Doing Math Without Showing the Work
When I was associate dean of a business school, I discovered something that struck me as faintly scandalous: our economics majors could graduate without ever taking a course in the history of economic thought. Curious, I looked further and found that this was no local eccentricity. At most American universities, the history of economics is not required for an undergraduate degree in the field, and—more remarkably still—most students who now earn a PhD in economics have never sat through a single class on the discipline’s own past.
That struck me as odd, in the way that it’s odd to meet a priest who has never read St. Augustine.
The modern economics doctorate is built largely on mathematics: general equilibrium theory, econometrics, game theory, real analysis, dynamic optimization. Economics departments have, in effect, become annexes of the math department, with a shared interest in Greek letters and a mutual suspicion of adjectives. Okay, maybe that’s unfair: behavioral economics, with its strange blend of statistics and psychology, has swallowed up much of the discipline, too.
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Yet economics has long been classified among the liberal arts, and for good reason: it concerns itself with human choice, value, exchange, and the moral texture of a life lived among scarce means and unlimited wants. Adam Smith, after all, held a chair in moral philosophy, not applied mathematics.
To strip economics of its history is to forget that the discipline was born asking ethical questions before it learned to do calculus.
The history of economic thought matters. Its absence from the curriculum amounts to a kind of institutional amnesia. You can’t know where you stand without knowing how you got there. A PhD economist who has never read Ricardo is a bit like a lawyer who has never read a single case predating 1960: technically competent, historically unmoored.
Or, to put it more bluntly: You can’t learn arithmetic if the teacher doesn’t instruct you how to show your work.
Herewith, then, a brisk tour of that history—brisk necessarily, and inadequate necessarily, since no set of paragraphs can do justice to any of these schools, each of which deserves, and has received, entire shelves of serious scholarship.
The biblical antecedents come first, if we’re being honest about origins. Gary North spent a good part of his career arguing that Scripture already contained a coherent economic worldview—on property, debt, interest, and labor—long before anyone thought to name the subject. Aristotle got there, too, distinguishing oikonomia, household management, from chrematistics, the pursuit of wealth for its own sake, and mounting a defense of private property against Plato’s communal fantasies.
But economics as a semi-organized discipline really begins with the medieval scholastics, and above all the School of Salamanca in 16th-century Spain. Those Dominican and Jesuit theologians, wrestling with questions of just price and usury, arrived at strikingly modern insights about subjective value and the role of scarcity in pricing—insights sharp enough that later Austrian economists have claimed the Salamancans as intellectual ancestors.
Then comes classical economics, the discipline’s adolescence. Adam Smith supplied its founding text in 1776, arguing that self-interest, channeled through markets, produces social benefit without requiring anyone’s benevolence. David Ricardo formalized the theory of comparative advantage and wrestled with rent and value. Thomas Malthus proffered the gloomy counterweight, warning that population would always outrun the food supply (a prediction gloriously, mercifully wrong, at least so far). Jean-Baptiste Say announced his law that supply creates its own demand, a claim that would later become the target of considerable abuse. John Stuart Mill synthesized and humanized the tradition, adding a concern for distribution that his predecessors had largely ignored.
Austrian economists, when they arrived on the scene, would criticize the classical school for its labor theory of value and its tendency to think in aggregates rather than in the choices of individual people (a criticism that would prove decisive for the discipline’s next turn).
That next turn had a detour, however, and not a happy one: Marxism, which took the classical labor theory of value and pushed it to its most extreme and destructive conclusion, treating capital as theft and history as a rigged class war. It was bad economics dressed as prophecy, and the 20th century paid dearly for the confusion.
The corrective arrived in the 1870s with the Marginal Revolution, when Carl Menger in Vienna, William Stanley Jevons in England, and Léon Walras in Switzerland—working independently and almost simultaneously—discovered that value derives not from labor input, but from the subjective, marginal utility a person places on the next unit of a good. This insight, less a refinement than a reformation, gave economics its modern analytical core and, in Menger’s case, birthed the Austrian school.
The Austrians—Menger, then Böhm-Bawerk, then Mises, then Hayek—built a tradition emphasizing subjective value, the impossibility of central economic planning, and deep suspicion of mathematical modeling as a stand-in for human judgment.
The neoclassical school, meanwhile, took the marginal revolution in a more mathematical direction, formalizing supply and demand into the elegant curves every undergraduate now learns to draw.
The Chicago school, associated with Milton Friedman and George Stigler, wedded rigorous price theory to a robust confidence in free markets and skepticism of government intervention, becoming for much of the late 20th century the most influential economic voice in American public policy.
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Four schools, four centuries, and barely a paragraph apiece here—which is precisely the trouble I began with. A discipline this rich cannot be honestly summarized; it can only be gestured at, as I have just done, which is exactly why it ought to be taught properly, in full, with primary texts and contentious debates and dead ends included.
Students who leave a doctoral program never having encountered Ricardo’s argument with Malthus, or Menger’s quarrel with the German historical school, are not being trained in economics so much as in techniques, which can show you the answer but can’t show you the work. An economist who can’t explain how his discipline arrived at its own conclusions is not really practicing a liberal art at all, but running a very sophisticated calculator and calling it reasoning.
Allen Mendenhall is a Senior Advisor for the Free Enterprise Initiative and a Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation. A lawyer with a PhD in English from Auburn University, he has taught at multiple colleges and universities across Alabama and is the author or editor of nine books. Learn more at AllenMendenhall.com.