Ideas have consequences. Journalist and author Jeff Madrick describes the bad ideas that led to economic crises in the United States and the world, particularly leading up to the 2008 recession, in Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World.
In general terms, what Madrick calls "mainstream economics" includes conservative, free-market economics primarily. To Madrick, Adam Smith's invisible hand "is a brilliant idealization of markets that shows how limited laissez-faire theory is in reality." Yet the theory has been abused by economists to dictate a limited role for government. Milton Friedman is the biggest villain to receive Madrick's ire in Seven Bad Ideas. Madrick talks about "Friedman's Folly," which he says is Friedman's "failure to define what we may owe each other beyond the Invisible Hand," the failure of which "has had a deep and almost unconscious influence over economists."
Madrick makes some good points about the reluctance of economists to look to economic historical models, rather than relying on mathematical theories. Many economists want to believe that economic theories are universal and unchanging, like the laws of physics. One the other hand, Madrick also accuses economists of basing their theories on faith rather than on empirical data.
Madrick's preference toward a communitarian, statist position really defines his concerns with "mainstream economists." He writes that in the 1970s they began to "denigrate government rather than reform it" starting with, of course, the pernicious influence of Friedman. By "emphasizing the laissez-faire philosophies of their discipline over more pragmatic and non ideological ones," these economists are "profoundly responsible for what has happened to America and the world."
I am neither an economist nor the son of an economist, but it's pretty clear to me that Madrick's ideological bent is just as pronounced as those he condemns for letting their ideological bent bend their ideologies. As occasionally insightful as Madrick might be, I found his writing to be rather smug and critical. Even though he is undoubtedly right on some points, he seems to lack the humility and objectivity that he thinks he has.
Thanks to Edelweiss and the publisher for the complimentary electronic review copy!
2016 Reading Challenge: A book about money or finance