Bettering Humanomics: A New, and Old, Approach to Economic Science, by Deirdre McCloskey (University of Chicago Press, 144 pp., $30)

I thoroughly enjoyed Deirdre McCloskey’s Bettering Humanomics, but I may be a glutton for feelings of intellectual inadequacy. Truth be told, I only understood about 60 percent of the book. It contains countless references to great works of the humanities, economics, and the history of economic thought. A casual reader cannot possibly be familiar with a fraction of them, even within his own field. But McCloskey expects you to know them.

At first this book frustrated and confused me. Then I suspected this reaction was by design. I am, after all, an economist myself: I have dedicated my life to learning my craft and benefited from many years of training at great institutions from important thinkers. But reading Humanomics, I became fully aware of how little I know. I now believe that becoming a fully formed economist requires that I stop watching trash TV in my free time and read the Theory of Moral Sentiments instead. McCloskey pulls no punches, whether on her intellectual opponents or on the reader. Here is one example, where she defends herself from a critic, philosopher Gerald Gaus:

Aside from these textual matters, I must say I find myself repelled by Gaus’s vision of people as cynical conformists: “we are such deeply social normative creatures, in the sense that we are so attuned to the normative expectations of others, that we can achieve a stable rule-based system of cooperation even when many are not enthusiastic about the moral attitudes and virtues that the rules express.” I invite him to reread Thucydides’s dialogue between the Athenian diplomats and the Melians, and repent.

McCloskey argues that economics would be better if we listened to people—in controlled experiments, chat rooms, meetings, surveys, and at the Rotary. We need to absorb the lessons from art and culture (perhaps trash TV has value, after all). She does not believe that economists need to ditch math and data, but our overreliance on these tools encourages us to view people as abstractions and leads us astray. Such tendencies also help explain the rise of behaviorism, which assumes that humans are flawed creatures who must be nudged by a wise bureaucrat into better choices; recent flirtations with industrial policy; and the belief that, if we just get our government and laws right, growth will follow.

We must consider how individuals see and experience the world around them, and we must recognize that humans are malleable in ways that we don’t account for. For example, McCloskey estimates a quarter of all income comes from “Sweet Talk”—not lies or trickery, but the ability to be persuasive and compelling, a crucial aspect of sales and advertising. It influences how we perceive the world and can be an important part of motivation.

We economists have lost our appreciation for the humanities, and that means that we underestimate the importance of human dignity. This is no small oversight. McCloskey spends about a third of her book arguing that understanding the humanity of the northwestern European population can explain why it industrialized first. Other countries around the world had wealth, strong institutions, and well-trained mathematicians and engineers (perhaps better ones), but industrialization happened in Britain first because it treated its people with dignity and empowered them with both rhetoric and knowledge. Scotland, for example, had extraordinarily high literacy rates, and even people of modest means had the “opportunity to have a go, testing their ideas in commerce.” Liberalism gave everyone a chance to innovate and create, and in doing so it upended the existing social and economic order.

Young economists tend to spend time pondering the elegance and usefulness of Kakutani’s fixed-point theorem instead of grappling with the question of why Britain industrialized first—a divisive yet central question in economic history, the answer to which would explain the creation of the first modern market and the unprecedented gains in innovation and living standards that it brought. If we could solve this puzzle, we’d crack the mysteries of modern growth and development, too. And if the answer is that Britain honored the humanity and dignity of its people, then the rhetorical hostility modern elites spew forth against their fellow citizens may be the biggest economic challenge we face today—not economic inequality.

I’m sympathetic to McCloskey’s argument, though I think that she minimizes the importance of scientific discovery and that institutions are more important than she gives them credit for. And though McCloskey insists she is not arguing that economists should ditch mathematical and empirical models, she does not acknowledge how much these methods elevated economics above other social sciences and the humanities. Mathematics is simply another way to communicate—an efficient and unambiguous one. The value of that rigor is clear as McCloskey defends her ideas from humanities scholars with Marxist sympathies who appear hung up on power structures and see the global economy as inherently zero-sum.

This may be one reason why economists don’t engage much with humanities departments anymore. When I was a graduate student, some of my professors discouraged socializing with my humanities peers because they were “crazy Communists.” I thought that was an unfair characterization, befriended them anyway, and am the better for it. But when the conversation inevitably turned to postmodernism, even I had to leave the bar. Economists, as McCloskey argues, may be too fixated on positivism, but that is an underrated quality in academia today.

No economist needs to be told that we use too much math, that people aren’t simple rational creatures, or that motivation involves more than incentives. We hear these protests at least once a day from the legions of armchair econo-critics. We also observe this ourselves: we live in the world and have relationships with non-economists, too. Still, McCloskey’s argument resonated with me—maybe because she is an economist and knows where the bodies are buried. Even if it is difficult to engage with humanities scholars these days, they do have much to offer us.

Bettering Humanomics was not an easy read. And yet—or perhaps because of this—I loved reading it and look forward to returning to it. It challenged, provoked, and frustrated me. Ultimately, it reminded me why I love being an economist: no matter how much I think I’ve learned, some new way of seeing the world comes along that deepens my understanding of how the economy functions.

Photo: Chaay_Tee/iStock


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