The Two Movements in Economic Thought, 1700–2000: Empty Economic Boxes Revisited

Abstract My theme is of a Rise and a Fall of understanding, coming from a failure to measure ones understanding. Down to 1848 the new field of political economy was gradually coming to understand the system of market-tested betterment (lamentably called by its enemies “capitalism”). After 1848, however, more and more of the economists, as they increasingly called themselves, came gradually to mis understand it. Indeed, the political left and the middle came to treat the theories of exchange-tested betterment with angry contempt, such as Thorstein Veblen’s blast against English economics, with its allegedly necessary assumption of the «hedonistic conception of man… of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli» (Veblen, Thorstein. 1898. “Why Is Economics Not an Evolutionary Science?,” Quarterly Journal of Economics 12(July): 373–397). “Imperfections” in the market took center stage in economics, and the understanding that had developed during the Rise was at best forgotten, or at worst condemned as “capitalist” propaganda, so obviously false that no actual measurement of its falsity need be offered.