David R. Henderson  

Wikipedia's Error on the Dismal Science

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In addition to Adam Smith's legacy, Say's law, Malthus theories of population and Ricardo's iron law of wages became central doctrines of classical economics. The pessimistic nature of these theories led to Carlyle calling economics the dismal science and it provided a basis of criticism of capitalism by its opponents.
This is from the Wikipedia entry on "Classical Liberalism."

This is incorrect. As David Levy and Sandra Peart have shown, the reason Carlyle called economics "the dismal science" is that the free-market economists of his time, who dominated the economics profession, strongly opposed slavery.

HT to Lawrence Samuels.

UPDATE: The mistake on Wikipedia has been corrected. I'm guessing it was by one of the readers of this post.

UPATE 2: They're back. As commenter Robinson points out below, the mistake in Wikipedia is back.


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CATEGORIES: Economic History



COMMENTS (19 to date)
Ted Levy writes:

But, David, the whole point of Wikipedia is that when you find an error, you can correct it...

Steve Sailer writes:

Outlawing slavery in the British Empire required less struggle in laissez-faire Britain than outlawing employing 5-year-old boys as chimney sweeps. The Earl of Shaftesbury worked from 1840 to 1875 to finally get an effective law through Parliament banning child labor inside chimneys:

http://www.vdare.com/articles/the-axis-of-amnestys-ideology-of-cheap-labor

The dogmatic ideology of cheap labor in 19th Century Britain did much damage to the reputation of economics.

Andy writes:

I hope you've fixed the error.

Tim Worstall writes:

"the reason Carlyle called economics "the dismal science" is that the free-market economists of his time, who dominated the economics profession, strongly opposed slavery."

More than that: they showed that slavery was uneconomic.

More than that: they showed that slavery was uneconomic.

I think the word you are looking for is inefficient.

Lorenzo from Oz writes:

Tim Worstall: if slavery was inefficient, the slaveowners were being irrational. As Robert Fogel demonstrated, they were not--slavery was quite efficient, in certain conditions. Slavery was immoral: alas, that is no enough to guarantee inefficiency.

Keith writes:

Lorenzo from Oz said:

if slavery was inefficient, the slaveowners were being irrational.
I disagree. An institution's inefficiency does not imply that participation in it is irrational--at least, not in the usual economic sense of "irrational."

Given others' participation in it, your participation could be better for you than your non-participation. (Of course, you might be even better off if no one, including you, participated.)

Any example of a policy that allows people to, with impunity, cause negative externalities, will illustrate this. Many forms of pollution fit the bill. It's privately profitable but socially deleterious.

MG writes:

Dave,

"Correctness", appears to depend on where in the wikisphere one happens to land. When I watched your video a couple of days ago, I searched for "economics as dismal science", and got this link

http://en.wikipedia.org/wiki/The_dismal_science

"It is often stated that Carlyle gave economics the nickname "the dismal science" as a response to the late 18th century writings of The Reverend Thomas Robert Malthus...However, the full phrase "the dismal science" first occurs in Carlyle's 1849 tract entitled Occasional Discourse on the Negro Question, in which he was arguing for the reintroduction of slavery as a means to regulate the labor market in the West Indies..."

Bob Layson writes:

Carlyle was further moved to ire by the economists' principle that all should count for one and none for more than one.

The liberal econmists also believed that the same institutions could be successfully adopted and used by all agents, of whatever race, even if all persons or races would not prove equally successful.

All persons, the economists concluded, could and would prosper without masters and should be left free to work, marry, save and run businesses as well as their own talent and the free agreement of others permitted. No Carlyleian leaders, heroes and great men were required to create order and keep it.

The sage of Chelsea did not agree.

Mark Brady writes:

MG cites Wikipedia's entry on "the dismal science":

"It is often stated that Carlyle gave economics the nickname "the dismal science" as a response to the late 18th century writings of The Reverend Thomas Robert Malthus...However, the full phrase "the dismal science" first occurs in Carlyle's 1849 tract entitled Occasional Discourse on the Negro Question, in which he was arguing for the reintroduction of slavery as a means to regulate the labor market in the West Indies..."

I think it was rather the case that Carlyle regretted it was not possible to reintroduce slavery into the British West Indies.

Roger Koppl writes:

Whether slavery was "efficient" depends on whose wealth you consider. If you exclude the enslaved population and assume selfish preferences, slavery would seem to be Hicks-Kaldor efficient. The slave owners profit by stealing the labor of their slaves. The rest of the free population may suffer material loss from the servitude of their brothers because slaves are less productive per hour worked. OTOH, the slaves take less leisure than they would as free people, which at least partially offsets the productivity loss. In either event, there is no clear Hicks-Kaldor gain for the free population from liberating slaves.

But of course slaves are people, each of whom counts for one. If we count slaves too, then, there would seem to be a Hicks-Kaldor gain from emancipation because of the huge utility gain it gives the slaves. Perhaps this logic helps explain why there was so much manumission in Rome. Apparently, the manumitted slave still had duties of service to the former owner, so there may have been the possibility of making something like real Hicks-Kaldor compensations.

Lorenzo from Oz writes:

I think we can take it as read that slavery is not Pareto optimal. The original claim, by C19th economists, was that slavery was less profitable to the slaveowner than free labour would be. That was flatly not true.

Indeed, one of the features of medieval economic history was the waxing and waning of the relative advantages of serfdom versus free peasants to the landlords. It depended on the costs of lowered productivity and coercion compared to the cost of free labour which, in the absence of technological change, basically depended on the labour/land ratio.

This is why periods of population collapse (the Dark Ages, post-Columbus Americas) or massive land expansion (post-Columbus Americas, Eastern Europe after gunpowder weapons destroyed the previous advantages of horse archers) saw the introduction of mass systems of labour bondage.

Lorenzo from Oz writes:

Just to be clear to the excessively literally minded (and historically challenged), I don't mean that the land area expanded, I mean that the land available for productive use to a particular economy or economies expanded.

Slaves also represented maybe a third of the productive capital of the South, which was a bit of a factor. That, even though the British slaveowners in the Caribbean had been compensated for the freed slaves, their situation deteriorated because the new free labour was less profitable than slavery had been was something Southern slaveowners were also well aware of.

(Just as free slaves would reduce the value of white votes was also a factor folk in the South were conscious of; particularly in places such as North Carolina, where a majority of the population were slaves. The claim that the Civil War was not primarily about slavery is nonsense on stilts. No-one goes to civil war over tariffs, it just does not matter enough. Something particularly obvious to an Australian, as we managed to federate when the main political divide was free traders versus protectionists.)

Ryan P writes:

Not completely changed -- still in dispute on the talk pages

Robinson writes:

The error's been reinstated.

The mistake comes from the book "A Critical History of Economics" by John Mills (indeed, everything on Smith, Say, Malthus and Ricardo cites this book as the reference, which is hardly balanced, but that's a different issue with the article).

The discussion on the talk page seems to center around "that's the way most economists understand the issue." It seems to me that it's just a common misconception that is pretty blatantly in contradiction with the facts.

Ken B writes:

Since this error serves an anti-free market agenda it will never be permanently corrected. I can't think of a good way to test this prediction that is not subject to manipulation. But it's like 'Is our children learning', 'You can see Russi from my house', or 'I invented the internet': a tendentious meme too valuable to let die.

Ryan P writes:

You should see the other source used to support the Carlyle reading. It's pretty laughable as a "here's what the mainstream economics consensus says" reference (unless most economists are in the habit of referring to themselves as autistic).

lc writes:

You could try contributing to the talk page? http://en.wikipedia.org/wiki/Talk:Classical_liberalism#Carlyle.27s_.22dismal_science.22_remark

James A. Donald writes:

In support of Carlyle: Supposing that a very large proportion of slaves were naturally improvident people, they would at best do poorly in freedom, and at worst predate on others.

The economic argument assumes most people are rational. In practice most businesses are run by rational men, because irrational business leaders lose money, but there are a large number of people who are not rational. What should be done with them? Putting them on welfare is not working out too well.

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