The Soulful Science: What Economists Do and Why It Matters

Diane Coyle, Princeton University Press, 2007, 278 pages, £17.99.

Were a weekly magazine to be launched today, it is unlikely that it would be called ‘The Economist’: the contemporary view of the subject is markedly less accommodating now than it was when The Economist was founded in 1843. Political economy was then seen as a rational and factually-based branch of philosophy; a reflection of its foundations in the thoughts of Adam Smith and – more than is generally realised – David Hume.

Economics’ fall from grace is relatively recent, its benign status only being lost in the 1970s as the misuse of Keynes’s theories by governments resulted in policy failures. These failures encouraged the growth of the neo-classical school, and a return to an emphasis on markets and money. Helped by the increasing sophistication of computing and the mathematical possibilities this offered, neo-classical economics grew to provide powerful analytical tools, but within a framework many regarded as introverted and constrained by excessive intellectual purity.

Nevertheless, neo-classical economics provided the methodology for the successful revival in the 1980s of both market orientation and the control of inflation as a prerequisite for stability and growth. Regrettably, one consequence of this was to associate economics with right-wing theology. Its objectives became seen as the reduction of the human condition to the pursuit of wealth at the expense of other values. This image has persisted, and is manifest in the current opposition to the use of market mechanisms for human betterment, be it in climate change or poverty relief.

Yet this view of economics is now hopelessly wrong. It ignores the discipline’s increasingly close relationship with others such as psychology, sociology and ecology. It also ignores the intellectual advances made since the 1980s, such as the now widely applied game theory. But the image prevails, and is doing much damage.

In The Soulful Science, Diane Coyle has set out to correct this, and to explain the reality of the modern subject. She does so eloquently, within a comprehensive overview of the history of economic thought, from Smith and Hume to the present day. She is even-handed: she took her PhD at Harvard at a time when the neo-classical movement was at its peak, and absorbed at first hand its subsequent broadening through the incorporation of related disciplines. Fluently written with the balance of a good novel, the result is a tour de force. Economic philosophy is interwoven deftly with its application in practice, the latter illustrated and enlivened by personal observation, frequently humorous. Set within this framework are objective discussions on, inter alia, the sources of economic growth, the difficulty of making poverty history, the subtleties of freedom of choice, and the psychological, social and environmental dimensions of economic behaviour.

There are some imperfections: the effects of comparative religion on behaviour are omitted, and treatment of other areas such as environmental economics could be expanded. But these are minor omissions. Coyle has written a potential classic, one that is not only accessible for both economists and non-economists, but persuasive – and overdue.

Donald Anderson