In a piece dear to the hearts of all my Econ 300 students, Master of rhetoric Deidre McCloskey lays out the case for teaching old school, Chicago economics.  Although I certainly beat the maximize! drum, the central intuition is certainly that profits drive economic activity in the long run. McCloskey traces the historical context back to Adam Smith:

The core of Smithian economics, further, is not Max U. It is entry and exit, and is Smith’s distinctive contribution to social science… He was the first to ask what happens in the long run when people respond to desired opportunities. Smith for example argues in detail that wage-plus-conditions will equalize among occupations, in the long run, by entry and exit. At any rate they will equalize unless schemes such as the English Laws of Settlement, or excessive apprenticeships, intervene. Capital, too, will find its own level, and its returns will be thereby equalized, he said at length, unless imperial protections intervene.

The essay is interesting throughout, and I certainly approve of her message on this point.

If you like the rhetoric of this piece, you might consider checking out some of McCloskey’s  other works, as she is indeed a prolific writer.  One recent add to my summer reading list is her update of The Rhetoric of Economics. In it, she argues that “economics is literary,” and that making a persuasive case is “done by human arguments, not godlike Proof.”

This is one of McCloskey’s continuing projects. This one began with her work in the 1980s, and continues to be discussed today. The preface to the second edition, in fact, begins with a discussion of why more people didn’t read past chapter 3 in the first edition.

One thought on “Old School Essay and Book Recommendation (Summer Reading, Part 3)”

  1. Interesting piece. I haven’t read enough McCloskey to fully understand her point. The title says “Why Economics Should Teach Good Old Chicago School Economics” but the content of the piece says that people don’t maximize, that you don’t need maximizing people to get competitive outcomes, and that we should think about economics in a more evolutionary manner. Ostrom includes an epsilon in the utility functions to get ethical (cooperative) behavior. This (along with a bit more humility — always good) seems to be the extent of what McCloskey is calling for. To me, the critique that she levels against Chicago School econ is stronger than the prescription she offers.

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