------ EH.NET BOOK REVIEW ------
Title: Economics of Good and Evil: The Quest for Economic Meaning from
Gilgamesh to Wall Street

Published by EH.NET (July 2011)

Tomas Sedlacek, /Economics of Good and Evil: The Quest for Economic Meaning
from Gilgamesh to Wall Street/.  New York: Oxford University Press, 2011.
xii + 335 pp. $28 (paperback), ISBN: 978-0-19-976720-5.

Reviewed for EH.Net by Robert H. Nelson, School of Public Policy, University
of Maryland.

/Economics of Good and Evil/ was originally published in Czech in 2009.  To
the admitted surprise of its economist author, Tomas Sedlacek, it sold more
than 50,000 copies and was turned into a popular play with sold-out audiences
at the Czech National Theatre in Prague.  Sedlacek served as an economic
advisor to the first Czech President, Vaclav Havel (who contributes a
Foreword), writes a popular Czech newspaper column, and is a member of the
Czech National Economic Council.  He adapted the original Czech version to
English so this new Oxford University Press edition is not merely a
translation.

The best-selling status of /Economics of Good and Evil/ is perhaps best
understood as reflecting an ongoing Czech search for a new national religion
to replace socialism and communism.  Any new faith likely to command wide
assent in Czech society today will probably have to be, as was Marxist
communism, itself a secular religion, perhaps again also grounded in
economics.  As Havel writes in the Foreword, a main purpose of the book is
to ask:  at a fundamental level “what is economics?  What is its
[deepest] meaning? Where does this new religion [of economics], as it is
sometimes called, come from” and where ideally might it be heading?

As an economist, Sedlacek is a throwback to the tradition of Adam Smith, John
Stuart Mill and Karl Marx.  There is no mathematics.  His scope of concern
extends to the full state of the world and his method is to analyze the
historic interactions of religion, economics and culture as they have come to
shape modern economic thought.  He traces the beginnings of current
economics as far back as the ancient Sumerians, then moves on to the
Israelites of the Old Testament, the ancient Greeks, the Christian world, and
finally comes to the modern age.

Economic concerns have always been a central part of western civilization,
and have been prominently addressed by leading thinkers of each era.  Modern
economics, Sedlacek finds, is less distinguished by its new economic ideas
than by its new outward manner of presenting economic insights that actually
are in many cases of even ancient origin.  Economists today, however, are
themselves often unaware of the original roots in the history of western
thought of their own ways of thinking.

Sedlacek explains that even the teachings of modern “scientific”
economics have a significant underlying religious and cultural message.  He
draws in this regard on the writings of Deirdre McCloskey who has contended
for thirty years now that the formal economics of today is actually often
metaphysics in disguise.  The scientific claims of mainstream economics are
best understood as an imperial claim for religious authority, a new way of
reasserting longstanding economic values, myths, and ethical creeds of the
West in a deceptively “modernist” and therefore supposedly newly
authoritative cloak.

Sedlacek begins the exploration of such topics in Chapter 1 with an analysis
of the ancient Sumerian Epic of Gilgamesh -- believed to be the first
mythical story ever put into written form.  In the Epic, he writes, “the
harlot was able to recast wild evil into something useful,” thus offering
4,000 years ago a “first seed of the principle of the market’s invisible
hand,” an economic principle that had in fact “its predecessors as early
as Gilgamesh.”  The organized city is seen in the Epic favorably as a
place where individuals can master specific skills and thus collectively
maximize their total outputs -- or, as Sedlacek writes, as early as Gilgamesh
-- the first important writing in human history -- we see a portrayal of
“the phenomenon of the creation of the city, [where] we have seen how
specialization and the accumulation of wealth was born, how holy nature was
transformed into a secular supplier of resources” for human benefit.


Sedlacek turns in Chapter 2 to the economic messages of the Old Testament.
Two thousand years before the Protestant Ethic, “for Hebrews, when a person
does well in the (economic) world, it is frequently understood as an
expression of God’s favor.”  The rule of law is sustained because for
the Jews “the Lord unequivocally preferred the judge as the highest form of
rule.”  Long before modern science, “Hebrew culture laid the foundations
for the rational examination of the world. ... [which] has its roots,
surprisingly, in [Old Testament] religion.”

Unlike the Greeks and most other ancient peoples, Sedlacek comments, “the
Jewish understanding of time is linear -- it has a beginning and an end.
The Jews believed in historical progress, and that progress is in this
world.”  These ideas, as Sedlacek says¸ set the original stage for the
much later worship of economic progress as the modern path of the salvation
of the world.  Indeed, the Old Testament offers a brand new “perception of
economic anthropology and ethos” that has survived to this day (if now in
outwardly much altered forms) and played an important “role in the
development of modern capitalist economics.”

In Chapter 3, Sedlacek describes the writings of the Greek poet Hesiod who
“examined such things as the problem of scarcity of resources, and,
stemming from that, the need for their effective allocation” -- and
therefore may appropriately “be considered to be the first economist
ever.” The Greek philosopher Epicurus develops a view of human behavior
grounded in “hedonism ... that would later receive a more exact
economization at the hands of J. Bentham and J. S. Mill.”  Sedlacek quotes
Karl Popper approvingly to the effect that Karl Marx is a modern heir to
Plato -- they both “offered a vision of apocalyptic revolution which will
radically transfigure the whole social world” and thereby bring a new
heaven on earth.

The ancient Greek philosopher Xenophon, a contemporary of Plato, Sedlacek
ranks as “a brilliant economist, who among other things dealt with the
issue of utility and the maximization of yield.”  He also “deals in
detail with specialization, offers a lot of advice on both the micro and
macro level, examines the favorable effect of incentives for foreign
investors, and so on.”  Although few current economists have ever studied
-- or maybe even heard of -- Xenophon, Sedlacek writes that “to a certain
extent, it could be said that his economic scope is wider and in many ways
deeper than Adam Smith’s considerations.”

Sedlacek moves in Chapter 4 to the economic messages of the New Testament and
the Christian world.  He notes that “of Jesus’s thirty parables in the
New Testament, nineteen (!) are set in an economic or social context.”
More broadly, “Christianity builds a large amount of its teaching on
economic terminology” and in the process renders a surprisingly wide range
of ethical economic judgments.

In the theology of Augustine, in contrast to the Old Testament, “the world
appears evil, unfair, transitory, unimportant” -- yielding a newly ascetic
outlook that significantly influenced European civilization during the Middle
Ages.  Yet, all through the history of Christianity there is a favorable
view of work, that “labor should provide man with pleasure and
fulfillment,” that “labor is even a responsibility for man: ‘If a man
will not work, he shall not eat,’” as the New Testament says in Second
Thessalonians.

Eight hundred years later, drawing heavily on recently recovered writings of
Aristotle, Thomas Aquinas reversed attention from Augustine’s inwardness
toward examining the external world as a new focus of Christian theology.
Aquinas saw private property as necessary, and the just price for him was in
essence the competitive market price.  In Aquinas’ writings, as Sedlacek
explains, “reason could not have received higher recognition.  If
practical discoveries can be truly proven [by rational methods], the
traditional explanation[s] of the Bible must defer, because that
interpretation was erroneous.”  For Aquinas, “revolting against reason
was ... like revolting against God.”  With rational analysis thereby given
such a powerful new religious authority, Aquinas and other scholastics played
a key role in setting the stage for the scientific revolution a few centuries
later and ultimately the shaping of modern economics.

Sedlacek writes that “Christianity is the leading religion of our
Euro-American civilization.  Most of our social and economic ideals come
from Christianity or are derived from it.”  Most economists today
admittedly do not know much about this and would be surprised to learn, as
Sedlacek argues, that much of contemporary economics still amounts to a
secularized -- and thus disguised -- Christianity.

In the next three historical chapters of /Economics of Good and Evil/,
Sedlacek delves into the more recent foundations of modern economics.  As he
writes, “Rene Descartes had a truly breakthrough influence on economic
anthropology.”  In the seventeenth century, Cartesian philosophy opened
the way to the vision of “economic man [who] is a mechanical construct that
works on infallible mathematical principles, ... and economists are
[therefore] capable of explaining even his innermost motives” through
mathematical methods.  For the first time with Descartes, “a mathematical
equation becomes the [religious] ideal of truth.”

Sedlacek’s analysis of Adam Smith emphasizes his role as a natural
philosopher who recognized that “psychology, philosophy, and ethics are in
reality at the core of economics.”    Smith has been recast by many
later economists as a value-neutral defender of the free market who saw human
motivation exclusively in terms of the expression of self-interest.  In
reality, as Sedlacek notes, the “invisible hand” is only mentioned once
in Wealth of Nations, almost in passing.  Instead, Smith has a much more
nuanced view of human behavior and the workings of the economic system --
“for us economists, I believe Smith’s legacy is that moral questions must
be included in economics.”  The final edition of The Theory of Moral
Sentiments was published after Wealth of Nations and thus might be considered
Smith’s final word on economics and morality.  For Smith, Sedlacek writes,
the appropriate ethical principles are “the key question of economics.”

After the historical analysis, the concluding chapters of /Economics of Good
and Evil/ present what Sedlacek labels as his final “blasphemous
thoughts.”  He finds that the modern devotion to “neverending growth”
is a contemporary manifestation of the old idea of religious progress but now
“in different clothing -- first in religious (heaven) and later in secular
forms (heaven on earth).”  Revealing the true path of maximal economic
progress has become the underlying “raison d’etre for economics, science
and politics and is something our civilization grew up with and simply
counts” as an unexamined article of faith -- as spread by the “modern
priests” of the economics profession.  Sedlacek believes, however, that
economic progress, while overall a great benefit in the modern age, may have
reached its useful limits, and any suitable economic religion of the future
should better teach us to be more “satisfied with what it [mankind] has,
the progress it has already made.”

Admittedly, this would require a whole new methodological foundation for the
field of economics.  If economic progress is not a basic goal, the pursuit
of “efficiency” would no longer have its current transcendent purpose --
“efficient” and “inefficient” having become the secular economic
substitutes for good and evil.  There might then need to be a return to
earlier religious views in which satisfying “work,” not consumption,
becomes the greatest object of human value.

In recasting economics, Sedlacek argues, a necessary first step will be to
deemphasize the role of mathematics.  The use of mathematical methods in
economics, Sedlacek concludes, “is useful but not sufficient. It is only
the tip of the iceberg.  Below the mathematics lie much more fundamental
issues” of institutions, culture, and basic belief -- even of religion.
These issues do not readily lend themselves to mathematical methods.

Rather than exhibiting an introspective curiosity about the foundations of
economics, Sedlacek thinks that too many current members of the economics
profession are happily content to remain in the dark as to the true
historical origins and the underlying ethical norms of their own field.
This is an almost willful blindness that is perhaps best understood as itself
a religious statement, part of the general religious scientism that afflicts
contemporary economics.  Full knowledge of the many historic antecedents of
modern economics would be almost an embarrassment for current economic faith.

In /Economics of Good and Evil/, Sedlacek draws on a wide range of
literature, economic and non-economic alike (there are probably more
references to Wittgenstein than to any one twentieth century economist).
The book is well documented including exhaustive footnoting that often
includes long direct quotes from original sources (many pages have as much
content in the footnotes as in the main text).

It is not possible in a short review such as this to do more than give the
flavor of /Economics of Good and Evil/.  It is also not possible to say that
Sedlacek is either “correct” or “incorrect.”  In a work of such
broad historical scope, one seeking to rewrite the history of economic
thought, a more authoritative judgment must await the test of time.

A more appropriate test for a review such as this, I would suggest, is
whether the book is “interesting,” “well informed and documented,”
“well argued,” “accurate,” and -- in the end perhaps the most
significant matter of all -- “persuasive.”  These judgments are not
reached by a scientific method.  For this reader at least, while there are
certainly areas where I would disagree in some of the details, /Economics of
Good and Evil/ is a fascinating and provocative read.

Works of such scope and ambition rarely come along in economics. (Indeed,
some current economists may not regard the book as legitimately falling
within the scope of “economics.”  They might say it really belongs to
the “history of ideas,” if with a strong economic emphasis.)  For those
economists interested in probing the deepest foundations of their own
professional discipline, however, this book is highly recommended.

Robert H. Nelson is a professor of environmental policy at the School of
Public Policy of the University of Maryland.  He is the author most recently
of /The New Holy Wars: Economic Religion versus Environmental Religion in
Contemporary America/ (Penn State Press, 2010).  He also addresses the
religious side of economics in /Economics as Religion: From Samuelson to
Chicago and Beyond/ (Penn State Press, 2001) and /Reaching for Heaven on
Earth: The Theological Meaning of Economics/ (Rowman & Littlefield,
1991).   His email address is [log in to unmask]

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Geographic Location: General, International, or Comparative
Subject: History of Economic Thought; Methodology
Time: General or Comparative