Who's Afraid of Adam Smith? How the Market Got Its Soul

Author: Peter J. Dougherty
List Price: $29.95
Our Price: Click to see the latest and low price
ISBN: 0471184772
Publisher: John Wiley & Sons (16 August, 2002)
Sales Rank: 66,716
Average Customer Rating: 4 out of 5

Customer Reviews

Rating: 5 out of 5
Great introduction to economics but only for open minded !
You have no clue - or almost - about what economics is about but you believe that economists have a very limited "marginal utility". This book might change your point of view.

Not written by economists but by their editor, this book provide a little guided tour through the classical and contemporary authors and their works. The authors key point - and I definitely agree with that - is that economists, from Freeman to friedman, are first and foremost concerned with social progress and in that respect, their contribution is tremendous.

It is definitely not a detailled history of economic though ("the ordinary business of life" by R. Backhouse and edited by the author does it) but the book is full of great anecdotes about famous economists that deserve the purchase.

In other word, if you are an economics graduate and do not dare to tell it to your girlfriend, you can offer her this book and she will push you to get the Ph.D ...

For more advance reader the fantastic "the mind and the market" by Jerry Z. Muller, to whom the author - and the reader - acknowledged a big credit is also recomended

One comment nevertheless : the author makes an excellent pitch for a few books but the one I looked for is not anymore available from the Princeton University Press, where the author works. The good point of that story, is that it confirms to me that this book is also driven by moral sentiments.


Rating: 3 out of 5
Unplugging a new Prometheus
Economics has been a large part of everyone's political expectations lately. In WHO'S AFRAID OF ADAM SMITH? / HOW THE MARKET GOT ITS SOUL by Peter J. Dougherty, there is a section called "Prometheus Unplugged" at the end of Chapter 1, ..., in which we are expected "to watch economists expand impressively on the technical side of Adam Smith's legacy. Continuing breakthroughs in the analytical apparatus of fields such as finance, strategy, growth, organizations, trade, and money promise to charge the wealth of nations in untold ways, to fuel the fire of economic growth . . ." (p. 19). That is not what is happening. I just read HAYEK ON HAYEK, (1994) on how THE ROAD TO SERFDOM (1944) by F. A. Hayek tried to demonstrate that modern methods will not dominate any market by political means because of the complexity of systems in which no one knows what is coming next. People who plan big budget surpluses always have them snatched away before the national debt is reduced to a pittance. Cutting taxes is a political stunt, in this context, in which even WHO'S AFRAID OF ADAM SMITH? is trying to tell us, "As economist Paul Romer has said of the connection between innovation and growth, `No amount of savings and investment, no policy of macroeconomic finetuning, no set of tax and spending incentives can generate sustained economic growth unless it is accompanied by countless large and small discoveries that are required to create more value . . .' . . . history instructs us that the real leaps forward--those that yield true progress--come from those new intellectual breakthroughs, not political logrolling." (pp. 39-40). Neither party is going to learn how to save a geopolitical economy by reading this book, as long as the recent growth in the amount of money available for investment has driven the rate of interest, the return for money market funds, to almost zero.

What is going on? Individual addictions have become so therapeutic for people in American society that it doesn't take long for most people to get what they want. Smokers are currently in the process of being saved from their road to serfdom, and they might get stomped out for openly enjoying something that is almost condemned in this book. "Note the number of rich and middle-class kids who still head to the psychic hinterlands or into drugs or sex or music in search of Meaning or something that closely resembles it." (p. 34). I have tried to argue with those people, and have discovered that most of them would rather not argue about economics at the level currently utilized in U.S. politics, but they applaud Ralph Nader for saying, *The future of the economy of this country is industrial hemp.* Check with Ralph on that quote. It always seems to be funnier, somehow, when he says it.

Allow me to call the author of this brisk little book P.J. This has shades on the cover, informally, I'm sure, but the Preface ends with thanks "To Grady Klein, cunning designer, my thanks for a jacket that so beautifully captures the spirit of this work." (p. xiv). Chapter 1 blends economics with P.J.'s knowledge of publishing books, a profession which has allowed P.J. to associate with Nobel prize winners. Chapter 2 is short, on the success of Paul A. Samuelson's textbook on economics, introducing the ideas of Keynes on smoothing out business cycles to a generation of college students since 1948. Selling more than 750,000 copies established a common outlook among professional people concerned with wealth, and P.J. would like to see a consensus on growth preserved. But at the beginning of Chapter 3, The Warning, is Robert Heilbroner, "If socialism failed, it was for political, more than economic, reasons; and if capitalism is to succeed it will be because it finds the political will and means to tame its economic forces." (p. 30). American troops wiping out a convoy of smugglers at the border of Iraq and Syria is not something that John Maynard Keynes was contemplating when he wrote the other quote, about capitalism trying to be "as efficient as possible without offending our notion of a satisfactory way of life." (p. 30). The old people who have grown used to being a growing part of the consumers of American society, and whose numbers are about to boom like the children of those who believed in the economic growth that became standard in 1948, while P.J. reports that modern economics, "in the wake of the catastrophic events of September 11, 2001--" (p. 186) is shifting to "a new and bewildering set of concepts that include slinky terms like . . . information cascades, adaptive behavior, market friction, diffusion rates, and other such exotica." (p. 187).

I don't actually think that growth is the ticket that is taking the global economic community anywhere that it wants to go, though it is easy to see why political speeches still try to push audiences in that direction. Effective economic organizations, a safety net, and even P.J.'s concern for the moral side of Adam Smith's legacy need to be preserved longer than the smokers.

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