The big three in economics: Adam Smith, Karl Marx, and John Maynard Keynes

by Mark Skousen

Posted on
economics politics philosophy

This book was published in 2007, before the Great Recession. It definitely reads that way. Very capitalist, very Christian, very neo-liberal.

I enjoyed learning more about Adam Smith. I feel like Skousen does a good job painting the importance of his ideas as an invention that drove the Industrial Revolution.

According to Skousen, Marx is the devil incarnate, and his ideas are a dangerous disease infecting the minds of intellectuals and workers. Skousen takes a strange interest in painting Marx and Keynes as deranged, sexual deviants, etc. (“The Truth about Keynes’ Homosexuality” is a section in this book.)

Skousen treats economics as a mostly solved science, and argues constantly that Marxism is essentially dead, only kept on life support by “sociologists, anthropologists, literary theorists”, and other cronies.

I really appreciate understanding where all the economic schools come from and how they differ:

  • classical school (Adam Smith): a free market allows for division of labor by way of the invisible hand
  • Marxian school: invented the word capitalism, pointed out the class conflict and exploitation inherent to using capital to organize labor
  • neoclassical school: solved the problem of relative subjective utility, which explained how demand sets prices
  • monetarist school: inflation is caused by the expansion of credit; if the money supply doubles, prices will double; thus inflation of the money supply is not a big problem
  • Austrian school: money is non-neutral and can be viewed as a commodity, and inflation can cause instability
  • Cambridge school (Keynes): public investment can stave off the effects of the business cycle

I’ll finish it off with this quote from the conclusion:

Competition within an industry is not necessarily reduced when it is limited to only a few large companies. … Competition is strong even among only a few large firms. Monopolistic firms tend to keep prices competitive because of the ever-present threat of entry by other large firms. The world is “as if” fully competitive.

That should give you a good impression of the slant we get from Skousen.