Behind the Veil of Economics: Essays in the Worldly Philosophy

by Robert L. Heilbroner

Professor Heilbroner shows why economics has become the reigning form of social inquiry, and how we might penetrate its mystique. He explores aspects of the "regime-like" character of capitalism and its historic position today; the meaning of work and value; and the manner in which the social visions of the "worldly philosophers" affect their economic analyses.

Genres: Economics, Philosophy, Politics

208 pages, Hardcover

First published January 1, 1988

About the author

Robert L. Heilbroner (March 24, 1919 – January 4, 2005) was an American economist and historian of economic thought. The author of some twenty books, Heilbroner was best known for The Worldly Philosophers, a survey of the lives and contributions of famous economists, notably Adam Smith, Karl Marx, and John Maynard Keynes.

Written in 1953, The Worldly Philosophers has sold nearly four million copies—the second-best-selling economics text of all time. The seventh edition of the book, published in 1999, included a new final chapter entitled "The End of Worldly Philosophy?", which included both a grim view on the current state of economics as well as a hopeful vision for a "reborn worldly philosophy" that incorporated social aspects of capitalism.

Although a highly unconventional economist, who regarded himself as more of a social theorist and "worldly philosopher" (philosopher pre-occupied with "worldly" affairs, such as economic structures), and who tended to integrate the disciplines of history, economics and philosophy, Heilbroner was nevertheless recognized by his peers as a prominent economist. He was elected Vice President of the American Economic Association in 1972.

He also came up with a way of classifying economies, as either Traditional (primarily agriculturally-based, perhaps subsistence economy), Command (centrally planned economy, often involving the state), Market (capitalism), or Mixed.

He was a trustee of the Economists for Peace and Security.

Heilbroner died on January 4, 2005 in New York, NY at the age of 85.

Reviews

[Lance Cahill · Rating 4 out of 5]

I’ve always found Heilbroner interesting ever since reading The Worldly Philosophers when recommended by my AP US History teacher in high school. Consistent with that, he is best when discussing the thought of others and not branching out on his own, especially the thought of early classical thinkers as Smith, Ricardo, and Marx.

Accordingly, skip the first and third chapters.

Ultimately, Heilbroner views economics as consisting of a vision which masks a theory constrained by a given social setting and institutions (that being what Heilbroner would refer to as a capitalist mode of production and distribution).

One area I’d like to focus on is the discussion of the theory of value. His discussion over the theory of value makes it seem as if economics never evolved from the initial branch out puts formalized by Marshall - Debreu is relegated to a footnote and Arrow is not even discussed! In what would otherwise be a minor foot fault looms larger as ones likely to read Heilbroner are the ones with an initial distrust of the economics profession. Discussion of Arrow or Debreu would be rather technical, but is needed context for ‘what economics is’.

Heilbroner doesn’t grapple with Debreu’s short discussion in his Nobel lecture of why an axiomatic approach to economics is useful from the perspective of scientific advancement:


The benefits of the axiomatization of economic theory have been numerous. Making the assumptions of a theory entirely explicit permits a sounder judgment about the extent to which it applies to a particular situation. Axiomatization may also give ready answers to new questions when a novel interpretation of primitive concepts is discov- ered.

Without grounding theory in some axiomatic precepts, it’s difficult to derive testable predictions.

In short, Heilbroner will provide another arrow in the quiver for those on his side, but indicate there might be a true want in grappling with the best arguments on the other side.

Heilbroner is a reliable popularizer of 18th and 19th century economic thought (no references to the ‘invisible hand’!) and should be read for that alone. But, does not give a fair shake to modern economic theory.

[Alejandro Teruel · Rating 3 out of 5]

This book includes eight chapters many of which were written and published first as independent papers.

In an otherwise excellent review, the Goodreads reviewer Lance Cahill asserts that in this book at least, Robert L. Heilbroner:

... is best when discussing the thought of others and not branching out on his own, especially the thought of early classical thinkers as Smith, Ricardo, and Marx.

Accordingly, skip the first and third chapters.

I do not agree with Cahill's dismissal of the first chapter which was one of the few chapters written to tie together the papers published here as chapters. In this first chapter, Heilbroner purports to provide the key to the book:

Economics as the study of the economy contains premises and value judgments of which it is itself unaware.

adding later this surprising and polemical statement:

[W]e will examine economics as a belief system, an ideology.

These are, in my opinion, fascinating goals -unfortunately most of the book does not address these goals very clearly, with the exceptions of chapters 1, 5, 6, and 8.

For those more interested in mainstream economy, I would recommend reading Lance Cahill's aforementioned Goodreads review. My review is written from an entirely different viewpoint, since I am more interested in ethical issues in economic thought, that is to say I am more interested in the goals Heilbroner sets in the first chapter.

In the first chapter, the author sets out to dismantle the idea that markets are “price systems” and that market activities :

.... function without the incentives and inhibitions of tradition (affect) or hierarchy (command)

characteristic of earlier economic regimes and thus dismantle the idea that economy can be studied independently of externalities such as political power or affect.

Heilbroner sketchily hypothesizes that, at least some of the beliefs underlying economic systems, can best be understood by studying psychoanalytic theories of childhood development, particularly as regards the socialization of primal drives into the adult capacity to form positive associations based on affect, as well as the construction of hierarchical relationships based on obedience. However:

At the heart of market society is the idea of exchange , presumably involving the impersonal, affectless interchange of goods or services according to their value to the parcipants

A closer look at exhange mechanisms and particularly the idea that markets rely on exchanges based on purely rational, self-interested calculations come up against a wall:

[M]ore than rational calculations is needed to support “maximizing behavior” for if this means obtaining largest pecuniary rewards, then we will, whenever possibl rob the blind, engage in minor pilfering, systematically undertip or fail to tip [...] There is an implicit agreement on what can be bought and sold, what interests may be pursued individually and collectively -[thus] there are social prerequisites of markets.

Furthermote:

Market society, with its linchpin principle of impersonal, equal-valued exchange, presupposes the tacit but strong subscription of all to the existing law. If such a subscription were not generally observed, transaction costs would soar and the exchange system would be hopelessly encumbered by the need to inspect and verify each step in the exchange process, to assure one's physical safety in the exchange situation, etc.

Unfortunately, the goals set out in the first chapter seem to have been thought out after publishing the papers that constitute the bulk of the book, so that identifying what beliefs and values are taken into account and analyzing how belief systems underlie economics are not clearly set out and the argument seems to meander and muddle along. Chapter 2, for example, appears to play lip-service to the psychoanalytic base of economics when it mentions in passing:

Roots of expansive drive (insatiable pursuit) for capital lie not so much in conscious motivations (utility maximization) as to the gratification of unconscious drives, specifically the universal infantile need for affect and experience of frustrated agression

but this is shallow, half-baked stuff at best. Chapter 2 also a brief comment on how a key belief about wealth gathering changes as capitalism starts to take off:

Under capitalism concern about good and evil as the most immediate and inescapable consequence of wealth gathering disappear; the dangerous passion of avarice becomes a benign interest.

With respect to the goals set forth in the first chapter, Chapter 3 merely points out that certain values are incorrected atributed to the rise of capitalism:

Individual freedom, participation, democracy, equality are associated with the rise of the bourgeois culture of the 18th and 19th century. But these principles rather than belonging to Capitalism belong to socialism [in the sense -Heilbroner explains- of Scandinavian type socialism]

Chapter 4 (The World of Work is, in my opinion, very poorly written and most confusing -Heilbroner appears to be thinking aloud and going backwards and forwards in search of insights about work, and only touches the goals set forth in the first chapter very tangentially, if at all. The author raises a couple of interesting questions but also, seen from the vantage point of 2024, makes a number of painfully prejudiced assertions such as denying that child-rearing constitutes work.

I had great hopes for chapter 5, The Problem of Value, which contrasts several theories about which values underlie pricing systems. This is a classical problem in economic thought which has been set aside, or rather sidestepped, in current mainstream post-classical utility theory. In the past ethical, the ethics of pricing -i.e. what constitutes just prices- and the labor theory and labor theories of values underpinning prices generated a great deal of acrimonious discussion. Contrary to neo-liberal and libertarian thought, Heilbroner ends up by suggesting that not all realms of activities and services in capitalist societies can be placed in a market system -which seems to tie in very nicely with Michael Sandel's eloquent criticisms in his e-course on Money, Markets and Morality and his book What Money Can't Buy: The Moral Limits of Markets.

Chapter 6 is an excellent analysis of the ideological underpinnings of Adam Smith's The Wealth of Nations and, to a lesser degree, Ricardo's work and some of Marx's ideas. It squarely addresses the first chapter's goals in a historical setting.

Rather belatedly, in the eighth and last chapter, Heilbroner points out several ideologically-based assertions by twentieth-century economists such as Milton Friedman, George Gilders and Jude Wanniski and thus convincingly shows how ideology underpins some key work in contemporary economics. It is a pity this chapter was not developed further.

[Renée · Rating 4 out of 5]

this was good, robert was a little verbose at times but i liked it