Stephen A. Marglin, The Dismal Science: How Thinking Like an Economist Undermines Community (Cambridge, MA: Harvard University Press, 2008), 376 pages.

In 1944 two very different but related books were published. The first was F.A. Hayek’s The Road to Serfdom. In a world that seemed to be succumbing to the socialist ideal, where planned economies represented a glorious future, where the turmoil of the market would be replaced by the peace of a directed economy, Hayek’s was a lonely voice warning that a command economy would necessarily entail the loss of freedom. With the demise of the Soviet Union and the apparent victory of market capitalism, Hayek’s views appeared to be vindicated. The second book painted a very different picture. In The Great Transformation, Karl Polanyi argued that a self-regulating market was a utopian fantasy. Polanyi, an economic historian, attempted to show that a market economy required a market society where all things were reducible to market terms. With this homogenization of reality, the very things that once provided a cushion against market forces were absorbed into the market. Where Hayek worried that socialism would jeopardize freedom, Polanyi worried that market forces themselves would erode the social and cultural contexts that made freedom possible.

The current economic trials besetting the global economy provide a good opportunity to consider some of the basic questions raised by Hayek and Polanyi. There are, of course, those who argue that our troubles are the result of government meddling in the market and recovery will best be achieved if the government stays its hand and allows the forces of the market to correct the effects of governmental mischief. On the other hand, there are those (and these seem to be in the majority) who argue that unregulated market forces led to the abuses that have made necessary increased regulatory oversight as well as significant federal intervention into financial markets and certain business sectors. So sixty years later, we find ourselves facing the same questions Hayek and Polanyi grappled with in 1944: are unfettered markets good or are they harmful?

Harvard economist Stephen A. Marglin enters this discussion, albeit elliptically, by putting to question the nature of his own discipline: could it be that economists, when they are thinking like economists, bring at least as much smoke as light? Could it be that the academic discipline itself, when faithfully practiced, blinds the practitioner to crucial verities and thereby produces what are at best half-truths? Could it be that thinking like an economist actually undermines community? Marglin’s account is not flattering to economics and is sure to ruffle the feathers of plenty of economists. His thesis: “over the past four hundred years, the ideology of economics has fostered both the self-interested individual and the market system, and has undermined, and continues to undermine, the community” (1, italics added).

Economics has, according to Marglin, become an ideology, a self-contained worldview with its own set of values as well as a particular epistemology and ontology. In short, modern economics is not simply a means by which exchanges can be described or even a set of tools that ensure optimal efficiency of market transactions. The ideology of economics is a way of seeing the world. It forces reality into a preconceived structure and subsequently deigns to rule this truncated world with all the authority of science. The modern discipline of economics is, among other things, imperialistic in its aims and destructive in its consequences. This unhealthy development would not have surprised Lord Copleston, Provost of Oxford’s Oriel College, who in the early 19th balked at the establishment of a chair of political economy precisely because that discipline is “so prone to usurp the rest.”

Marglin shares many of the concerns voiced by Polanyi. “The market bears a large share of the responsibility for eroding . . . community, for undermining the centrality of community in our lives.” The term “market” of course, can mean a variety of things, and Marglin takes care to define exactly how he intends to use this word.

By ‘market’ I mean something different from the variety of markets that have been with us since time out of mind and exist in virtually all societies. . . . I mean with Karl Polanyi a self-regulating market system, a world in which markets collectively allocate resources, set prices, determine the distribution of income—in short, a system in which markets provide for our needs and wants and from which we derive our sustenance. And something more: a system that not only regulates itself but also regulates ourselves, a process that shapes and forms people whose relationships with one another are circumscribed and reduced by the market (2).

Marglin is not, though, unaware of the many ways that markets make the world better. Markets have fueled innovation in medicine, and people are healthier for it; markets have made possible better production, and distribution of food and hunger has been abated; and labor-saving devices have relieved people from many grueling and dangerous jobs. He does not dispute these good things. He does, though, take issue with those in his field—and if Marglin is correct this is most economists—who applaud the benefits of markets without admitting the dark side of the same dynamic force. There is, it seems, an implicit faith underlying the economist’s creed.