, we must dive into far more ancient myths and philosophy. That is the reason for this book: to look for economic thought in ancient myths and, vice versa, to look for myths in today’s economics.
Modern economics is considered to have begun in 1776 with the publication of Adam Smith’s Wealth of Nations. Our postmodern age (which seems to be significantly humbler than its predecessor, the modern scientific age) is more likely to look further back and is aware of the power of history (path dependency), mythology, religion, and fables. “The separation between the history of a science, its philosophy, and the science itself dissolves into thin air, and so does the separation between science and non-science; differences between the scientific and unscientific are vanishing.” Therefore, we shall set out as early as the written legacy of our civilization allows. We shall search for the first traces of economic inquiry in the epic of the Sumerian king Gilgamesh and explore how Jewish, Christian, classical, and medieval minds considered economic issues. Additionally, we shall carefully investigate the theories of those who laid the foundations for contemporary economics.
The study of the history of a certain field is not, as is commonly held, a useless display of its blind alleys or a collection of the field’s trials and errors (until we got it right), but history is the fullest possible scope of study of a menu that the given field can offer. Outside of our history, we have nothing more. History of thought helps us to get rid of the intellectual brainwashing of the age, to see through the intellectual fashion of the day, and to take a couple of steps back.
Studying old stories is not only for the benefit of historians, or for understanding the way our ancestors thought. These stories have their own power, even after new stories appear and replace or contradict them. An example could be drawn from the most famous dispute in history: the dispute between the story of geocentrism and the story of heliocentrism. As everyone knows, in the battle between helio- and geocentrism, the heliocentric story won, though even today we geocentrically say that the Sun rises and sets. But the Sun does not rise or set: if anything is rising, it’s our Earth (around the Sun), not the Sun (around the Earth). The Sun does not revolve around the Earth; the Earth revolves around the Sun—so we are told.
Furthermore, those ancient stories, images, and archetypes that we will examine in the first part of the book are with us to this day and have cocreated our approach to the world, as well as how we perceive ourselves. Or, as C. G. Jung puts it, “The true history of the mind is not preserved in learned volumes but in the living mental organism of everyone.”
Economists should believe in the power of stories; Adam Smith believed. As he puts it in The Theory of Moral Sentiments, “the desire of being believed, or the desire of persuading, of leading and directing other people, seems to be one of the strongest of all our natural desires.” Note that this sentence comes from the alleged father of self-interest being the strongest of all our natural desires. Two other great economists, Robert J. Shiller and George A. Akerlof, recently wrote: “The human mind is built to think in terms of narratives … in turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework of our motivation. Life could be just ‘one damn thing after another’ if it weren’t for such stories. The same is true for confidence in a nation, a company, or an institution. Great leaders are foremost creators of stories.”
The original quote comes from “Life isn’t one damn thing after another. It’s the same damn thing again and again.” This is well put, and myths (our grand stories, narratives) are “revelations, here and now, of what is always and forever.” Or, in other words, myths are what “never happened, but always are.” However, our modern economic theories based on rigorous modeling are nothing more than these metanarratives retold in different (mathematical?) language. So it is necessary to learn this story from the beginning—in a broad sense, for one will never be a good economist, who is only an economist.