Thursday, November 28, 2013

Five top books on how the world’s political economy works

Mark Blyth is Professor of International Political Economy at Brown University. He is the author of Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century.

His new book is Austerity: The History of a Dangerous Idea.

With Toby Ash at Five Books, Blyth discussed five top books on how the world’s political economy works, including:
[L]et’s take a closer look at the first of your five books [The Passions and the Interests by Albert O. Hirschman], which I believe looks at the effects of trade on social patterns.

The book isn’t really about that. There’s one section called The Thesis of Doux Commerce in which he talks about the gentling effects of commerce and the late seventeenth century French theory that trade amongst individuals polishes the manners and creates civilité, but that’s a minor part of the book.

The book is about the two notions of the passions and the interests. If you go back to the philosopher David Hume, he says “Reason is, and only ought to be the slave of the passions.” What drives and animates us as human beings is our passions. Reason should be the slave of them. The great victory of the Enlightenment was to make passions the slave of the interests and to push interests forwards. So if we think about it in the context of economics in the modern world, people follow their interests not passions. People who follow their passions are a bit weird.

What does this all mean? He takes us back to the 1700s to show that what you had at the end of the feudal and medieval world was a search for certainty. If you take away the church and the fear of death - which the Enlightenment was busy doing through the scientific revolution - you are left with the potential for anarchy. So something was needed to contain those passions. Hirschman goes back through a reading of Machiavelli and others all the way to the American Federalist Papers, where you have the notion of the balance of passions and the division of powers. He is showing us the search for Newtonisation, a search for the law-like social world, which is the beginning of the mathematical side of the social sciences.

What Hirschman is showing is that it’s all about power. This whole notion of trying to find a balance of the passions to produce interests is about a particular economic society that’s emerging which we now call capitalism. It used to be that people had interests, of course, but no one regarded them as primary. Your interests were often referred to by your ‘corporate’ interests or occupation – you were a peasant or a priest, for example. But notions of individuals having interest in money were very much frowned upon in the Christian medieval world. But all this was coming apart, and what Hirschman does is show how a series of thinkers - up to and including Adam Smith and David Hume - basically tried to find a balance of the passions but ended up creating, through the emergence of a mercantile society, a notion of self-interest which is uniquely individual and uniquely to do with money and earning cash. The notion in the whole book, which Keynes echoes in his, is that it is far better for man to lord it over his bank balance than it is over his fellow man. What capitalism does is give everyone the same self-interest, and that same self-interest gives us predictability, and with predictability you have very small, low cost government because you have self-regulating beings, running around playing the same game – the pursuit of money.

This book has all this wonderful intellectual history which tells us something important about the modern world. We didn’t always think of ourselves as individuals. We didn’t always think the pursuit of money and markets was natural. These things were constructed by people with a particular interest at a particular point in time. That interest, in many ways, had very little to do with the making of money. It was a means to an end to control people rather than an end in itself, which is where we have got to today.
Read about the other books Blyth tagged at Five Books.

The Page 99 Test: Austerity.

--Marshal Zeringue