------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (March 2008)

Stephen A. Marglin, _The Dismal Science: How Thinking Like an 
Economist Undermines Community_. Cambridge, MA: Harvard University 
Press, 2008. xvi + 359 pp. $35 (cloth), ISBN: 978-0-674-02654-4.

Reviewed for EH.NET by Eric Jones, Melbourne Business School.


This is an exceptionally learned, uncompromisingly contrarian 
critique of markets and economics by a member of the Department of 
Economics at Harvard University. Stephen Marglin emphasizes the costs 
of market transactions and blames economics for supplying the 
associated frame of reference. _The Dismal Science_ is patently the 
result of a lifetime of reading and cogitating about conceptual 
issues related to market exchanges and economists' approaches to 
them. Some historical background is given but what is mainly offered 
is extended commentary on the history of thought and on everyday 
practice.

The "modern world view," in Marglin's opinion, derives from 
economics, which ignores the breakdown of community and elevates 
instead an obsession with productive efficiency. No accusation seems 
too gross for him to level at the economics profession. Economics 
distorts everything, he says, particularly human proclivities, 
although I found it hard to keep clear whether he thinks 
non-economists are too sensible to think like smart-alec graduate 
students or have been brainwashed by the economics' mind-set seeping 
into every debate. In a meandering volume crammed with long 
quotations, he seems to qualify each assertion only to proffer some 
variant a few pages later.

His charges against economics boil down to the way the subject 
fosters individual maximization, ignores distributional concerns, and 
legitimizes "the market" behind a pretense of scientific detachment. 
Yet economics is a broad church and is always evolving, never more so 
than at present. Aha, the reader thinks, at least behavioral 
economics is not so crass as to accept the Homo economicus of Econ 
101. Marglin is a step ahead, however, urging that all the behavioral 
economists are doing is altering one or two assumptions at a time. 
Theirs may seem a prototypically scientific procedure but Marglin 
will not agree. His mind is made up, right to lamenting that Adam 
Smith failed to entitle his book, _The Wealth of Workers_.

One of Marglin's favored examples is the Amish, whose mutual 
dependence resists the market. The Amish exemplify community in his 
terms, which is to say there is no exit short of exorbitant personal 
cost. Who are the Amish? For practical purposes they are the 
community leaders. A world thus dominated is surely as likely to 
become that of the Lord of the Flies as a circle of benevolence.

While Amish community patterns survive, they are only patterns: 
Pennsylvania is not the eighteenth-century Rhineland, nor can it be 
when some Amish run tools off propane gas although they are forbidden 
electricity, install telephones in their barns although they are not 
to have them in their houses, and so forth. Thus, while they do so at 
a long remove, the Amish shadow American society. Theirs is often, so 
to speak, the world of the Shabbas goy, not the principled realm of 
community implied.

Marglin's notion that a world of neighborliness was swept away by 
impersonal insurance markets does not fully capture reality. He 
thinks the neighbors would have rallied round to put up another barn 
for you if yours burned down -- a Seven Brides for Seven Brothers' 
model of community help. No doubt there was mutuality in small 
places. But he does not refer to what actually preceded the 
development of fire insurance. Previous arrangements were less, not 
more, personal than the policy one might buy for oneself from an 
insurance agent. They relied on briefs for alms, instruments not 
abolished in England until 1828. Parish records are full of sums 
collected for briefs for distant places.

The system was non-compulsory but also non-local -- you subscribed 
for sufferers whom you would never meet and lived in hopes they would 
respond to your brief if you suffered in turn. People helped their 
neighbors but simultaneously belonged to vast networks of Christian 
support that can only be termed "community" by considerable 
stretching. This had little to do with the nation-state, which is one 
of Marglin's innumerable betes noires: the instrument was previously 
the Papal Brief. Briefs did not supplant community, they supplemented 
it, while being less reliable than formal insurance. Moreover it is 
misleading to single out England as the home of insurance markets. 
Continental countries were writing insurance against losses of crops 
from hailstorms back in the eighteenth century. England, supposed 
fount of market ideology, did not do so until 1842.

Nor is the impression given of the English enclosure movement more 
persuasive. Landowners were eager to take land into ring-fenced 
holdings of their own but this did not preclude their raising 
productivity. Marglin thinks they were merely engrossing. Enclosure 
processes were long drawn out, he claims, because until 1688 peasants 
who resisted were backed by the Crown. Nevertheless we have to 
explain why progress was slow even afterwards. Copyholders were not 
instantly stripped of resources -- Marglin does not acknowledge that 
they typically held their farms on three lives. Nor were farmers 
necessarily averse to leaving the land in order to become shopkeepers 
in the market towns of a gradually expanding economy.

We must agree that markets entail costs, as Marglin endlessly 
insists, even if economists neglect the fact. Yet he rationalizes 
away the corresponding costs of being trapped in small groups that 
risk being inequitable as well as inefficient. The work of Jonathan 
Hughes on the colonial economy shows just how onerous non-market 
regulatory control was: we need not rely on gains in efficiency from 
the adoption of markets to reject the politicized allocation of 
resources and roles inseparable from "community."

Marglin does advance some telling points against the practice of 
modern economics and, even leaving aside the political animus evident 
in _The Dismal Science_, it would take another volume (though not 
such a long one) to expound and contest its hundreds of propositions. 
Economists may be left to look after themselves; and while economic 
historians may wish to contemplate aspects of the critique, I suspect 
most of them will leave by the door through which they first came in. 
They may also be under-whelmed by some of the stylized historical 
facts on which the arguments depend.


Eric Jones is Professorial Fellow, Melbourne Business School, 
University of Melbourne, and Visiting Professor, University of 
Exeter. He is the author of _The European Miracle_, _Growth 
Recurring_, and _Cultures Merging_.

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