Friday, 18 January 2008

The Logic of Life

Peter Boettke tells us that Tim Harford's new book, The Logic of Life: The Rational Economics of an Irratinal World is another book he wished he would have written. Bottke says
Harford's The Logic of Life is actually the sort of work that those schooled in Misesian and Hayekian economics can be, and should be writing. Use economics to make sense of the world around us --- write in clear and entertaining prose. Harford's model of rational choice is very Austrian (he doesn't call it that) -- but it is not the fiction of homo-economicus, or the lightening calculator of pleasure and pain, or the omniscient agent with perfect self-control. Instead, as William Jaffe once wrote about Menger's man is the same as Harford's, he is "caught between alluring hopes and haunting fears." He is, however, the pivotal chooser and as such the unit of analysis.

What Harford does in this book is walk through several of the main papers in economics written over the past few decades and provides the basic intuition that is behind the papers. In the case of some of these papers, I think Harford's reasonable interpretation excuses the excesses of formalism that in those papers cloud the basic economic intuition rather than illuminate it. In other instances, he captures not only the essence of the argument, but the reason the author approached the topic the way they did. In all instances, he makes more plain language sense of the econoimc argument than the professional economists on which he is drawing.
It is not however the book Gavin Kennedy would have written. Kennedy writes
I have my copy on order but I came across this excerpt and found this:

"Adam Smith, the father of modern economics, traveled Europe as tutor to the Duke of Buccleugh. But despite his travels, Adam Smith never actually visited a pin factory. While sitting at home in Kirkcaldy and penning the most famous passage in economics, he was inspired by an entry in an encyclopedia."
He then goes on to comment,
My question to the Undercover Economist is simple. 'On what do you base your assertion that Adam Smith never visited a pin factory?'

You must have some evidence. It is important that you because it will have to be reconciled with the following extract of Adam Smith from Wealth Of Nations:

"I have seen a small manufactory of this kind [the famous pin factory of 18 labourers from Diderot’s Enclyclopaedia on the same page] where ten only were employed, and where some of them consequently performed two or three distinct operations." (WN I.i.3: 15)

So, you see my problem, Tim Harford, either you have outstanding evidence that Adam Smith was lying or you are mistaken. You would also have to make a strong guess as to why he would lie about such a matter.

We know there were nail manufactories close by his mother's house in Kirkcaldy, Fife, any one of which could have had a small workshop attached that specialized in pins, and was distinguished from the '18 operations' in Diderot in France ('25' according to Murray Rothbard in 'England') by the precise number of "10" labourer’s in Fife, Scotland, some of them doing 'two or three operations'.
Take that Tim Harford!

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