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The Dismal Science: How Thinking Like an Economist Undermines Community
Economists celebrate the market as a device for regulating human interaction without acknowledging that their enthusiasm depends on a set of half-truths: that individuals are autonomous, self-interested, and rational calculators with unlimited wants and that the only community that matters is the nation-state. However, as Stephen A. Marglin argues, market relationships erode community. In the past, for example, when a farm family experienced a setback―say the barn burned down―neighbors pitched in. Now a farmer whose barn burns down turns, not to his neighbors, but to his insurance company. Insurance may be a more efficient way to organize resources than a community barn raising, but the deep social and human ties that are constitutive of community are weakened by the shift from reciprocity to market relations.
Marglin dissects the ways in which the foundational assumptions of economics justify a world in which individuals are isolated from one another and social connections are impoverished as people define themselves in terms of how much they can afford to consume. Over the last four centuries, this economic ideology has become the dominant ideology in much of the world. Marglin presents an account of how this happened and an argument for righting the imbalance in our lives that this ideology has fostered.
Marglin dissects the ways in which the foundational assumptions of economics justify a world in which individuals are isolated from one another and social connections are impoverished as people define themselves in terms of how much they can afford to consume. Over the last four centuries, this economic ideology has become the dominant ideology in much of the world. Marglin presents an account of how this happened and an argument for righting the imbalance in our lives that this ideology has fostered.
384 pages, Paperback
First published January 1, 2008
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July 24, 2009It seems to me that the study of economics, to an unbecoming degree, assumes that all people behave in a narrow, self-interested manner. Not only do I believe this presupposition is false, I think that the zeitgeist has a nearly totalitarian hold on public culture such than anyone who deviates from this fashionable brand of obnoxiousness is labeled by conventional wisdom as irrational at best and immoral at worst. The idea that all business decisions should be guided by the market relegates all other "externalities," such as community stability, aesthetic regard, and cultural mores, as unimportant. Further, it seems that positing the Market as a determining entity shifts the responsibility from the individual agents buying and producing these goods to some amorphous, morally dubious power. As a black man, I'm well aware of how blithely the Market kept us in chains and how it wasn't "the Market" that led the Birmingham bus boycott or the Civil Rights movement. The idea of the supreme wisdom of the market seems to be the enemy of individual responsibility and moral rectitude, and the only excuse the market seems to have for itself is, "Well, in the long run, following me will be for the best." And I'm just not sure that's true. I think that Marglin fleshes out these intuitions in his book. I'll find out this weekend.
April 1, 2013
An economist who questions the foundations of his 'science'. Starts out a little slow, but picks up after the first 50 pages. Has an appendix that will go over some economic terms people may not be familiar with. He argues that the modern economic model is based on its own brand of knowledge. He breaks knowledge into two categories (with itself is an Epistemic view) which are experimental and algorithmic.
Although not explicitly noted, his view of experimental knowledge really is an existential view of knowledge for those familiar with this philosophy.
Recommended. Those who enjoy existential or anthropological economic texts and are looking for something that chews on modern economical axioms and philosophies will enjoy.
Although not explicitly noted, his view of experimental knowledge really is an existential view of knowledge for those familiar with this philosophy.
Recommended. Those who enjoy existential or anthropological economic texts and are looking for something that chews on modern economical axioms and philosophies will enjoy.
April 28, 2014
Finally liberals and conservatives agree on something. Like conservatives George W. Carey and Robert Nisbit, liberal Stephen Marglin sounds the alarm for community and tradition's demise - though they differ on cause. Instead of centralized government and rights invention by the Court, Marglin takes aim at that most sacred of modernity’s inventions, our Adam-Smith-originated economic model where the foundational assumptions of economics are those of modernity. Sounding like conservative Allan Bloom (“Shakespeare's Politics”), Marglin laments “the narrowing of economic minds as students set aside larger questions for career advancement.” Not so much directed at students but at this civilization's assumptions central to economic theory that made students this way. Point being that both sides (and there are only two in America) - despite evermore dogmatic defiance - are recognizing the machine we made that now makes us in its image. An image lacking community, humane perspectives and human connectedness. Not to confuse community with “association,” “special interest,” facebook or bowling league, both sides agree “community” is something deeper. A face-to-face arrangement in which people share a common cause and need, as Marglin writes, “creating a common future, recalling a common past.” This is decidedly not an adolescent counter-culture Sixties reaction, but a growing clarity of consequences of materialist thinking. Dismal is, however, not exactly a solution either. While we get the problem, how to fix it isn't clear. As Hayek showed in his “Road To Serfdom,” the devil’s in the details of practical implementation.
The kernel of Dismal Science is that modern economic models are approximations of reality (as anyone in science knows); that these models consider human aspects of society as perturbations or ignored altogether; that these inaccurate models are then made real through social engineering that force humans to fit as parts in the machine. Community becomes a foreign entity lost to shallows of modernity through the draining assumption that humans are “autonomous, rational, self-interested individuals seeking to maximize utility through efficient markets” and nothing more. To such an extreme that barriers to development like preservation of communities or the natural world are seen as backward hindrance to growth and globalization. Marglin's barn raising provides an example. Property insurance did not exist until the 17th century, but who today would want to be without it? If you pay an annual premium for your barn and your barn burns down, the insurance company pays strangers to rebuild it. While perhaps more efficient (or not) than gathering neighbors for a barn raising, in earlier times this was done. Responding to need, gathering those neighbors and building the barn strengthened interdependence and community. It is only when we focus on barns, says Marglin, rather than the people raising them that insurance appears a more effective means of coping with disaster.
Marglin owes some credit to Karl Polanyi for breaking the ice on this question, but Marglin provides a more complete argument with 70 years of added experience since Karl wrote his socialist manifesto, “The Great Transformation.” In that book Karl argued that societies are now subservient to economies, not the other way round as they had been. In “Dismal,” Marglin argues similarly that markets are now superior to communities. Again, in one of those great historical ironies, we hear the echo of Karl’s brother - and Frederick Hayek’s mentor, Michael Polanyi in Marglin’s defense of community and tradition as not “anything goes.” Occasionally dense with economist lingo (after all, he's also writing to economists), hang in there, the reward is very worth the effort, offering a fresh, experienced perspective to this latest creation of the Anthropocene (and but for human population, probably its most powerful force).
The kernel of Dismal Science is that modern economic models are approximations of reality (as anyone in science knows); that these models consider human aspects of society as perturbations or ignored altogether; that these inaccurate models are then made real through social engineering that force humans to fit as parts in the machine. Community becomes a foreign entity lost to shallows of modernity through the draining assumption that humans are “autonomous, rational, self-interested individuals seeking to maximize utility through efficient markets” and nothing more. To such an extreme that barriers to development like preservation of communities or the natural world are seen as backward hindrance to growth and globalization. Marglin's barn raising provides an example. Property insurance did not exist until the 17th century, but who today would want to be without it? If you pay an annual premium for your barn and your barn burns down, the insurance company pays strangers to rebuild it. While perhaps more efficient (or not) than gathering neighbors for a barn raising, in earlier times this was done. Responding to need, gathering those neighbors and building the barn strengthened interdependence and community. It is only when we focus on barns, says Marglin, rather than the people raising them that insurance appears a more effective means of coping with disaster.
Marglin owes some credit to Karl Polanyi for breaking the ice on this question, but Marglin provides a more complete argument with 70 years of added experience since Karl wrote his socialist manifesto, “The Great Transformation.” In that book Karl argued that societies are now subservient to economies, not the other way round as they had been. In “Dismal,” Marglin argues similarly that markets are now superior to communities. Again, in one of those great historical ironies, we hear the echo of Karl’s brother - and Frederick Hayek’s mentor, Michael Polanyi in Marglin’s defense of community and tradition as not “anything goes.” Occasionally dense with economist lingo (after all, he's also writing to economists), hang in there, the reward is very worth the effort, offering a fresh, experienced perspective to this latest creation of the Anthropocene (and but for human population, probably its most powerful force).
February 13, 2008
The dismal science offers a balanced, thoughtful (and Harvard economist) answer for those kids in economics class who raise questions with the sneaking suspicion that all is not right. Why is it that economic theory is at times promoted with almost religious zeal without equal or adequate attention to its shortcomings and limitations? Are we all really purely self-interested calculating individuals with preferences that 1)never change as we grow and 2)are in no way affected by what other people have or by our family, friends, altruism? Does it make sense to continue to promote economics as a science when so much empirical evidence from around the world directly contradicts its founding principles? And what about economic losers? Is what makes the most economic sense (real life example: dumping toxic waste off of coast of Cote d'Ivoire) what we actually want?
April 6, 2023
A very good read criticising the individualistic assumptions and methodology of mainstream economics and the resulting effects for community and society
The author examines examples of how economics has been distorted by an uncritical acceptance of the dominant ideology of knowledge and includes a sharp critique of economists who deny the normative (prescriptive) aspect of economics, as pioneered by Lionel Robbins
Religion (albeit an unnecessary detour at times), (classical) political economy, political science and philosophy feature throughout alongside discussions of economics
I found the following example particularly illuminating: the Amish as a society privileges community above all and in doing so, forbid insurance precisely because they understand that the market relationship between an individual and the insurance company undermines the mutual dependence of the individuals
The economist serves the nation-state by legitimising not only an analytic division between the size of the pie and its distribution, but by legitimising the claim that the focus on the size of the pie is devoid of politics; while the nation-state serves the economist by providing a cover for economics to ignore the inconvenient side of change and conflict: real hardships to real people, whose livelihoods and sometimes the very meaning of whose existence are sacrificed on the altar of a larger economic pie - an argument echoed afterwards by degrowth proponents
Marglin underlines how the individualistic worldview promotes scarcity - as long as commodities are a primary means of solving existential problems, goods will be scarce; denying, as individualism des, the primary of relationships, all that's left is stuff. Goods and services in effect substitute for meaningful relationships with family, friends and community. As exemplified by health care - as long as good health is a commodity, there is no way - short of a halt in the progress of medical technology - that health care could cease to be scarce within the individualistic worldview. There is no limit on an individual's desire for health care (see Arrow, 1963) except the other goods they would give up for the sake of better health, so neither health care nor ordinary consumption goods can be surplus. Marglin instead argues that the premises of modernity must be rethought in order for society to have enough.
Marglin agrees with Bhagwati (2004) and other defenders of globalisation that people everywhere want the technologoical benefits that have come to the West with modernity, but departs thereafter, arguing that peple do not necessarily want the cultural entailments in which imported technologies of improving health, alleviating physical drudgery, providing material comfort, come attached with. Most notably, they do not necessarily want their lives governed by the market. They may want enough to lead a dignified life, but they do no necessarily wish for lives of quiet desperation as individuals calculating how to get more and more.
This final chapter: "From Imperialism to Globalisation, by way of Development" also has a thoughtful discussion on culture, civilisation and economics, advancing the assessment that destroying a civilisation is a crime against humanity - without necessarily accepting that this crime would enhance productivity and increase prosperity, as quoted from Lohmann et al. 1994 how a Thai villager rejected all options posed to them by a economic consultant...first they objected to the manner in which the choice was put to them, if such matters were to be discussed and considered, they could only be discussed and considered as a community, not through approaches to separate indivudals, or "preference polling". Second, the villager said that each alternative would lead to destruction of the forest on which the villagers depended for water and other goods. Putting the forest in the hands of discrete individuals, would destroy the community and thus the forest.
Marglin calls for a rejection of the individualist ideology of knowledge in favour of one that gives greater weight to experience, or to spirituality, which would be against an overly narrow focus on rational deliberation
By rejecting the primacy of the individual over the relationships that constitute community, one might be sensitive to the rights of individuals and the rights of community; drawing on Anderson's concept of imagined communities, by rejecting the primacy of the national community, the claims of local communities become more legitimate
Appendix A - a brief primer on the internal criticisms of economics, as opposed to the external criticisms that the book sets out, is also particularly worthwhile for anyone with a background or interest in economics
A necessary antidote to Mankiw, Summers et al and sections on welfare and development should be a must-read for econ 101
The author examines examples of how economics has been distorted by an uncritical acceptance of the dominant ideology of knowledge and includes a sharp critique of economists who deny the normative (prescriptive) aspect of economics, as pioneered by Lionel Robbins
Religion (albeit an unnecessary detour at times), (classical) political economy, political science and philosophy feature throughout alongside discussions of economics
I found the following example particularly illuminating: the Amish as a society privileges community above all and in doing so, forbid insurance precisely because they understand that the market relationship between an individual and the insurance company undermines the mutual dependence of the individuals
The economist serves the nation-state by legitimising not only an analytic division between the size of the pie and its distribution, but by legitimising the claim that the focus on the size of the pie is devoid of politics; while the nation-state serves the economist by providing a cover for economics to ignore the inconvenient side of change and conflict: real hardships to real people, whose livelihoods and sometimes the very meaning of whose existence are sacrificed on the altar of a larger economic pie - an argument echoed afterwards by degrowth proponents
Marglin underlines how the individualistic worldview promotes scarcity - as long as commodities are a primary means of solving existential problems, goods will be scarce; denying, as individualism des, the primary of relationships, all that's left is stuff. Goods and services in effect substitute for meaningful relationships with family, friends and community. As exemplified by health care - as long as good health is a commodity, there is no way - short of a halt in the progress of medical technology - that health care could cease to be scarce within the individualistic worldview. There is no limit on an individual's desire for health care (see Arrow, 1963) except the other goods they would give up for the sake of better health, so neither health care nor ordinary consumption goods can be surplus. Marglin instead argues that the premises of modernity must be rethought in order for society to have enough.
Marglin agrees with Bhagwati (2004) and other defenders of globalisation that people everywhere want the technologoical benefits that have come to the West with modernity, but departs thereafter, arguing that peple do not necessarily want the cultural entailments in which imported technologies of improving health, alleviating physical drudgery, providing material comfort, come attached with. Most notably, they do not necessarily want their lives governed by the market. They may want enough to lead a dignified life, but they do no necessarily wish for lives of quiet desperation as individuals calculating how to get more and more.
This final chapter: "From Imperialism to Globalisation, by way of Development" also has a thoughtful discussion on culture, civilisation and economics, advancing the assessment that destroying a civilisation is a crime against humanity - without necessarily accepting that this crime would enhance productivity and increase prosperity, as quoted from Lohmann et al. 1994 how a Thai villager rejected all options posed to them by a economic consultant...first they objected to the manner in which the choice was put to them, if such matters were to be discussed and considered, they could only be discussed and considered as a community, not through approaches to separate indivudals, or "preference polling". Second, the villager said that each alternative would lead to destruction of the forest on which the villagers depended for water and other goods. Putting the forest in the hands of discrete individuals, would destroy the community and thus the forest.
Marglin calls for a rejection of the individualist ideology of knowledge in favour of one that gives greater weight to experience, or to spirituality, which would be against an overly narrow focus on rational deliberation
By rejecting the primacy of the individual over the relationships that constitute community, one might be sensitive to the rights of individuals and the rights of community; drawing on Anderson's concept of imagined communities, by rejecting the primacy of the national community, the claims of local communities become more legitimate
Appendix A - a brief primer on the internal criticisms of economics, as opposed to the external criticisms that the book sets out, is also particularly worthwhile for anyone with a background or interest in economics
A necessary antidote to Mankiw, Summers et al and sections on welfare and development should be a must-read for econ 101
October 14, 2025
Marglin argues that the field of economics makes many invalid assumptions, but that economists either treat those assumptions as good enough or ignore them altogether. The result is that people are constrained to fit the theory, and they lose much of their humanity in the process. That economic assumptions are invalid is well-supported by the book, but the argument that it leads to loss of community was hard enough to follow that it left me unconvinced, except in a few local and specific cases. Still, I recommend the book as an antidote to economic fundamentalism.
January 4, 2018
Шикарна тема, хороші приклади, дуже-дуже необхідний аналіз нашого сприйняття і майже релігійної віри в економіку. Проте читати дуже важко - я думаю, що до особистого стилю автора додався такий собі переклад - неузгоджені відмінки, віддалене розуміння теми. Щоб пробратись через це мені треба було більше 10 підходів і кілька років - і ось останній з них, який не змінив мою думку і на жаль, не дав того задоволення, яке могло б бути від таких тем. Дуже шкода.
August 9, 2019
A very interesting, if difficult, read. Part of that difficulty no doubt stems from my lack of familiarity with economics, but it is also an academic book that at times involves intricate arguments in support of his main point: thinking like an economist leads to the destruction of community. Where he spoke specifically to this point and restated his argument in condensed form was where the book shined for me, meaning the conclusions of each chapter, and chapters 12 and 13 as a whole.
Want to read
February 11, 2009I heard this guy interviewed on NPR. Definitely want to read this some day.
Read
January 1, 2009excellent book by a leading economist who describes how market relationships can erode community
Displaying 1 - 10 of 10 reviews