Thursday, January 24, 2013

Who do you think Adam Smith would most resemble if he was alive and practicing economics today?

An accompanying question is how you think he would politically align.

I think my title question is easier than this supplemental question. I don't think we can answer my supplemental question conclusively. I could see him being anything from a libertarian to a liberal Democrat (American "liberal" and American "Democrat" in this case). I have a harder time seeing him as a any kind of social democrat. I really don't know and I think anyone that thinks they do know is fooling themselves.

But the title question is a little easier. We know what problems interested Smith and we know his basic answers to it. Asking "who would he resemble today?" is basically asking - given modern tool boxes and literatures, how would he pursue the questions that interested him today.

I think he'd be a combination of Kenneth Arrow, Joseph Stiglitz, Paul Romer, and Paul Krugman. These are the guys that ask Smithian questions and get Smithian answers using modern tools and modern literatures.

It should be clear why I cite Arrow, Romer, and Krugman. Arrow is the modern take on the invisible hand, Romer is the modern take on the importance of the pin factory to growth, and Krugman is the modern Smithian trade theorist that is more concerned with increasing returns and absolute advantage than the more Ricardian themes of decreasing returns and comparative advantage.

Stiglitz is not quite as obvious. I only throw him in because all of the ideas he's famous for (credit rationing, efficiency wages, information asymmetry, applications of monopoly power) first appeared in Adam Smith. So once you've allotted the market process to Arrow, growth to Romer, and trade to Krugman a lot of the rest of the interesting things Smith said are given their modern incarnation in the work of Joe Stiglitz.


  1. Ha ha ha! I was going to make a joke and say, "Let me guess, you and Karl Smith say Paul Krugman." I can't even make a caricature of you anymore.

    1. I don't get the joke.

      The Bastiat thing was counter-intuitive because although Krugman is an excellent public communicator of economics, his politics were different. So I think Smith and I honestly believed it but knew it would rustle feathers.

      Here, I'm not sure critics have a leg to stand on. There is no contesting the Krugman does Smithian trade theory after a long interlude of non-Smithian trade theory.

  2. Perhaps he would be defending himself from his followers in the manner of Adam's Fallacy Duncan Foley.

  3. Are you talking about if he were interested in things he was intetested in and alive today? And only economically or philosophically as well?

    Adam Smith as he was is tricky. He would reject the entire post Arrow-Debrue rationalism and the entire Malthus-Keynes-Samuelson tradition in macro. That limits the list considerably. Acemoglu comes to mind. Stiglitz is interesting but obviously the politics and political economy are very different.

  4. I suspect that Adam Smith and John Maynard Keynes would find much in common with regard to speculation...


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