Mark Blaug

Mark Blaug’s distinguished career stretched over five decades and many branches of economics. He tells us in his autobiography that he was first attracted to economics by Henry George, who did ‘not entirely convince me’ and by Karl Marx, who ‘bowled me over. His long love affair with Marxian economics gave him a life-long insight into the workings of theoretical systems that are self consistent but empirically irrefutable. He had a similar experience with his even longer flirtation with Freudian psychology. His eventual disillusionment with the Marxists’ approach of condemning capitalism because it is not fair led him to the pragmatism that also lasted the rest of his life: ‘...we can agree that capitalism is not an edifying system: it is crass, brutal and morally reprehensible but it does deliver the goods and in the final analysis it is the goods that we want!’ (Blaug: 2000:202)

Writing about his evolution from a left wing Marxist towards the right wing, he gives what is a classic statement of the political position of many liberal economists: ‘[I am] rather right wing on questions of economic policy, such as privatisation, deregulation, trade union legislation and the like, but fiercely left wing on questions of social policy such as welfare payments, unemployment compensation, positive discrimination in favour of women, blacks and gays, the right to abortion, legalisation of soft drugs and so forth.’(Blaug 2000:205)

His most famous book, and a tour de force in the history of economic thought, Economic Theory in Retrospect, grew out of the graduate course that he taught at Yale for several years starting in 1955. The first edition was published in 1964 and the 5th edition in 1997. Various editions were translated into Italian, German, Portuguese, French, Spanish, Russian, Czech, and Polish. The only rival to this great book for its comprehensiveness and analytical depth is Schumpeter’s History of Economic Analysis, which, at least in the English speaking world, never achieved the prominence of Blaug’s book.. Blaug worked on and off on the history of thought for the rest of his life. His CV lists nearly 50 articles and several books in this field. One of the latter is his Ricardian Economics: A Historical Study, a penetrating analysis of the writings of an economist whose works are anything but easy reading. In his autobiographical essay he develops a cogent defence of the study of the history of thought. (Blaug 2000: 206-9) He argues that we cannot really understand an idea ‘...without knowing where it came from [and] how it evolved out of previous ideas.’ This is because: ‘…great theories in economics as in other subject are path dependent…’ Without knowing their history, ‘...they just drop from the sky.’ Evident here is the tension between those who regard economic theories as universally applicable, similar to the laws of physics, and those who regard them as context specific, depending on various institutional and historical contexts.

After six years at Yale, he was passed over for promotion to a tenured post because the department saw no need for a specialist in the history of economics. He sought an academic post in the UK but was just ahead of the expansion of the academic job market that followed the setting up of the new universities in the early 1960s. Then by a lucky accident, he heard about, applied for and obtained a post in the economics of education at the University of London. Over the next 20 years he wrote extensively on the economics of education — his CV lists 173 articles and related items, as well as 15 books written or edited on that subject. Originally he was an advocate of the human capital approach but later he came to regard it as ‘thin and unproductive’. He felt that it ‘...vastly exaggerates the role of cogitative knowledge in the undoubted economic value of education. ...what employers really value about education is not so much what educated workers know than how educated workers behave.’ This insight, he believes, has important implications for vocational training, and educational planning and financing. Sadly, his potentially important work in this field was, on his own admission, ‘...without the slightest visible effect on either educational circles or the treatment of education by economists...’. (Blaug 2000: 211)

He spent considerable time in Asia and Africa as an educational consultant for various international organizations. Eventually he concluded, as did many others both before and after him, that aid to developing countries did more harm than good. He was a strong advocate of emphasising elementary education for the masses rather than higher education for the few and for the view that money spent on formal vocational training was largely wasted. He also felt that most the governments of developing nations failed to understand that rapid growth was incompatible with ‘...the immediate eradication of unearned incomes and perfect equality in the distribution of earnings...’ to say nothing of their destructive attitude of wanting indigenous entrepreneurship while stamping ‘...on everyone who made money, particularly by selling shoddy goods to ordinary people in the so-called “informal sector”.’ (Blaug 2000:213)

From an economist’s point of view, his most important area of interest other than the history of thought was economic methodology. His Methodology of Economics: How Economists Explain (first edition 1980 second edition 1992) is in my opinion a work that should be assigned to all graduate students of economics and many undergraduates for detailed reading and critical analysis. Even those who disagree with its strong Popperian slant will profit by detailing the reasons for their differences.

He was a relentless critic of the tendency in modern economics for what he regarded as excessive formalism achieved at the expense of empirical relevance. He disagreed strongly with economists such as Frank Hahn who believed that although general equilibrium theory might be empirically untestable (i.e., ruled out no conceivable observations), it could nonetheless help us to understand economic processes. In contrast, he argued (Blaug 1992: 169) that general equilibrium theorists had undertaken ‘... endless formalization of purely logical problems without the slightest regard for the production of falsifiable theorems about actual economic behaviour...’. In a similar vein he was highly critical of the reswitching literature, arguing that the determination of the interest rate ‘...has little if anything to do with static equilibrium theory, which is the domain of the great reswitching debate; it rests instead on the presence of uncertainty in a dynamic model of price determination á la Knight and Schumpeter.’ (Blaug 1992: 184) As a student of economic thought, he was acutely aware of just how often excessive concentration on static equilibrium theory led economists to ignore the important insights of these two great economists.

In a recent scholarly essay ‘The Fundamental Theorems of Modern Welfare Economics Historically Contemplated’ (Blaug 2007) he dispelled many misconceptions concerning the historical antecedents of modern welfare economics while being extremely critical of its exclusive emphasis on static efficiency. He argued that the first fundamental theorem did not, as many economists have asserted, formalise the insights of Adam Smith who instead saw as the justification of competition that it contributed to ‘the wealth of nations’ by which he meant economic growth. He went on to observe that ‘... static efficiency does not necessarily imply dynamic progress, while dynamic progress may be incompatible with static efficiency.’ (190). Most Schumpeterians would regard this as a correct but excessively cautious statement of the contrast between the two. Later in his paper Blaug justifies this comment of mine when he writes ‘...there is actually a world of difference between the ideal output enshrined in the first fundamental theorem and the real-world dynamic performance of a competitive economy. Adam Smith never made that leap from one world to the other, but modern general equilibrium theorists do so without the slightest hesitation.’ (196-7) He is even more scathing about the second fundamental theorem: ‘How can anything that is so patently impractical be a useful reference point? Well, actually, it cannot...’ (200). He goes on to analyse economists’ schizophrenia in accepting that although the assumptions required by these theorems bear little relation to reality, the theorems nevertheless are in some way useful in helping us to understand reality. The importance of these theorems lies, he argues, solely in their ‘ceremonial value’.

Clearly Blaug was sceptical of the emphasis on equilibrium-based theorising by both micro and growth economists, holding instead an evolutionary view of the economic process. He believed that Schumpeter, in spite of his over glamorisation of the entrepreneur, ‘…said more about economic progress under capitalism than any other economist since Marx’ and went on to observe that that was ‘...a sad comment on the last hundred years of economic theorising!’ (221).

Mark did not suffer gladly those whom he regarded as fools and, as a result, he sometimes left enemies behind him. But he also left behind him a much larger group of admiring students and colleagues who attest to his high quality as a thinker, a teacher and a human being.

Richard G Lipsey,
Simon Fraser University


Blaug, Mark (1997) Economic Theory in Retrospect, 5th edn., Cambridge, Cambridge U P.

Blaug, Mark (1992) The Methodology of Economics: How Economists Explain, 2nd edn. Cambridge, Cambridge U P.

Blaug, Mark (2000) Autobiographical essay in Exemplary Economists, Vol II: Europe, Asia and Australasia, R E Backhouse and R Middleton (eds.), Cheltenham, Edward Elgar Publishing.

Blaug, Mark (2007) ‘The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated’, History of Political Economy, 3(2) 185-207.

From issue no. 157, April 2012, pp.17-18

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