To better understand economic thought, I decided to tackle Mark Skousen’s 2007 book “The Big Three in Economics: Adam Smith, Karl Marx and John Maynard Keynes.” Not written as an economics textbook but more of a biographical look into the lives of these three important men, Skousen also analyzed their economic philosophies.
As a conservative economist, Skousen did not believe these three should be treated equally and clearly ranked them in order of importance with Smith out front, then Keynes a distant second and finally Marx trailing far behind and almost forgotten.
Skousen did not just jump from one of the big three to the next but in between those chapters; he told the stories of dozens of other economists who helped push along their field to the next major figure — like David Ricardo, Thomas Malthus, John Stuart Mill and Friedrich Hayek. By weaving together all these figures, he gave a variety of ideas and how each affected the way we view the economy today and even more what we should do going forward.
Smith, the father of classical economics, was clearly Skousen’s favorite. He noted the importance of 1776 as the birth of America and the year Smith wrote “The Wealth of Nations.” Smith’s ideas of capitalism and the ‘invisible hand’ created the science of economics and helped move nations away from mercantilist policies that were prevalent in European nations. Instead, Smith believed in free markets and limited government.
While Skousen’s book came out before Trump’s first presidency, he emphasized that Smith was against tariffs as he believed they stifled free trade. Skousen wrote, “Smith was no laissez-faire extremist,” as he “believed in a role for the state, including public works and education.”
Skousen then turned to Marx’s “Das Kapital: A Critique of Political Economy.” Written in 1867, “Das Kapital” and other works made Marx a revolutionary force in economics and politics.
While critical of Marx’s theories, Skousen offered a fair assessment of his impact. To a degree, he recognized where Marx was coming from, understanding the plight of the working class during the Industrial Revolution; however, even though he saw Marx’s intelligence, Skousen was critical of him as a person.
Marx criticized capitalism from which he benefited while also living a comfortable life and never holding down a real job. Skousen was also critical of Marx because Marx was very critical of his government but inspired nations that would not allow the same degree of criticism.
While Skousen believed Marx was an important economist, he also believed his ideas have failed and Marx is really no longer relevant outside of about three university economic departments and is only being taught in history and sociology classes.
Skousen’s final and perhaps most detailed section focuses on Keynes, whose 1936 book “The General Theory of Employment, Interest and Money” redefined economic policy during the Great Depression.
Here I must admit, Skousen’s last chapters became harder to follow. Suddenly, there were economic models and lots of math to understand — and there is a reason I went into history.
While he believed Keynes is the most important economist in the 20th century, Skousen did not agree with Keynes’ ideas for the long term. He did not believe Keynes’ ideas took America out of the depression nor did he believe that government deficits and public works spending stimulate long-term economic growth.
Though Skousen did not include him in the big three, he praised Milton Friedman and his criticism of Keynes. Though not as well-known as Keynes, Skousen saw Friedman as the most important economist of the 20th century and possibly only second to Smith himself overall. He saw Friedman as a champion of economic freedom and limiting government intervention. Friedman believed that changes in the money supply—whether too much or too little—cause booms and busts and criticized Keynesians for focusing too much on government spending and not enough on monetary policy.
I enjoyed this book and learned a great deal, but it was not an easy read. The first half was mostly written as a biography, but the second, with modern economics, became technical. I admit I had to reread several parts to understand the mathematical concepts. While none of that is a negative reflection of the book, it isn’t a casual read to understand economics.
Skousen did push his own beliefs, but I don’t have a problem with that either. I prefer an author be upfront with his or her arguments rather than claim no bias when they clearly have them.
In the end, I would recommend the book if one were seriously trying to understand economic thought, but note that it did come out in 2007. It does not take on current issues, but gives a solid understanding to historical approaches to economic ideas which give readers a base of understanding on current issues.
Skousen’s “The Big Three in Economics: Adam Smith, Karl Marx and John Maynard Keynes,” Routledge Publishing, New York, 2007, is available at Amazon, Barnes & Noble, Half Price Books and Walmart.
James Finck is a professor of American history at the University of Science and Arts of Oklahoma. He can be reached at HistoricallySpeaking1776@gmail.com.
