Mark Blaug (1937- ) was born in the Netherlands, raised in the US and became a naturalised Briton in 1982. He made far reaching contributions to a range of topics in economic thought. In addition to work on the economics of art and the economics of education, he is best known for his work in history of economic thought and the methodology of economics.
He wrote a lengthy memoire in an essay titled “Not only an economist – autobiographical reflections of a historian of economic thought.” This is on line at Questia.
Henry George and Marx
I owe the decision to study economics to the influence of the writings of Henry George and Karl Marx. In 1944 I was 17 years old and attending Peter Stuyvesant High School in New York City. I enrolled for a course in Commerce, and in the last week of the term the teacher took some of the better students, which included me, to a special lecture at a nearby Henry George School.
He was intrigued but not entirely convinced by Progress and Poverty but next he encountered the pamphlets of Lenin and Stalin and then the weightier tomes of Marx and Engels which “completely bowled” him over, so he became an avowed follower of Marx.
When I now try to recall just what it was about Marxist writings that converted me so quickly, I think it was a combination of qualities that says as much about me as about Marxism. Firstly, it was the aura of the absolute conviction of possession of the truth that radiated from every page of the writings the leading Marxists, accentuated in the case of Lenin and Stalin by their dogmatic and abusive tone towards their intellectual opponents. Secondly, it was the encyclopaedic range of Marxist theory, the sense that here was a universal science of society and indeed a philosophy of history as well as a philosophy of nature…Even all this does not fully account for my attraction to Marxism. The real appeal of Marxism for me was its conceptual apparatus, its intricate jargon of special terms and categories, its endless Talmudic distinctions between “base” and “superstructure”, between “modes of production” and “relations of production”, between “strategies” and “tactics” of social action, between the “contradictions” and the “unity of opposites” of social and economic systems, etcetera, etcetera. Once one had commanded the technical language, adherence to Marxism created an entire subculture of discourse in which, literally, one could only be understood by other Marxists. In short, Marxism gave me my first glimpse of the culture of scholarship, an intellectual community that feeds upon itself.
I did not remain a purely intellectual Marxist. I joined the American Communist Party, attended political meetings and participated in party demonstrations. I did this reluctantly because I was never much of a joiner but, nevertheless, I went through a brief period of genuine political activity. It was brief because my natural rebelliousness soon got me thrown out of the Communist Party…Although I ceased to be a card-carrying member of the Communist Party in 1945, it took me at least another seven to eight years to shake off all the blinkers that Marxism leaves behind…
When I think of some of the things that I believed when I was a communist and that I expounded passionately and with a sense of total conviction, I blush to the roots of my hair. I can remember, for example, how I defended the Stalinist version of the Moscow Trials, namely that Trotsky living in Paris and Mexico City had orchestrated a vast conspiracy of sabotage inside the Soviet Union that even infected the Soviet military hierarchy–and this despite reading Arthur Koestler’s Darkness at Noon, which I brushed aside as bourgeois propaganda. It has made me suspicious ever since of beliefs strongly held and has helped me to be more tolerant than I am naturally inclined to be. Whenever I now pronounce that so-and-so is absolutely true, I always say quietly to myself; “yes, just like the Moscow Trials.
He had a nasty experience of McCarthyism when he was the one member of the faculty at Queens College in New York to sign a petition in support of a respected colleague who was dismissed by the City University of New York. The College President sent a brief note to say if he did not resign forthwith he would be dismissed and black-listed for future employment.
This looked like a disaster for his career and he was broke and depressed when the telephone rang to inform him that he had been offered a grant by the Social Science Research Council to enable him to go abroad to write my PhD thesis. People behind the scenes were lending assistance to victims of McCarthyism.
In the curious way that every disaster in my life has always in due course turned into a blessing, there now began what I quickly realized were the best two years in my life. I had picked a topic, the rise and fall of the school of David Ricardo in nineteenth century economic opinion, that turned out to be even more promising than I had imagined.(1) I also discovered that scholarly research was my true metier. I took a room within a stone’s throw of the British Museum Reading Room in London and lived the life of a medieval monk, reading and writing as much as 18 hours a day, 7 days a week. My early efforts were sent off to my doctoral supervisor, George Stigler, then at Columbia University, whose acerbic but acute comments were just what I needed to spur me on. Two years later I was back in New York with a completed thesis.
Two years for a PhD thesis!
The Flirtation with Freud
Even as I fell under the spell of Marx, I also succumbed to the siren call of Freud. In the summers of 1944, 1945 and 1946, I worked as a waiter in upstate New York hotels–the so-called “Borsht Belt”–and many of my guests were psychiatrists and psychoanalysts. It didn’t take long before I was deeply immersed in the writings of Freud and Freudians and thrilled by the power of Freudian theory to explain everything, a power which of course reminded me of the style of Marx. I still recall vividly being absolutely entranced by Freud’s Interpretation of Dreams, the sense that something as inherently mysterious as dreams could be accounted for in an rational manner. I yielded too, to the enormous rhetorical power of Freud, who, whatever one may think of him as a scientist, was a great literary artist. Freudianism stayed with me insidiously much longer than Marxism. But, gradually over the years, I became increasingly aware of how self-fulfilling and self-justifying were many of the key concepts of psychoanalytic theory and how characteristic was the unwillingness of analysts to submit Freudian ideas to an empirical test. I now think that virtually the whole of Freudian theory is a tissue of mumbo-jumbo and that psychoanalysis as a therapeutic technique is not very different from Chinese brain-washing. But this was a view that came to me only slowly and not without a certain measure of personal experience with psychoanalysis.
Why Bother With the History of Economics?
Ever since my childhood, I have been a voracious reader. When I was young, I read to escape and later reading a book a day became a habit which I could not shake off. A non-stop reader has a comparative advantage in a subject like the history of economic thought and in that sense intellectual history, at least for me, a form of self-indulgence. Within a year of arriving at Yale University in 1954, I was asked to take over William Fellner’s graduate course in the history of economic thought for no better reason than that I was the only person on the faculty anxious to teach it. And so, at the tender age of 27, I found myself teaching a compulsory course in the history of economics to postgraduate students at one of America’s foremost institutions of higher education. Yale in those years admitted some twenty to thirty hand-picked graduate students in economics and in the next few years my students numbered at least a dozen or so names who later became well-known academic economists. I was so nervous about teaching the course that I over-prepared myself: within a few years I had collected thousands of pages of notes, notes that were eventually to become my only well-known book, Economic Theory in Retrospect (1962).
He was an enthusiastic “absolutist” contra the “relativists” who believe that all past doctrines are more or less faithful reflections of the historical circumstances in which they are created.
This is not a point of view I now hold, having been upstaged over the years by even more strident upholders of the “Whig interpretation of history”. When I witness the attempt of many commentators in recent years to reproduce the great ideas of the past in modern dress, particularly in one or another mathematical model, I realize that absolutism carried to its logical extreme deprives the history of ideas of all raison d’etre: far from imparting an appreciation of the past, it actually destroys historical understanding by condemning all thinkers down the ages to live now and to think as we doapart from Schumpeter and Stigler, it was my students at Yale who would have driven me to absolutism whatever its intellectual merits. The history of economic thought was a compulsory graduate course in the 1950s but these students were typical American graduate students: they wanted to learn the tools and techniques of modern economics and to hell with such scholarly subjects as economic history and the history of economic thought. I was aware from the moment the course began that I had to sell the history of economics as somehow relevant to these young Turks. No wonder then that I taught the subject by emphasizing the filiation of purely analytical concepts and continually emphasizing the modernity, and sometimes lack of modernity, of the ideas of the past
The very task of working so hard to put over the history of economics as a legitimate subject for intellectual inquiry eventually soured me on the subject altogether. By the time I left America in 1962, I was more or less determined to work instead in applied economics. But eventually, after a holiday from the history of economic thought for a decade, I came back to it again in the 1970s as my first and ultimately last love. In the final analysis, I find nothing as intellectual satisfying as the history of ideas.
The Economics of Education
In 1962, I left America to spend a year in Paris on a research scholarship to continue my investigations of the nineteenth century cotton industry. At the end of that year I reached the promotion barrier at Yale: after six years as an assistant professor an American university must either promote you to an associateship, which carries tenure, or dismiss you.
I began making applications for a number of vacancies at British universities but there was little expansion in the academic job market in 1962 and I soon realized that I might well fail to find a job before the year was out. By a fluke I bumped into Lionel Elvin, the Director of the University of London Institute of Education, who told me that they had been unable to fill a vacancy in the economics of education because this was a new field in Britain. I had never heard of something called “the economics of education” and decided to inform myself. This did not take long because the subject was indeed little researched in 1962. I took the bull by the horns and wrote to Lionel Elvin, admitting that I was a novice in the economics of education, but asking whether the Institute would hire me on a temporary basis for a year or two. They agreed to do so and those two years turned, much to my amazement and theirs, into 23 years!
It did not take me long to become an enthusiastic advocate of human capital and I was certainly the first to venture to make rate-of-return calculations for educational investment in Britain. For about a decade, roughly from 1965-75, I proselytized on behalf of human capital theory and I like all enthusiasts, outperformed my adversaries at least quantitatively. But then this God failed as had Marxism and Freudianism before. In 1976, I published a long post-mortem whose title says it all: “Human Capital theory: A Jaundiced Survey”.
I spent a good deal of time during my years at the Institute of Education on leave in Asia and Africa as an educational consultant for various UN agencies, such as UNESCO, UNECAFE, ILO and the World Bank. I participated in economic missions to six underdeveloped countries in tropical Africa, South and South-east Asia. I lived in India for six months writing a book on graduate unemployment and worked in Thailand and Indonesia for a year, working for the Ford Foundation. At first, I learned a lot about development economics and the role of economic advice to Third World governments but diminishing returns to learning soon set in and I found myself repeating more or less everything I had said in the last country had worked in. I started out as a do-gooder, anxious to help lift the downtrodden masses of the Third World from the squalor in which they lived. But as time passed, I found myself more and more inclined to agree with Peter Bauer that aid to developing countries does more harm than good.
The Methodology of Economics
As the 1970s passed by, I turned increasingly towards the methodology or philosophy of economics as a subject of abiding interest. Actually, this had been my interest all along but I had never realized itBy the time I had come to work on my doctoral dissertation, I had somehow absorbed Popperian falsificationism without ever reading Popper. Some of it I acquired from Milton Friedman’s classic essay “The Methodology of Positive Economics” (1953), which, without mentioning Popper, presents a sort of vulgar, Mickey Mouse Popperianism. Some of it filtered down from remarks and asides in Stigler’s essays on the history of economic thought.
In 1962, while living in Paris, I strolled into a bookshop one Friday afternoon and saw a copy of Karl Popper’s The Open Society and Its Enemies (1945) which, as everyone knows, is a study of Plato, Hegel and Marx as three great enemies of the open society, I went home and started reading it as soon as I had finished dinner. I read all night, all day Saturday, and, after falling asleep reluctantly, finished the book on Sunday. I can safely say that no book before and no book since has excited me more. It was literally like drinking a whole bottle of champagne at a single sitting.(4) Not only did it slay Plato and Hegel, both of whom I had always regarded as monsters of the right, but it made short shrift of Marx for committing the “apocalyptic fallacy”, the game of predicting doomsday some day in the indefinite future. At the same time, it offered a philosophy of science, falsificationism, and a convincing argument against political revolutions, on the grounds that we lack the knowledge totally to transform society, but that we can and should reform society on a piecemeal basis.
From Popper to Lakatos
In the late 1960s he met Imre Lakatos, Popper’s successor to the professorship in logic and philosophy of science at LSE. They shared many views including their sense of humour. A PhD student with Lakatos, Spiro Latsis, applied the idea of scientific research programs to economics and Lakatos organised a massive conference on the”methodology of scientific research programmes” which was held on the Greek island of Nafplion in 1974. For Blaug and many others this was, the conference of a lifetime.
In economics, there were great men like Lionel Robbins, John Hicks, Terence Hutchison, Herbert Simon, and Axel Leijonhufvud. In philosophy, there were giants like Carl Hempel, Adolf Grunbaum and Paul Feyerabend. It was intellectually exciting; it was held in Nafplion, a beautiful site in Greece; and it was lavishly financed by John Latsis, Spiros Latsis’ father [a shipping magnate] who gave us all a glimpse of the style to which we would have loved to have become accustomed.
Arguments about the relationship between Popper and Lakatos have raged on ever since 1974. I regard Lakatos as, say, 80 per cent Popper and 20 per cent Kuhn, emphasizing different things but conveying essentially the same methodology as that of Popper. When Neil de Marchi and I organized a second Nafplion conference in Capri in 1989, I was taken aback by the hostility that so many of the economists at the conference expressed for the ideas of Lakatos and Popper. Much of that hostility was directed at Lakatos’ insistence that scientific research programmes should ultimately be judged by the number of novel predictions that they generate. This criterion proved to be too much to stomach for most of the participants who realized that its implication was to cast doubt on virtually the whole of what passes nowadays as neoclassical economics.
Blaug turned his face resolutely against the formalism that came to dominate economics during the 1950s. He pointed out that this is not a result of physics envy, after all, physicists want their theories to be testable and explain what happens in the real world. Economics turned more to maths envy, especially in the form of general systems theory.
What strikes me most about economics after 45 years of studying the subject is the high regard that general equilibrium theory continues to enjoy, despite its failure to realize its own objectives, and the persistent neglect of technical progress as a topic of economic investigation. Economic historians have in recent years finally begun to open the black box of technical change but economic theorists continue to study economic growth as if it were all the result of capital accumulation and the growth of the labour force, mere quantitative increment in the factors of production. There is a central figure in 20th century economics that perfectly reflects this overemphasis on Walrasian general equilibrium theory combined with the underemphasis of technical progress, namely, Joseph Schumpeter. The curious fact about him is how much he himself admired Walrasian theory as the pinnacle of intellectual achievement in economics and, on the other hand, how his own original contributions to economics owed little if anything to the Walrasian inspiration; indeed, if truth be told, it clashed with it. In my younger days, I did not rate highly Schumpeter’s theory of entrepreneurship and its associated treatment of innovations but since then I have come to regard The Theory of Economic Development (1911), the product of a 28-year old economist, as one of the seminal works of twentieth century economics, on par with Fisher’s Theory of Interest or Keynes’s General Theory. The insight that process innovations are only one kind of innovation and probably much less important in economic growth than product innovations or organizational innovations was an insight of genius. And so was Schumpeter’s recognition that bank credit played an essential role in the promotion of entrepreneurship and was not just a financial appendage to machine-driven factory production. It is true that Schumpeter glamorized entrepreneurship and almost reduced it to the heroism of outstanding individuals but, nevertheless, he said more about economic progress under capitalism than any economist since Marx. (What a sad comment on the last hundred years of economics theorizing!). He also recognized that Pareto optimality, perfect competition, static efficiency, and all that–the much-praised first and second Fundamental Theorems of Welfare Economics, inspired by general equilibrium theory–have no practical import because we actually appraise market structures by means of the standards of workable competition, dynamic efficiency, and technical dynamism: that’s what Adam Smith meant by the invisible hand of competition, not the equality of the marginal rate of substitution in consumption with the marginal rate of transformation in production.
An alarming manifestation of sterile formalism in much current economics is the popularity of post-modernist strictures on the very idea of methodology as a set of prescriptive norms. Economics, Donald McCloskey has told us, is nothing more than a species of persuasive rhetoric, not really different from literary criticism and aesthetics. Certain “thick” methodological rules–speak softly, listen to your opponents, give reasons for your conclusions–were all right but the “thin” methodology of Popper and Lakatos was somehow ruled out as illegitimate. That this is a hopelessly inconsistent position seemed never to have occurred to him or his acolytes.
Without turning Popper or Lakatos into gurus whose writings may not be questioned, I would insist that the valid core of their contribution is the notion that economics must aspire to address real-world economic problems and that this aspiration is best satisfied by the production of theories with empirically refutable implications. That is not to say that every analytical concept that fails to meet that requirement must be instantly discarded but simply that we must strive to make falsifiable predictions and certainly must never to rest satisfied with an economic theory until it has been confronted by empirical evidence. Technical puzzle-solving as a game to be played for its own sake is not to be held out as an ideal to students, the way in which it is at the moment.
Throughout my professional career as an economist, I have admired Milton Friedman’s style of doing economics, while detesting his political views, and admired Paul Samuelson’s political views while disliking the type of economics he practices. Between that Scylla and Charybdis, I seem condemned forever to remain.