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The Making of Modern Economics

Author: Mark Skousen
Publisher: Routledge • 2009 • 494 pages
The Making of Modern Economics: The Lives and Ideas of the Great Thinkers

The man who first called economics “the dismal science” obviously never read this history of the discipline by Mark Skousen. Previous histories tend to give a dry and disjointed account of economists and their contradictory theories. But Skousen — a free-market economist himself — unifies the story by casting it as the dramatic struggle of free-market capitalism against Keynesianism, Marxism, socialism, and other “-isms”.

This is an account of high drama with a singular heroic figure, Adam Smith, at the center. Skousen shows how Karl Marx, Thorstein Veblen, John Maynard Keynes, and even laissez-faire disciples such as Robert Malthus and David Ricardo detracted from Smith’s “system of natural liberty” — while others including Alfred Marshall, Ludwig von Mises, Friedrich Hayek, and Milton Friedman elaborated and improved upon Smithian economics. Along the way, Skousen offers a full-scale review and critique of every major school and their theories, including classical, Keynesian, monetary, Austrian, institutionalist, and Marxist economics.

Best of all, Skousen brings history alive with revealing anecdotes about the great economists, including:

  • The professor of moral philosophy who burned his clothes, then burned his papers before dying
  • The Cambridge economist who may have been a secret agent for the Soviet Union during World War II
  • The free-market economists who were able to predict the 1929-33 crisis, yet failed to convince the world of their theories
  • The revolutionary who, though his income was in the top 5 percent in Europe, constantly begged for money and speculated wildly in the stock market
  • The government advisor who was so fascinated with people’s palms that he had casts made of his friends’ hands
  • The multimillionaire who lost everything in the stock market crash of 1929
  • The wealthy economist who was murdered by his housekeeper
  • The utilitarian thinker who demanded that his preserved body remain on display at the University College of London
  • The free-market advocate who invented income tax withholding to help finance World War II
  • The multimillionaire broker who gave all his wealth to his three sons
  • The Chicago economist who regularly flunked a third of his class
  • The economist whom Darwin and Wallace read before hatching their theory of evolution
  • The economist who spent three months in jail, charged with blaspheming against the Virgin Mary
  • The philosopher who learned Greek at age three and suffered a mental breakdown at 20
  • The economist who fancied himself an informal consultant to Italian dictator Benito Mussolini
  • The famous minister of finance who paraded around the streets of Vienna with two prostitutes and later became president of the American Economic Association
  • The American economist who refused to use a telephone, make his bed, do the dishes, or clean his clothes — and who gave all his students the same grade, regardless of their work
  • The European professor who was determined not to use charts or graphs of any kind in his voluminous writings, and who was a confirmed bachelor until age 57

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