Teaching the basics of a subject and inspiring students to become its devotees are not easily combined. Even a great textbook has the space only to cover the current knowledge in its field. But most of us are more easily inspired by the stories of people and their great discoveries. Economics provides a good example of the problem. Textbooks like Greg Mankiw’s Principles of Economics can be admirably clear, but few of us are easily excited by crisp summaries of basic ideas or problem sets drilling home the fundamentals.

One virtue of Tyler Cowen’s new book—Who is the Greatest Economist of All Time and Why Does it Matter?—is that it may persuade younger readers to take up the subject not only as a field for further study but as a way of looking at the world around them. That is more important than ever as demagogues of both the left and right now take to social media to deny the most basic insights of economics, pushing such counterproductive policies as rent control and protectionism. Passive knowledge of the right principles is not going to be enough to stem such policies. The passion that comes from loving economic truth provides a surer defense of our prosperity.

Cowen has hit upon a novel way of stirring interest: creating his own competition among six great economists for the title of the greatest of all time (GOAT). That method creates suspense (no spoilers on the winner here!), but also requires determining what makes the greatest economist—which means thinking through what is essential about discipline.

The book prompts comparison to three other excellent ones. Robert Heilbroner’s The Worldly Philosophers and Todd Buckholz’s New Ideas from Dead Economists (from a center-left and center-right perspective respectively), tell the story of economics through the intellectual biographies of great economists. But they lack the excitement that comes from a competition. Cowen’s descriptions of economic theory are also more sophisticated and original, but because of that, they sometimes require more economic background than do these other more introductory sketches. Charles Murray’s Human Accomplishment ranks the greatest in multiple arts and sciences. But Murray’s is a quantitative approach, basing his rating on the amount of discussion each figure garners in approximately two hundred encyclopedias. Cowen’s evaluations, by contrast, are the result of his own ardent, but subjective, evaluations. He writes as a fan.

Early on in the book, Cowen lays his cards down on the table about what will make the GOAT Economist: “The economist must be original, of great historical impact, have had a hand in both theory and empirics, have had a hand, in both macro and micro and not be too wrong on the substance of these issues. Further, the person must already be a pretty good economist. That is, if you sat down with the person and discussed economic issues, you would be impressed.” What Cowen means by his last criterion is that if you asked the economist about a novel economic question outside of issues that he has considered in his theories, he would give a crisp and persuasive analysis. Not all theorists can think outside of the confines of their own work! 

The Classical Liberals

With these criteria in mind, Cowen narrows his shortlist down to six after considering and rejecting a larger number of very substantial economists, including Kenneth Arrow, Paul Samuelson, and Joseph Schumpeter, for obviously failing one or more of his criteria. Milton Friedman would seem to be an obvious choice. But Cowen’s service here is to go beyond the received wisdom and delineate what made him, like the others he surveys, an economist with almost magical powers of insight. He shows that Friedman was far more than an advocate of laissez-faire. He made important breakthroughs. One I had not known about was the permanent income hypothesis. Friedman’s idea here was that personal consumption decisions are not made primarily based on one’s current income but on one’s expectations about future income and the interest in smoothing consumption so that it will be more equal over time. Thus, one takes out student loans and saves for retirement.

But beyond the predictions for personal behavior, Cowen shows the hypothesis’s broader implications for the whole economy: this simple idea matters as much for macroeconomics and microeconomics. The government cannot easily manipulate our spending. We will not, for instance, go out and spend a one-time tax cut designed to juice the economy because it raises our current income but regard it as part of our flow of income and indeed recognize that in a world of government deficits, a tax rebate suggests higher taxes in the future. Friedman’s bit of economic theory makes an important political point: individuals in any moderately free society cannot be made into economic puppets of the government.

Cowen nominates another favorite of classical liberals, Frederich Hayek. Cowen makes the case that Hayek wrote the best economic article of all time, “The Use of Knowledge in Society.” Here Hayek shows an economy is a discovery process, aggregating information from particular times and places. It is not fundamentally an optimization process, because there is no optimizer with sufficient knowledge for that task. That makes economics nothing like an engineering problem with obvious solutions, but rather a continuous process where human creativity, alertness, and intelligence allow participants to see opportunities.

Again, this insight is not limited to showing why economic markets are necessary to discover preferences and constraints. It suggests that many of our fundamental political institutions should not be geared toward engineering a “correct” solution but toward eliciting information that facilitates better individual decisions. Federalism, as Hayek saw in other essays, was itself a discovery system where citizens choose among different bundles of government policies and rights.

But while Cowen is a fan of Hayek, he is not blind to his faults. While many classical liberals praise The Constitution of Liberty, Cowen points out that the work endorses many areas for activist government, like national health insurance, without providing a clear theory of why such actions do not limit liberty. Cowen’s inclusion of The Constitution of Liberty as part of his consideration of Hayek as an economist shows that his view of economics is not a narrow technical one but encompasses issues of political economy.

Longshots (In my view)

John Maynard Keynes is a bête noire of classical liberals, but Cowen argues that his basic impulses were nevertheless liberal. He wanted to preserve a society where people could pursue conversation, aesthetics, and pleasure as they defined it. Communism and fascism were both threats to such a society in Keynes’ time and they thrived when societies fell into prolonged depression. Thus, for Keynes, the pressing need was for a particular kind of economics—depression economics—and his solution was to use government spending to get out of depression to restore the social conditions of a liberal society. However, some of his ideas have not stood the test of time for reasons that Friedman and Hayek pointed out. Government intervention may not work because of the individual’s expectations, and it may interfere with the discovery process that makes for a flourishing society.

Cowen also notes that Keynes’ faith in elite governance led him to some dark places. He was Director of the Eugenics Society for many years and favored selective breeding to promote intelligence. As Cowen notes, if Keynes were considered a right-wing thinker, these views may well have gotten him canceled today.

One of Cowen’s more surprising nominations is Thomas Malthus, the cleric who inspired Thomas Carlyle to label economics the dismal science because of his prediction that more efficient ways of growing food would just encourage people to have more children, dooming them to perpetual poverty. It might seem that Malthus can be dismissed, being so obviously wrong—due to one of Cowen’s own criteria. The Industrial Revolution eventually created a larger nutritional surplus than even big families needed. Today, the major health problem in the West is not the risk of starvation, but of obesity. Advanced societies now have trouble even replacing themselves. Population implosion, not explosion, seems the contemporary threat.

But Cowen has answers to this. Malthus recognized that vice (of which he surely included sex with artificial barriers to procreation) might be a way to prevent the population from growing. But Cowen recognizes that Malthus rejected this as a sound solution, because as a Christian minister, he believes that that kind of society would become promiscuous. And while he was wrong that food was a binding constraint on per capita income, today many argue that our environment is a binding constraint on growth. Cowen thus sees him as the father of environmental economics which, whatever one’s views of its recommendations, has become an important part of the academic discipline.

Cowen’s argument for Mathus’s fundamental importance is clever, but I continue to see him more as a fascinating niche economist than a contender for GOAT. Cowen claims that Malthus’s insights into the family were richer than those of the Nobel Laureate Gary Becker. Maybe so. But Becker extended price theory into many other realms where economics had not been previously appreciated, like crime and discrimination. His work showed that the economic rational choice model has broader implications than analysis of commerce. He pioneered the theory of human capital which correctly emphasizes that workers’ dynamic capacity, not just capital, is the key to the modern economy. He is a more persuasive nominee for the GOAT economist.

Surprising and Unsurprising Classic Options

The most surprising nomination of all may be John Stuart Mill–known as a political theorist, not an economist. But Cowen makes a persuasive case that his economic thinking is underrated. Economics is properly obsessed with causal inference in evaluating policies. In evaluating policy, correlation is not enough, given the existence of so many potentially confounding variables: One must show that a policy actually contributed to a result. In his book on The Subjection of Women, Mill argued that it was not possible to infer that greater economic freedom for women would not be socially beneficial just because no society had ever benefited from it. Mill noted that for most of human history, strength was key to labor, but that had changed. Thus, even if women’s participation in an open labor market would not have contributed much to prosperity in the past, it could nevertheless do so in a world where machines did the heavy lifting. Moreover, Mill observed that Britain did allow Queens to rule, and most of them—like Elizabeth and Victoria—proved better rulers than the Kings.

Cowen emphasized that Mill, unlike other nominee economists who valued both liberty and utility, found a way to make them compatible. He believed that if society encouraged character development through education and the arts, people’s preferences would become more aligned with liberty. I am not as taken with this resolution as Cowen. How will society educate for character? Mill does not appear to have a theory of how this will happen through spontaneous order. But if the means of character development are coercive, how can we be sure that those who frame them will have character development rather than political power in mind? Just look at what passes for character development today in much of K-12 education. Much of it looks more like indoctrination into principles inimical to liberty. School choice might be the answer, but does it depend on the already developed characters of parents to send children to sound schools?

Of course, Cowen includes Adam Smith. And he does so with original analysis of the essence of his thought. The principal problem of economic life for Smith, according to Cowen, is that our individual perspective is necessarily too local and narrow to lead to the good of the whole. Thus, institutions need to be established that will lead to a more global perspective. The market happily takes such local, parochial, and self-interested perspectives and makes them work for the good of the whole. Smith was also a defender of standing armies because they make it easier to defend the nation-state—a more encompassing polity than the city-state. It thus extends the market, and the more extensive the market, the more global the perspective. A more extensive market, however, also leads to more specialization. Smith recognizes that specialization exacerbates parochialism by narrowing individuals’ perspectives at work. It is not clear he has an answer to this dilemma, and I fear we may be back to John Stuart Mill’s solution or lack of one.

A bonus of Cowen’s free book is that he embeds its internet version in Chat-GPT 4 so you can ask the book questions. I queried why another Nobel Laureate, James Buchanan, the economist who has most influenced my own work on constitutionalism, is not included on either the short or long list for GOAT. Chat-GPT4 replied at length and here is its money quote:

For the GOAT title, Tyler is looking for someone with a more expansive reach in changing both the field of economics and the world at large. Consider Buchanan’s concentration on public choice: it is influential but also specialized. In comparison, the likes of Adam Smith influenced not just economics but also philosophy, ethics, and broader societal governance.

Certainly, Cowen has resisted the specialization against which Adams Smith warned and wants his GOAT to possess an encompassing economic perspective on a flourishing society.