“Back in 1991, in what now seems like a far more innocent time, Robert Reich published an influential book titled The Work of Nations, which among other things helped land him a cabinet post in the Clinton administration. It was a good book for its time—but time has moved on. And the gap between that relatively sunny take and Reich’s latest, Saving Capitalism, is itself an indicator of the unpleasant ways America has changed.
The Work of Nations was in some ways a groundbreaking work, because it focused squarely on the issue of rising inequality—an issue some economists, myself included, were already taking seriously, but that was not yet central to political discourse. Reich’s book saw inequality largely as a technical problem, with a technocratic, win-win solution. That was then. These days, Reich offers a much darker vision, and what is in effect a call for class war—or if you like, for an uprising of workers against the quiet class war that America’s oligarchy has been waging for decades.”
“Intellectual arrogance, you say. Maybe so–but surely my arrogance is a puny thing compared with that of men who believe themselves able to invent a new and improved economics from a standing start, who are prepared to write books with titles like The Way the World Works or The Work of Nations without bothering to read one or two of those undergraduate textbooks first. (And don’t tell me that they do too know what is in the textbooks. The circumstantial evidence that they do not–the simple things misunderstood, the garbled statistics, the statement of both standard concepts and classic fallacies as if they were revolutionary innovations–is overwhelming.)
Some may also object that while what I say may be true, it is bad form to point it out–that we need to put such quarrels aside and get on with the task at hand. I might respond by noticing that there is a sort of ethics of convenience at work here: Some of my critics have spent years denigrating conventional liberal economists and putting their friends on pedestals, then suddenly declare that such fights over intellectual prestige are unseemly when those pedestals begin to crack. But the important point is that this objection presumes that we are agreed on what must be done–which brings me to the question of what it means to be a liberal.”
“But the commentators had reason for their skepticism. After all, other members of the administration–especially Labor Secretary Robert Reich–have been insistently pushing a very different view. In the world according to Reich, even well-paid American workers have now joined the “anxious classes.” They are liable any day to find themselves downsized out of the middle class. And even if they keep their jobs, the fear of being fired has forced them to accept stagnant or declining wages while productivity and profits soar.
Like much of what Reich says, this story is clear, compelling, brilliantly packaged, and mostly wrong. Stiglitz, by contrast, is telling the complicated truth rather than an emotionally satisfying fiction.”
“What does Gould have that Maynard Smith does not? He is a more accessible writer — but evolutionary theory is, to a far greater extent than economics, blessed with excellent popularizers: writers like Dawkins (1989) or Ridley (1993), who provide beautifully written expositions of what researchers have learned. (Writers like Gould or Reich are not, in the proper sense, popularizers: a popularizer reports on the work of a community of scholars, whereas these writers argue for their own, heterodox points of view). No, what makes Gould so popular with intellectuals is not merely the quality of his writing but the fact that, unlike Dawkins or Ridley, he is not trying to explain the essentially mathematical logic of modern evolutionary theory. It’s not just that there are no equations or simulations in his books; he doesn’t even think in terms of the mathematical models that inform the work of writers like Dawkins. That is what makes his work so appealing. The problem, of course, is that evolutionary theory — the real thing — is based on mathematical models; indeed, increasingly it is based on computer simulation. And so the very aversion to mathematics that makes Gould so appealing to his audience means that his books, while they may seem to his readers to contain deep ideas, seem to people who actually know the field to be mere literary confections with little serious intellectual content, and much of that simply wrong. In particular, readers whose ideas of evolution are formed by reading Gould’s work get no sense of the power and reach of the theory of natural selection — if anything, they come away with a sense that modern thought has shown that theory to be inadequate.
Economics is not as well served by its writers as evolution. Still, the distinctive feature of the writers whose ideas about world trade play well with an intellectual audience is the same: the successful books are those that not only do not explicitly discuss mathematical models, they are not even implicitly based on mathematical reasoning. A book like Robert Reich’s The Work of Nations (Reich 1991) not only eschews equations and diagrams, it never even tries to present the idea of comparative advantage informally. In fact, it never uses the phrase “comparative advantage” at all, even to criticize it. As a result, books by authors such as Reich or Thurow do not make humanists uncomfortable. Unavoidably, however, they also give them no sense of the power and importance of economic models in general, or of Ricardo’s difficult idea in particular. If anything, the message one gets from these books is that in the new economy nineteenth-century concepts no longer apply.”
“Like most American intellectuals, I first learned about this subject from the writings of Stephen Jay Gould. But I eventually came to realize that working biologists regard Gould much the same way that economists regard Robert Reich: talented writer, too bad he never gets anything right. Serious evolutionary theorists such as John Maynard Smith or William Hamilton, like serious economists, think largely in terms of mathematical models.”
“Nor is he shy about naming names, some of them very prominent Washingtonians indeed. Labor Secretary Reich, a much-quoted proponent of national competitiveness, is an “offensive figure, a brilliant coiner of one-liners but not a serious thinker.””
“Robert Reich has never shied away from big ambitions. The title of The Work of Nations deliberately alluded to Adam Smith; Reich clearly hoped that readers would see his work not simply as a useful guide but as a foundational text. Saving Capitalism is, if anything, even more ambitious despite its compact length. Reich attempts to cast his new discussion of inequality as a fundamental rethinking of market economics. He is not, he insists, calling for policies that will limit and soften the functioning of markets; rather, he says that the very definition of free markets is a political decision, and that we could run things very differently. “Government doesn’t ‘intrude’ on the ‘free market.’ It creates the market.”
To be honest, I have mixed feelings about this sales pitch. In some ways it seems to concede too much, accepting the orthodoxy that free markets are good even while calling for major changes in policy. And I also worry that the attempt to squeeze everything into a grand intellectual scheme may distract from the prosaic but important policy actions that Reich (and I) support.”
-Yes, a “far more innocent time” it was: when Paul Krugman didn’t have to be a whore to stay in the top 1%. To use Krugman’s words, “Things have changed a lot since 1991“.