In the latest Hub book review, Patrick Luciani reviews GOAT: Who is the Greatest Economist of all Time and Why Does it Matter? by Tyler Cowen (2023) which assesses the cases of some of the top economists in history to determine who can lay claim to being the greatest among them.
Who is the greatest of all time, or the GOAT, among economists? It’s a fascinating question but an odd one as well. One would think that the greatest would depend on one’s political stance. Tyler Cowen, a well-known professor of economics, best-selling author, podcaster, polymath, and co-founder of the highly successful Marginal Revolution website, has released a 350-page book, available for free online, that tries to answer the question. It was his COVID lockdown book that kept the inveterate traveller busy at home.
When I started reading, I was hooked. It was fascinating getting a refresher about critical economic ideas but also the personalities behind them. Every page carried new information. Cowen achieved the impossible, turning the history of economic thought into a page-turner, bringing to life the ideas of six economists who have shaped the world we live in.
Cowen lays down a few criteria for a proper evaluation to get past the problem of political bias. Any candidate for the GOAT prize must be original, of great historical importance, a carrier of essential ideas, and know lots of micro and macro theory and empirics. Finally, any candidate must not be “too wrong” on the “substance of issues.” In other words, you might be a great thinker, but if your ideas can’t survive the test of time, you’re off the list.
The shortlist of great economists who get their own chapters are Milton Friedman, F. A. Hayek, John Maynard Keynes, John Stuart Mill, Thomas Malthus, and—no explanation needed here—Adam Smith. The surprise is that Karl Marx didn’t make the final six. For all his fame and disruptive influence, the 1917 Russian Revolution made him famous, not his economic intelligence.
Another surprising omission was Paul Samuelson, the first American to win the Nobel Prize in economics. His 1948 textbook Economics has gone through 16 editions and sold over four million copies. That book has educated more students of economics than any before or since. Samuelson was a brilliant economic modeller and was primarily responsible for bringing deep math to the science of modern economics. But according to Cowen, Paul Samuelson didn’t understand economics!
Here’s some evidence: Samuelson got the Soviet Union wrong. He insisted that the Soviets would catch up and overtake the United States and believed a socialist command economy could “function and even thrive.” Samuelson also got the 1970s and ’80s recessions wrong and insisted that wage and price controls were the way to fight inflation. Despite his brilliance, Samuelson’s arrogance stopped him from considering that the Chicago school under Milton Friedman might be on to something.
Here’s a summary of Cowen’s final six.
Friedrich August Hayek
As a fan of Austrian economics, Tyler Cowen claims that Hayek’s three best articles are superior and more important than the top five articles of any other economist. High praise, without a doubt. Hayek argued that knowledge of how the economy works doesn’t reside in the minds of policy experts but is dispersed as “bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”
The message is that we can never fully know that “knowledge.” And we weren’t going to find that knowledge with sophisticated econometrics. Therefore, allocating resources by economic planners to solve economic problems is doomed to fail. The best we can do is “find the best decentralized mechanism for improving opportunities.” That insight has changed how we think about economics today, with profound implications for growth and prosperity. One weakness was Hayek’s skepticism about modelling or deep data analysis to address economic problems.
John Maynard Keynes
Keynes certainly meets most, if not all, of Cowen’s criteria. There’s no question that Keynes was the most attractive economic thinker of the lot. He’s the one that Cowen would choose to spend time with because his world went beyond economics and into the arts and diplomacy. Keynes was a man of culture as a member of the Bloomsbury Group with Virginia Woolf and E.M. Forester, who pursued his varied sexual relationships with “true ardour,” which made him stand out from the crowd of boring bureaucrats and professors.
As an economist after the Second World War, his influence on international and domestic policy was enormous and unimaginable without him. Great as he was, Cowen tells us he wasn’t that good an economist. His famous book, The General Theory, “is riddled with microeconomic mistakes and ambiguities, such as confusion between movements of curves and shifts along curves.” He had poor terminology, was unclear about elasticities, and confused average and marginal rates.
According to Cowen, Keynes never nails microeconomics. By those standards, Keynes would have flunked an intermediate microeconomics exam. Keynes was a big-picture guy who never quite saw the deep complexity of an economy, and his simple models couldn’t solve messy real-world problems. Keynes was also an avid supporter of eugenics, an antisemite. He also suggested in his German translation of his General Theory (yes, Cowen also reads German) that his investment theory was closer “with totalitarianism than with laissez-faire.”
Milton Friedman
Although without the charisma of Keynes, Friedman has all the ingredients of a GOAT. His scholarship is, without a doubt, Nobel Prize-level stuff, a prize he won in 1976. His historical study of the Monetary History of the United States, with Anna Schwartz, was a landmark in helping us understand the Great Depression. In the real world, he also led the reforms against the military draft and supported floating exchange rate policies that have proven essentially correct. He seems vindicated in advocating vouchers to improve public school education levels and advocated a negative income tax to help the poor, an idea now picked up by the Left. He has also influenced the Federal Reserve’s attention to money supply and prices. He has spread the gospel on the values of freedom and free market principles, along with his macroeconomic ideas, which are on par with Keynes’s influence. Cowen’s criticism seems to centre on Friedman’s position that economic problems are easy to resolve and simple to understand. He had little time for government programs to help the poor and blamed the state for the poverty that existed. Cowen was also miffed by Friedman’s attack on complex modelling, insisting that their predictive value counts even if the assumptions aren’t realistic.
Malthus and Mill
I admit I was surprised to see Thomas Malthus and John Stuart Mill as among the six best economists on Tyler Cowen’s list. I never considered them economists in the strictest sense. If Cowen says they belong, they belong.
On Malthus, I would have thought his prediction that population growth would always outstrip food production and lead to widespread famine has proven to be one the biggest gaffs in economic thinking. He completely missed the boat on the role of agricultural innovation and technology. But Cowen reminds us that Malthus was right for 99 percent of human history, and we shouldn’t be too hard on him because he missed that one percent. Today, Malthus’s ideas have worked their way into how we think about environmental sustainability. The word “Malthusian” is part of our vocabulary when we talk about protecting the earth and husbanding its resources. For that, Thomas Malthus deserves a place in the top six.
Cowen also gives high praise to John Stuart Mill, better known as a political philosopher than an economist, though his economic writing is extensive. He regards Mill’s The Subjection of Women, which is not usually considered a book on economics, as “an excellent tract on women and the economics of gender and discrimination” and campaigned strongly for complete legal equality for women. Mill knew more economics than anyone in his time and was “all-encompassing in a way that no other GOAT contender can claim.” According to Cowen, Mill’s argument for liberty relied much on economic concepts such as “decentralization, anti-paternalism, and externalities,” ideas developed decades before Hayek and Friedman. However, it was strange to learn that Mill, who was a utilitarian first and a progressive second, favoured capital punishment and argued as much. Cowen holds high admiration for Mill’s learning and broad education and considers him the most profound thinker of them all.
Adam Smith
I would have guessed that Adam Smith would walk away with the top prize as the greatest of all time. Or is he? His contributions to economic theory are well-known even by non-economists, such as his articulation of the division of labour, economies of scale, and how a free-market system based on self-interest drives the betterment of society by an unplanned “invisible hand.” He saw the deep flaws in mercantilism and understood the power of open trade to advance national wealth and how the price system transfers information to increase or decrease production.
Cowen reminds us that his thinking went beyond these concepts to argue that the division of labour also applies to national defence and the necessity for countries to protect their liberty and prosperity with well-trained standing armies. Smith’s two books, The Wealth of Nations and Theory of Moral Sentiments, together stress the need for individuals to break from “being excessively narrow, short-sighted, and obsessed with local information.” Here, Smith parts ways with Socrates, who saw teaching as the duty of elites, while Adam Smith saw a role for state subsidies to support the study of sciences and philosophy for everyone. Smith was a wide-ranging thinker beyond his reputation as an economist.
The verdict
So, who is the GOAT?
In the final chapter, Cowen summarizes the pros and cons of the six finalists. Without looking at the last section, my bet was on Milton Friedman. Cowen takes us on a journey of economic ideas without coming down on anyone as the Greatest Economist of all Time. However, he chose—to my surprise—John Stuart Mill as his informal winner and was his clear favourite as a thinker. Consolation prizes go to Milton Friedman as the best economist and Adam Smith as the most original and foundational economist.
Tyler Cowen ends by lamenting that we will never see the likes of these thinkers again because the scholarship of economics has fundamentally changed. Economists are now smarter and better trained but are no longer the “carriers of ideas.” Instead, they have become clever testers of hypotheses. Long gone are the thinkers who can imagine beyond their specialized fields. Pity.
