Grand Pursuit: The story of economic genius

Sylvia Nasar made her debut in 1998 with A Beautiful Mind– a riveting biography which became a resounding success. It was nominated for the Pulitzer Prize and won the National Book Critics Circle Award for biography in 1998. It recreated the drama of the life of Nobel Prize winning economist and mathematician John Forbes Nash Jr, whose meteoric rise as a mathematical genius in the 1950s was interrupted by schizophrenia for three decades. After a heroic and lengthy battle with this devastating mental illness, Nash miraculously recovered and was awarded the Nobel Prize in Economics in 1994. In 2001, the best-seller was converted into an Academy Award-winning blockbuster movie with Russell Crowe starring as John Nash.

After ten years of painstaking research, Sylvia Nasar has come up with another engaging and enjoyable book about the brilliant minds and ideas that have shaped economics during the last couple of centuries. Grand Pursuit- The story of economic genius is a compelling although not comprehensive study of the lives and times of the great economists who changed humankind, from 1850 to the present decade, from Victorian England to contemporary India. It is not a history of economics or economic thought such as J K Galbraith’s masterpiece A History of Economics. Comparatively speaking, Grand Pursuit has more in common with Robert Heilbroner’s classic The Worldly Philosophers, focusing on lives and ideas of economic thinkers  who were searching for “Intellectual tools that could help solve what Keynes called the political problem of mankind: how to combine three things- economic efficiency, social justice and individual liberty.”

A Beautiful Mind was a tale about the mystery of the human mind in three acts: genius, madness and re-awakening. Using the same technique in Grand Pursuit, Nasar sketches the story of great economists in three acts again: hope, fear and confidence. Hope refers to the period dating from 1850 to 1914 when economic theory showed that people can not only change their own lives but also control their destiny. As Nasar remarks, “Before 1870 economics was mostly about what you could not do. After 1870, it was mostly about what you could do.” Fear, which is Act II, symbolizes the interwar period (1914-1945) when, alternating between horror and hope, it seemed that everything would be lost for capitalism but was rescued at the last moment in the 1940s. Confidence, the last act, is the story of post-1945 prosperity enjoyed by most parts of the world although this phase has also witnessed crisis and catastrophes, recessions and revolutions.

The portrait gallery consists of interesting and impressive characters from Marx and Engels to Alfred Marshall and Keynes, from influential Austrians Hayek and Schumpeter to brilliant Americans Irving Fisher and Paul Samuelson, from British duo Beatrice Webb and Joan Robinson to Indian Nobel laureate Amaryta Sen. Well-researched and lively biographical sketches are Nasar’s forte who is a former economics correspondent for the New York Times and currently professor of Journalism at Columbia University.

[quote]Nasar is no fan of Karl Marx[/quote]

Nasar is no fan of Karl Marx. She is not impressed by his feat of changing world history by just reading and writing in the British Museum reading room for nearly three decades. She criticizes him for never visiting a factory yet commanding workers to take control of the means of production and for failing to notice a prosperous middle class growing up around him all over London, thus challenging, if not contradicting, his theory about what he termed as the imminent collapse of capitalism. He failed to see statistical evidence that the share of the working class in the nation’s wealth was on the rise. Nasar writes approvingly of Alfred Marshall who visited factories and firms, collected data, and postulated that capitalism advances by boosting productivity which results in lower prices and higher prices, thus spreading, throughout society, the gains of material progress.

Keynes is the central character of the book and arguably the most influential economist of the 20th century. He witnessed the failure at Versailles in 1919 and later became the architect of the successful Bretton Woods system in 1945. More importantly, he pulled America out of its worst crisis in the 1930s and guided post 1945 global economic policy by insisting that just as the central bank was the lender of last resort, crisis could only be averted if the government acted as the spender of last resort. Keynes is portrayed as a Rolls Royce driving Cambridge don who phoned his broker from bed, a government official who married a Russian ballerina, an art afficionado who bought art masterpieces in Paris for the British Treasury when prices crashed on the eve of World War I.

[quote]Socialite turned socialist Beatrice Webb, who popularized the concept of the welfare state in Europe, is Nasar’s heroine[/quote]

Socialite turned socialist Beatrice Webb, who popularized if not invented the concept of the welfare state in Europe, is Nasar’s heroine – among her many admirers included a young politician named Winston Churchill.  A protégé of Keynes at Cambridge and member of his inner circle at one time, Joan Robinson was impressed by the Soviet central planning model, travelled frequently to Moscow and China in the 1950s and 1960s but failed to notice or just ignored any signs of hunger or deprivation. Ironically, her one time student, Amartya Sen later remarked: she failed utterly to detect the biggest famine in modern history.

Harvard professor Paul Samuelson boldly declared that he doesn’t care “who writes the nation’s laws- or crafts its advanced treaties-if I can write its economics textbook.” It was no empty boast as the postwar generation of Americans, including President Kennedy, learned economics through his textbook and Newsweek column and he was the main intellectual force behind Kennedy’s 1963 tax cut.

Milton Friedman deserved a full chapter as champion of free market theory but since he is discussed as a Treasury official only, this counts among the few shortcomings that the book suffers from. Focus on the post 1970 period, with particular reference to the 2008 financial crisis, is weak. Another mistake is crediting Beatrice Webb with laying the foundations of the European welfare state. Ironically, it was Germany’s Iron Chancellor Bismarck, a right wing politician, who introduced the concept of social insurance in Europe in the 1880s.

In 1849 British historian Thomas Carlyle dismissed and disparaged economics as “the dismal science” but when Nasar writes about economics and its great protagonists, it does  not come across as dismal at all- in fact Nasar’s scintillating prose makes it sparkle and shine on every page.