History Matters

I was planning to take a break from blogging today but then I came across Chris House's homily to his students encouraging them not to read the General Theory; or, for that matter, anything else written in economics BME (before the Mankiw era). I simply cannot let that exhortation stand without adding a few words in defense of the history of thought and in support of Scott Sumner's  take on Chris' post.

I've given quite a few public lectures over the last several years to promote economic literacy and to publicize my book, How the Economy Works.  In those talks, I was often asked if I think that economics is a science. My answer is yes; but it's not an experimental science. The research task of a group of economists is similar to that of a team of research chemists, presented with an unknown substance and asked to identify it, subject to two constraints.  1) the team is allowed to conduct at most three experiments a century and 2) they are not allowed to read the research notes of their predecessors.

A knowledge of economic history is equivalent to a knowledge of the outcome of the chemistry experiments; a knowledge of the writings of our predecessors is equivalent to reading the research notes written at the time.

Chris tells his students not to read the classics. I tell my students something very different.  Be skeptical of everything you're taught.  Think through a problem before you read the literature; then go read  what other people had to say.  By thinking out the problem first you are more likely to understand why the literature moved in the way it did.  And don't stop reading with whats on the reading list for your latest course. It often pays to dig back a bit further; sometimes a lot further.

When you tackle hard problems, and that's pretty much everything in macro, it pays to read what very smart people before you had to say about those problems. Read Hicks' Value and Capital.  Read Patinkin's  Money Interest and Prices. Read Hayek on The Constitution of Liberty.  And YES read Keynes' General Theory.