Business Nuggets from Thought Leaders in Economics

In 50 Economics Classics, Tom Butler-Bowdon provides what he characterizes as “An intelligent person’s guide to capitalism, finance, and the global economy.” He agrees with Ronald Coase that “the biggest problem in economics is that theories and models have been constructed on assumptions which practitioners have not bee bothered to examine and admit. He coined the term ‘blackboard economics,’ in which everything works perfectly in theory, but not so much in reality. Some of the biggest mistakes in economics came from putting this theoretical cart before the horse.”

Here are Butler-Bowdon’s comments on a dozen of the 50 thought leaders on whom he focuses, listed in chronological order:

Thomas Malthus (1766-1834): “Restrictions on populations growth are crucial for prosperity. We let it get out of control at our peril.”

Adam Smith (1723-1790): “The wealth of a nation is that of its people, not its government, and that wealth is achieved through the division of their labor and the ever-greater specialization of their skills. The foundation of all future prosperity is current savings.”

David Ricardo (1772-1823): “Trade is the great facilitator of world prosperity, because it allows participating countries to make the most of their resources, people and skills.”

Karl Marx (1818-1883): “When an economic system treats workers as mere objects, it is setting itself up for a revolution.”

Thorstein Veblein (1857-1929): “So ieties are wholly driven by emulation and the need for status. The more resources we have to consume, the greater our social esteem.”

Max Weber (1864-1920): “When an economic system treats workers as mere objects, it is setting itself up for a revolution.”

John Maynard Keynes (1883-1946): “Elegant models of how economies work are often wrong. Markets are not self-correcting, but need constant intervention and management to ensure high consumer demand, investment, and employment.”

Benjamin Graham (1894-1976): “In stock investing, consider yourself part owner of a company, not a trader.”

John Kenneth Galbraith (1908-2006): “Rather than championing financial markets, governments must make sure that speculative frenzies do not warp or ruin the economy.”

Milton Friedman (1912-2006): “The free market, not government, ensures protection of individual rights and standards of quality, and delivers extraordinary prosperity.”

John Bogle (1912- ): “Fixed ideas in economics can have disastrous results. The world hung onto the gold standard long after it had stopped being a means to create stability and growth.”

Niall Ferguson (1954- ): “Finance has been the crucial ladder in the making of the modern world. All ladders are precarious, but without them it is hard to build anything.”

Butler-Bowdon devotes 7-8 pages of analysis to each of the 50 economists and their major works.

50 Economics Classics: Your shortcut to the most important ideas on capitalism, finance, and the global economy was published by Nicholas Brealey (May 2017). To learn more about Tom Butler-Bowden and his brilliant work, please click here.

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