Miskatonik Economics

Not everyone is a fan of Brad DeLong, but one positive facet of his blogging is the ample H.P. Lovecraft references. Usually it's just in the title, and not obvious (probably quite confusing) to people not familiar with the early twentieth century horror writer. But I appreciate it! He had two in a row recently - here it comes up in blogging on the G-20, and here it comes up in a discussion of Sen. Ben Nelson.

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There's actually a little to say about Lovecraft and economics. He lived from 1890 to 1937, and in 1933 he was interviewed by the WPA about his work. Not only was Lovecraft a small part of this New Deal program, he declared in this interview that "politically I am a Democrat. I support President Roosevelt and the New Deal programs." He goes on, "but more importantly I am a New Englander, by birth and allegiance. I am a Rhode Islander, a son of Providence." Later in the interview, he discusses the relationship between books and movies, and expresses his doubt that movies can ever be made of books. This is clearly an artist's perspective, and perhaps forgiveable given the novelty of movies at the time. An economist would understand that artistic proclivities don't always dictate the kinds of movies that people demand (and of course one can also challenge Lovecraft on artistic grounds).

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An economist appears at least once that I know of in Lovecraft's stories; Nathaniel Wingate Peaslee is a professor of political economy at Miskatonik University before he is driven to madness. His descent into madness was apparently initiated while teaching - the course, we are told, was "Political Economy VI - history and present tendancies of economics". This was in 1908. If Peaslee was familiar with present tendancies, he almost certainly was familiar with the work of J.B Clark, an American marginalist and opponent of Bohm-Bawerk in the early capital controversy, whose work on marginal productivity had been published by that time. By that time Clark would have been well established at Columbia, but he had previously taught in Massachusetts - the location of Miskatonik University. We can be fairly certain that Peaslee was familiar with Clark and other American marginalists because he refers to W.S. Jevons in his lectures. In 1908 a sudden amnesia overtakes Peaslee, and he is mentally transported to another world for the next five years. In 1913 he comes out of the amnesia, continuing the lecture precisely where he left off. And apparently, he left off at Jevons. Coming out of the amnesia, he continued:

"...of the orthodox economists of that period, Jevons typifies the prevailing trend toward scientific correlation. His attempt to link the commercial cycle of prosperity and depression with the physical cycle of the solar spots forms perhaps the apex of..."

This is a reference to work Jevons did in the 1870s. I'd take some issue with Jevons's characterization here. There was nothing "typical" or "orthodox" about Jevons at this time, at least in Britain and America. What was more typical was Ricardo and Mill, and later Marshall's reworking of marginalism, as well as American institutionalists. But no matter - even if Peaslee mischaracterizes the 1870s, marginalism had made its mark by 1908 (or I suppose in this case 1913).

All this comes from the story The Shadow Out of Time. Not only is this a great one because its main character is an economist - it also has (probably unknowingly) a very economic theme: what Keynes called "the dark forces of time and ignorance that envelope our future". Peaslee is taken to another world by beings that can switch consciousnesses with other life-forms across time and space. These beings are not constrained by Keynes's "dark forces of time and ignorance," and so therefore probably live in a much different society than ours (perhaps one more consistent with Classical economics in that sense!). When Peaslee returns he has no idea what has happened to him, and he abandons economics and begins studying psychology - which of course is the direction that Keynes turned to when he realized the significance of these dark forces for the economy. Traditional economics could only get him so far - psychology, he realized, had to do a lot of work as well.