AIER readers are familiar with many of the big names in free-market scholarship and advocacy, such as Ludwig von Mises, Friedrich Hayek, and Milton Friedman, but many other important contributors remain obscure. Unsung Heroes of the Market: The 24 Underrated Economists You Need to Know, published by the Independent Institute, introduces 24 of them. Each chapter is carefully crafted by a writer or writers deeply familiar with its subject.
The book opens with a chapter about an individual we scarcely think of as an economist at all — Alexander Hamilton. In it, Richard Salsman challenges the view, held by some free-market stalwarts, that Alexander Hamilton advocated big government, central planning, and a burgeoning national debt. On the contrary, Salsman writes, “Hamilton adopted [Adam] Smith’s critiques of mercantilism and physiocracy, but also rejected a few of Smith’s errors: his labor theory of value; his belief that some labor was non-productive, and his assertion that public debt always diminished prosperity.” While Hamilton is often attacked for his stance that public debt can be useful, Salsman points out that he also advocated for any public debt to be rapidly discharged. Hamilton also embraced the modern economic view that all economic sectors are valuable and that “a harmony of intersectoral interests is possible, preferable, and achievable.”
Several of the thinkers profiled in the book are women, among them the British economist Harriet Martineau, who lived in the early nineteenth century. David Levy and Sandra Peart write about her contributions, most notably her arguments against the champions of slavery. She toured the American South, saw slavery in action, and concluded that it was both morally wrong and economically inefficient. Levy and Peart write:
Both her subject matter and her method of collecting information via travel proved controversial from the beginning of her career. Perhaps for those reasons, Martineau disappeared from the scholarly landscape for close to a century after her death.
In a chapter that might seem puzzling, Robert Whaples examines the work of Thorstein Veblen. Puzzling because, as Whaples notes, “Left-of-center economists laud him, but the mainstream virtually ignores him, and most classical liberals find him rather alarming.” Veblen is known for his work on the role of status, and he attracts leftists through his attacks on “conspicuous consumption” by the rich, which helps give their anti-market agenda traction. Whaples counters, writing, “Veblen and his followers see this as a problem, but if the drive for status is so primal, then thwarting conspicuous consumption will only drive attempts to display status somewhere else, perhaps something that is truly harmful.” Among the economists in the book, Veblen is the furthest from a hero of the market.
A figure more conventionally suited to the book’s title, and much underappreciated, is Frank Fetter. In his chapter on Fetter, Matthew McCaffrey writes that he developed “a consistently subjectivist theoretical system based squarely on the work of the Austrian economists and their America sympathizers.” Fetter argued with institutionalists like Veblen, who opposed subjectivism outright, but also with Austrian-influenced economists who, he maintained, failed to consistently develop and advance their outlook.
Thomas Cargill contributes an illuminating chapter on Clark Warburton, who spent much of his career working at the Federal Deposit Insurance Corporation. Based on his analysis of government data, “Warburton came to the conclusion that the Great Depression was largely the result of mistakes made by the Federal Reserve.” That was 30 years before Milton Friedman advanced that claim. Warburton argued that discretionary government economic policies were apt to lead to policy errors that would be compounded rather than corrected. Sadly, not only was Warburton largely ignored, but because his views conflicted with the Keynesian orthodoxy that government economic control was necessary and beneficial, he was told to stop publishing his ideas if he wanted to keep his job.
British-born W. H. Hutt began his career teaching at the University of Cape Town in South Africa. He made his mark as one of the most original and daring thinkers of the twentieth century. In their chapter about him, Art Carden and Ilia Murtazashvili write:
Hutt despised coercion in all its forms, and he distinguished between private coercion on the part of strikers and boycotters and public coercion on the part of the government. The role of coercion of various kinds in inhibiting coordination played an important role in his work from his first book, The Theory of Collective Bargaining, through to the end of his long and colorful life.
Hutt was particularly well known for his contrarian thoughts about the impact of labor unions and strikes, arguing that they could not transfer wealth from business owners to laborers in general. Hutt also explained how minimum-wage laws were used in South Africa as a means of protecting established (white) workers from competition from black workers.
Another fascinating individual included in the book is Eric Hoffer, who became known as the longshoreman philosopher. Alberto Mingardi writes, “His insights into both the ‘supply’ and the ‘demand’ for mass movements and into what motivates human actions like work, trade, and proving one’s worth make him an underappreciated economist, though he was not an academic economist at all.” Hoffer was self-educated but realized that he had insights about society and a knack for clearly explaining them. He is known for his 1951 book The True Believer, in which he examined the common traits in mass movements and the need many people have to attach themselves to some “holy cause” if their own lives are unfulfilling.
Michael Munger profiles the Italian economist Bruno Leoni. In the late 1950s, Leoni was recognized for his writings on the importance of the law and the harms that a society incurs when the law becomes uncertain. In 1958, he was invited to a conference sponsored by the Volker Fund, along with Friedrich Hayek and Milton Friedman. His presentation there led to the publication in 1961 of his book Freedom and the Law. Leoni was elected president of the Mont Pelerin Society in 1967, and his work was attracting more and more attention. But in that year, he was murdered in Italy, ending a career that was just reaching its apex. Munger sums up his passion: “how the workings of the market, and market-like processes, could produce social order, extending even into the space of politics and the state.”
During the Cold War years, many economists believed the Soviet Union’s economy was rapidly expanding and would soon surpass that of the United States. One economist who didn’t believe that central planning would outperform our messy free-market system was Warren Nutter. Phillip Magness writes about Nutter, who taught at the University of Virginia, alternating the chairmanship of the economics department with James Buchanan. (The university’s administration didn’t like the profusion of anti-collectivist writings from the department and retaliated with budget cuts and other nasty tactics.) In 1969, Nutter wrote a book entitled The Strange World of Ivan Ivanov, a devastating indictment of the belief that a society can be improved through the imposition of top-down state control.
Rosolino Candela contributes a chapter on Israel Kirzner, who enrolled at New York University intending to study accounting and happened to hear about a professor who gave an interesting seminar on economics — Ludwig von Mises. Kirzner decided to attend and was so captivated that he chose to pursue a PhD in economics under von Mises. Candela writes, “The hallmark of Kirzner’s scholarship has been to take his inspiration from Mises and develop his own unique appreciation of the entrepreneurial market process, not for the purpose of illustrating where mainstream economic theory had gone wrong per se, but to explain why its focus on equilibrium states painted an incomplete picture of the market process.” Kirzner’s work also illustrates the ways government regulation hinders entrepreneurs from taking advantage of opportunities for profit.
Is Thomas Sowell an “underrated” economist? Art Carden and Brian Albrecht argue that even though he is well known, his many contributions to economics are not sufficiently appreciated. Sowell was born into a poor family in segregated, rural North Carolina in 1930, moved to Harlem, served in the military, and entered college as a convinced leftist. His studies led him away from those views. Among Sowell’s signature contributions is his analysis of the consequences of racial preferences, where he points out that well intentioned actions can be, in their effects, highly negative for the groups they hope to help. He also examines the role of culture in economic development; Sowell argues that racism and discrimination often explain less of these economic differences — and culture explains far more — than prevailing accounts suggest.
Julian Simon, profiled by Robert Whaples, almost did not become an economist at all. After service in the Navy, Simon went into advertising before turning to academic life to earn an MBA and then a PhD. His good business sense enabled him to devise the system airlines use to auction seats when flights are overbooked, compensating the passengers who are most willing to wait. Simon is best known for his work on demographics, where he changed from thinking that population growth was a bad thing to understanding that human minds are, as he titled a book, The Ultimate Resource. We also read about the famous bet between Simon and the doomsayer Paul Ehrlich about whether a basket of major resource commodities would fall in price over a decade (they fell 36 percent, and Ehrlich had to pay up).
Each chapter is worth reading, but I will discuss just one more. The book concludes with Peter Boettke’s chapter on Don Lavoie. Lavoie was Boettke’s teacher and a brilliant scholar whose life was tragically cut short by cancer. One of his great works was a book entitled National Economic Planning: What is Left?, a devastating attack on the notion that government officials can improve a nation’s economy through “industrial policy.” Drawing on Mises and Hayek, as well as decades of evidence, Lavoie showed that government planning inevitably backfires.
The other economists profiled in the book are Karen Vaughn, Karl Mittermaier, Kenneth Boulding, Edith Penrose, Earl Thompson, Charlotte Twight, Robert Tollison, Viviana Zelizer, Knut Wicksell, Ursula Hicks, and Friedrich Lutz.
I tip my hat to Independent Institute for this enlightening volume.
