“Grand Pursuit” is a worthy successor to Robert Heilbroner’s “The Worldly Philosophers,” a staple of introductory courses in economics. Nasar’s aim, however, is not to write intellectual history but to put the reader into the lives of the characters of a sweeping historical drama that extends from Victorian England to modern-day India. That she largely succeeds reflects the depth and breadth of her research but also the elegance of her prose.
She divides her drama into three “acts”: Hope, Fear and Confidence. Her story starts with Charles Dickens and Thomas Carlyle and the intellectual ferment of a rapidly industrializing London in 1840, which for all its Oliver Twist-like poverty, soon put the lie to Thomas Malthus’s notion that population would inevitably outrun prosperity.
Nasar introduces us to the odd couple of the proletarian revolution: Friedrich Engels, the politically wayward son of a Manchester industrialist; and Karl Marx, an undisciplined German intellectual who, without ever having stepped inside a factory, summoned factory workers to take control of the means of production. Marx’s dislike of capitalism manifested itself in his prediction that it would collapse of its own weight, but also in a life filled with missed deadlines and unpaid bills. We learn that he got his wife’s maid pregnant and suffered from myopia, a disease that, Nasar quips, might explain why he failed to notice a prosperous middle class growing up all around him in London.
Ironically, it was a mathematician and Cambridge don, Alfred Marshall, who spent all his time in mills and foundries before hitting upon the essential truth of modern economics: that competition begets rising productivity and rising productivity begets wealth, not just for the factory owner but for the most skilled and productive workers. Marshall added human capital to the economic equation.
Enchanted with social history, Nasar chooses as her favorite character Beatrice Potter, the socialite turned socialist who couldn’t decide whether she was more in love with the free-market libertarian Herbert Spencer or the populist politicianJoseph Chamberlain. In the end, however, she settled for a brilliant but odd-looking socialist named Sidney Webb. Together, their tireless inquiry into the conditions of England’s slums pulled at the heartstrings of the English middle class and laid the foundation for the European welfare state.
Few today know Irving Fisher, the American economist who identified the importance of money in the economy — inflation, deflation and the illusions they create for investors and consumers. We learn that he made a fortune from inventing the Rolodex, was an enthusiast for cars and health food, and confidently predicted in the summer of 1929 that stock prices had reached a permanently high plateau. Neither his fortune nor his reputation survived.
In Joseph Schumpeter, however, Nasar finds a more entertaining riches-to-rags character whose intellectual legacy proved more enduring. Schumpeter was a brilliant academic who failed miserably as Austria’s finance minister but managed to parlay his connections into a lucrative bank charter that allowed him to drive up and down the main boulevards of Vienna with a prostitute on each knee. His lavish and lusty lifestyle came to a tragic end with the market crash of ’29 and the subsequent death of his young wife and child. But where Marx had seen in capitalism’s booms and busts the seeds of its own demise, Schumpeter saw the “perennial gales of creative destruction” as necessary for new and better companies to take over from the old. He was to economics what Charles Darwin was to biology, and among the first to swim against the intellectual and political tide toward greater government management of the economy.
But it was John Maynard Keynes whose name came to be synonymous with that trend and dominated the world of economic thought for much of the 20th century. If Schumpeter was the Darwin of economics, Keynes was its Freud, injecting the psychology of fear and greed and the importance of uncertainty and irrationality into the economic model. When the tea partyers of the 1930s prescribed sound money and balanced budget as the antidote to the Great Depression, it was Keynes who dismissed them with the quip “Were the Seven Wonders of the World built by thrift? I doubt it.”
Nasar trails along with Keynes from his undergraduate rooms at Kings College, Cambridge, to the famous Bloomsbury salon to the treaty room at Versailles to the grand ballroom at Bretton Woods where the foundations of post World War II prosperity were laid. She captures his towering intellect, his eye for talent and beauty and his wicked wit. We learn that it was Keynes who nominated his free market-loving rival, Friedrich Hayek, to a coveted seat in the British Academy and Hayek who wrote to Keynes’s widow that her husband was “the one really great man I ever knew.”
In truth, Nasar’s drama loses steam after Keynes leaves the stage. In her telling, the ideas of Joan Robinson, Milton Friedman, Paul Samuelson and Amartya Sen seem more denouement than glorious climax. Robinson’s political flings with Stalin and Maoundercut the credibility of her incisive theory about the less-than-perfect competition of free markets. While Friedman inherited from Hayek the task of leading the counter-revolution to Keynesian economics, the only memorable anecdote from Nasar’s tale is the deliciously ironic one of how, as a young Treasury official, Friedman inadvertently contributed to the steady growth of government with a revision to the income tax code that failed to adjust tax brackets for inflation.
Perhaps the reason that Nasar’s tale sags in the final act has to do with her determination to produce a “story of an idea” rather than a history of economic thought. In the end, her “idea” — the limitless possibility of social and economic progress — gets so overwhelmed by historical detail that it cannot hold the narrative together. In trying too hard to show off her talents as a storyteller and dramatist, Nasar winds up giving short shrift to her other great talent as an explainer of economics.
is a business and economics columnist for The Post and a professor at George Mason University.