Selfishness, Greed and Capitalism. Christopher Snowdon

      

      First published in Great Britain in 2015 by

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      ‘I think there is a truth, and I think that economists have found a significant amount of the truth in economic behaviour. There are a lot of things we do not know, but there are also a lot of things we do know, which non-­economists get completely wrong.’

      Gary Becker (Herfeld 2012: 85)

      The author

      Christopher Snowdon is the Director of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove, Iron Fist. He has also authored a number of publications for the IEA, including Sock Puppets, Euro Puppets, The Proof of the Pudding, The Crack Cocaine of Gambling and Free Market Solutions in Health.

      Foreword

      When the Institute of Economic Affairs was founded, there was particular concern about economic discourse in the class of people F. A. Hayek described as ‘intellectuals’. These were people who were widely regarded as speaking with authority but who had no particular capacity for original thinking in relation to many of the issues on which they commented. One good example of such a person would be a member of the clergy when speaking about economic issues. It is true that he may have expertise in relation to some aspects of the subject, such as how to determine what is and what is not ethical behaviour in business. However, on technical aspects of economics and public finance, clergy probably know no more than the average layperson.

      In recent years, a number of popular books on economics have come to the fore which are widely read and quoted by exactly the kinds of people Hayek identified. Some, such as those by Naomi Klein, are written by non-economists: in other words by the same intellectual class which is the source of the problem Hayek was identifying. Others are written by people with a strong academic record, such as Ha-Joon Chang. Chang comes in for some criticism in this monograph but it cannot be argued that he is a mere ­second-hand dealer in ideas.

      In some of these popular economics texts, ideas that are arguable are sometimes presented as fact (or at least without consideration of contrary evidence) and certain things are said that are the complete reverse of the truth. A particularly favoured tactic of such authors is to argue that supporters of a market economy believe in certain things which they do not believe in at all (that is, a ‘straw man’ is erected). The straw man is then demolished and the reader is led to believe that the case for the market economy falls with it.

      The misuse of economics is not confined to discussion of policy issues in the public square. Economics now feeds in to many subjects taught in schools and universities. In schools, subjects such as geography, and even science and religious education, involve the presentation of economic principles. In many degrees at universities (for example, business studies, international relations and geography) modules cover economic principles.

      When economic ideas are taught in these contexts, there is not necessarily the proper analysis and discussion which would be expected in a specialist course. Teaching materials are provided to generalists and they tend to present ‘facts’ or ‘principles’ that are assumed to not need discussion and which are highly debatable.

      This monograph is a very effective attempt to correct economic myths that prevail in public discourse and which are often promoted in schools and even universities. It begins by examining straw men, such as the assertion that economists believe that people behave selfishly or that economists think that GDP is all that matters. The fact that economists do not believe these things at all is easily established and it is surprising that eminent economists with good publication records (albeit not in the philosophy of economics) can honestly argue otherwise.

      The author, Christopher Snowdon, then moves on to look at myths that can be subjected to empirical analysis and easily shown to be false. These myths, such as the idea that the poor are getting poorer while the rich get richer, or that we are working longer hours, are easily rebutted.

      Christopher Snowdon performs a very important service in this book, which is a significant contribution to the Institute’s educational mission. The chapters are all very easy to read and rich with the necessary evidence. Anybody interested in economics or who is studying economics will find the points the author makes important in their own right. It will be even more valuable for those who have previously been introduced to the myths that are rebutted. The myths the author deals with are very widespread as they have been taken on board and regularly repeated by newspaper columnists, others in the media and economic commentators more generally.

      Philip Booth

      Editorial and Programme Director

      Institute of Economic Affairs

      Professor of Insurance and Risk Management

      Cass Business School, City University, London

      October 2014

      The views expressed in this monograph are, as in all IEA publications, those of the author and not those of the Institute (which has no corporate view), its managing trustees, Academic Advisory Council members or senior staff. With some exceptions, such as with the publication of lectures, all IEA monographs are blind peer-reviewed by at least two academics or researchers who are experts in the field.

      Preface

      This book is divided into two sections. The first four chapters deal with ‘straw man’ assertions that are sometimes made about free-market economics. For critics of the market economy, it is easier to respond to absurd distortions of their opponents’ position than to tackle their arguments directly. The most common exaggerations and misrepresentations about economists’ beliefs and assumptions are dealt with in Part 1.

      Part 2 addresses specific claims that can be shown to be false. These claims typically portray the state of economic life in the twenty-first century in a gloomier light than can be justified by empirical evidence. Pervasive beliefs about Britons working longer and longer hours for less and less pay are addressed in this section, along with claims about inequality, social mobility and happiness.

      If this book makes