Lost Prophets (Magill Book Reviews)
The subtitle of this book by columnist Alfred J. Malabre, Jr., is puzzling for two reasons. First, although he is a major newspaper columnist of many years, one could argue that this does not make him an “insider”; second, his book is more a history of economic policy than a discussion of the economists who shaped that policy. In support of his choice, Malabre’s history often is framed in terms of the economists who influenced policy. He interviewed many of the economists and policymakers discussed, attended some of their seminars, and makes a strong case that journalists had as much influence in the rise of supply side economics as did economists.
Malabre concludes that the business cycle is here to stay and that economic policy to counteract business cycles has in many cases done more harm than good. He suggests that economic modeling can be useful as a guide but warns against overreliance and of setting unrealistic goals. Calling economics more a guessing game or pseudoscience than a true science, Malabre in his conclusion states that economics has not done a very good job of prediction and suggests that the Nobel Prize for Economics be discontinued.
The tone of the book can be guessed from the title of chapter 1, “The Impossible Dream.” That chapter discusses the Bretton Woods system of tying the values of nations’ money to gold, thereby fixing the exchange rates of currencies between one another. Later chapters describe the rise, in turn, of Keynesian countercyclical policy, the monetarism of Milton Friedman, and supply side economics. At each juncture, Malabre points out the mistakes made, occasionally reinterpreting what have been called successes as failures.
Malabre’s tone is reasoned throughout, but his facts do not support the stridency of his conclusions. In pointing out economists’ faults, he fails to recognize that many agree with him in his most reasonable statement, that the business cycle cannot be controlled completely. He adopts a defeatist attitude that cycles are inevitable and ignores the widely accepted proposition, suggested even in the history presented in this volume, that economic policy in many cases has lessened the negative effects of business cycles.