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ADAM'S FALLACY: A Guide to Economic Theology

ADAM'S FALLACY: A Guide to Economic Theology [Kindle Edition]

Duncan K. Foley
4.5 out of 5 stars  See all reviews (2 customer reviews)

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"Foley gets deep into the analytical content of major schools of thought, ranking Adam's Fallacy up there with Heilbroner's classic." - Robert Solow, New York Review of Books "[A] passionate book, to be welcomed in a discipline notably devoid of passion. [Adam's Fallacy] can be read for pleasure and enlightenment by economists and non-economists alike." - David Throsby, Times Literary Supplement"

Product Description

This book could be called “The Intelligent Person’s Guide to Economics.” Like Robert Heilbroner’s The Worldly Philosophers, it attempts to explain the core ideas of the great economists, beginning with Adam Smith and ending with Joseph Schumpeter. In between are chapters on Thomas Malthus, David Ricardo, Karl Marx, the marginalists, John Maynard Keynes, Friedrich Hayek, and Thorstein Veblen. The title expresses Duncan Foley’s belief that economics at its most abstract and interesting level is a speculative philosophical discourse, not a deductive or inductive science. Adam’s fallacy is the attempt to separate the economic sphere of life, in which the pursuit of self-interest is led by the invisible hand of the market to a socially beneficial outcome, from the rest of social life, in which the pursuit of self-interest is morally problematic and has to be weighed against other ends.

Smith and his successors argued that the market and the division of labor that is fostered by it result in tremendous gains in productivity, which lead to a higher standard of living. Yet the market does not address the problem of distribution—that is, how is the gain in wealth to be divided among the classes and members of society? Nor does it address such problems as the long-run well-being of the planet.

Adam’s Fallacy is beautifully written and contains interesting observations and insights on almost every page. It will engage the reader’s thoughts and feelings on the deepest level.

Product details

  • Format: Kindle Edition
  • File Size: 2282 KB
  • Print Length: 288 pages
  • Publisher: Harvard University Press (30 Jun 2009)
  • Sold by: Amazon Media EU S.à r.l.
  • Language: English
  • ASIN: B0010NWGQM
  • Text-to-Speech: Enabled
  • X-Ray:
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (2 customer reviews)
  • Amazon Bestsellers Rank: #584,227 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Most Helpful Customer Reviews
3 of 4 people found the following review helpful
This is one of the best books I have read explaining ideology in economic thinking. The issues are potentially deeply confusing, with economists using the same words but different meanings and contradictory arguments, even in their own works. Foley unapologetically cuts through the verbage to extract the insights of Smith, Ricardo, Marx and later great economists, separating the ideology from the "science".

Of course, even in the "hard" sciences, ideology creeps in - and not just at the level of the observer affecting the observed. The very questions that many hard scientists choose to address come from an ideological stance, but their methods are intended to be scientific, and the same methods can be used in the social sciences, such as economics. Social scientists face a more difficult problem that their theories can change the societies they are studying. Foley makes a great contribution to understanding this problem.

The key issue addressed by Foley is how Smithian thinking (that the invisible hand is "good" and the economics that spring from perfect equilibrium are the best way of organizing society) can be fallacious. It is surprising how deeply embedded (often unconciously) in assumptions used by economists this has become. It have become almost a requirement to assume in economic theory e.g. "rational consumer behaviour" or the existence of a global social optimum, with associated conditions required by neoclassical economic theory. With this approach, mainstream economists have ended up declaring that the best outcome in a cost-benefit model of global warming is one with indefinite and probably accelerating climate change. (See the works of William Nordhaus and his followers).
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4.0 out of 5 stars Breathtaking, informative, systematic 2 Oct 2012
By Alex B
Adam's Fallacy: A Guide to Economic Theology is as fascinating as the title would suggest. American Professor Duncan Foley gives a broadbrush account of the economics thinkers that have contributed to some of the most influential theories in the political economy. To any reader interested in how theories have developed or what famous terms such as the 'invisible hand' really mean, this book is a must for you.

Foley believes that Smith, in his 1776 classic The Wealth of Nations, commits a fallacy in believing that self interest when interacting with markets in the capitalist economic system creates a more desirable moral system as members of the economy are forced to, as a result, develop an interest and regard for others. There are a number of good reasons why Smith would believe this: property rights for example provide a springboard to self-interest economically speaking (such as owning business premises) whilst engendering a sense of regard for others (only functions if everyone respects each others business premises). Foley, a vehement opponent of this position, gives a good reason why this has proved not to be the case: capitalism has caused widespread socio-economic inequalities, hardly a symptom of care for others and a charitable society.

Foley goes on to give concise, clear and at times quite breathtaking reviews of some of the greatest economist-philosophers of all time. At times it is quite bizarre just how he manages to fit in and explain so clearly several concepts in the space of just a few pages. He begins with Adam Smith, the focal point of the book, before systematically moving onto Malthus, Ricardo, Marx, Veblen and finally Keynes, with other more peripheral contributors in between such as Joseph Schumpeter and Vilfredo Pareto.
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Most Helpful Customer Reviews on (beta) 3.9 out of 5 stars  11 reviews
31 of 32 people found the following review helpful
5.0 out of 5 stars a very solid book 28 May 2008
By Augustas B. - Published on
People who wrote negative reviews of this book could at least appreciate Foley's honesty: he unequivocally states it is his point of view and throughout the book he identifies himself as a political economist. He does not pretend he is some "positive scientist" like Milton Friedman did (the latter also used some of the most arbitrary and ridiculous assumptions in his work). This book presents an honest and well-argued opinion. Throwing the Soviet Union into the comments is a complete straw man and has no relevance whatsoever.

This book presents the ideas of classical political economists, Marx, marginalists, as well as 20th century economists like Keynes, Hayek and Schumpeter. Insights are abundant: Smith believed in limited laissez-faire (for example, he believed in the infant industry argument), Marx's vision looked quite similar to capitalism (as it included a surplus product), Keynes differentiated between risk and uncertainty, etc. It is not an easy read as some passages get somewhat dry and technical (e.g. when theories of value are being discussed). Utlimately, this book has a wealth of ideas. Foley includes a nice list for further reading for those interested and an appendix with certain concepts explained (I thought the graph with Ricardo's analysis of land and rents was very helpful).

My only complaint is that it could have been longer. For example, Foley discusses Smith's division of labor quite a bit, but forgets to include Smith's claim that without government intervention to provide education, division of labor could also render human beings "as stupid and ignorant as it possible for a human creature to become". The discussion of Schumpeter and Veblen are painfully short and leave one wanting more. Foley mentions neoclassical synthesis in passing and claims it proved "unstable ideologically". It would be great to see this shift discussed in detail, but Foley moves on. Of course, I might be too demanding. Nevertheless, "Adam's Fallacy" provides food for thought for anyone interested in the history of economic ideas.
16 of 18 people found the following review helpful
5.0 out of 5 stars Economic Theory as Theology 7 Sep 2007
By OldGuy - Published on
Format:Hardcover|Verified Purchase
This is a truly excellent book. As a long time student of the history of economic thought, this book, subtitled "A Guide to Economic Theology" offers a truly insightful perspective on Smith and other classical economists. It has always been my belief that there are a lot of people (some are pompous neo-cons) who quote Adam Smith and have never read him. The author quite effectively dismantles the argument inherent in "Adam's fallacy"; that is by acting in our own (avaricous)self interest, we are acting for the public good; that we must accept injustice in the present to allow for distributive justice over time. Markets for goods, services, and labor do not always produce efficient, let alone just outcomes.

The book should be required reading - not just in Economics Departments, but for elected officials as well. Three cheers for Duncan Foley!!
16 of 18 people found the following review helpful
4.0 out of 5 stars 4.5 Stars-Excellent book-Horrible Title 1 July 2007
By Michael Emmett Brady - Published on
Foley is correct that "Modern" economic theory(Monetarism,Rational Expectations,Real Business Cycle theory,New Classical Economics, Efficient Market Hypothesis,etc.),which is based on the false claim that all markets can be modeled either as being normally distributed, or " as if " they were normally distributed,assumes stability and a natural self adjusting,self correcting invisible hand mechanism that,operating through the process of labor specialization,division of labor,extension of the market,and economic growth, transforms private greed into a social optimum.These theories model the economy as if it were inherently stable and subject only to exogenous shocks.They assume away the inherent ,internal,endogenous shocks created internally by both technical(capital goods) and financial innovation ,as well as the speculative shocks caused by speculators leveraging their bets with huge infusions of bank loans leading to the inevitable bubble and collapse.
Adam Smith did not make this error or commit "Adam's Fallacy".On pp.734-735 of the WN,1776,Modern Library (Cannan)edition,he makes it clear that the economic growth process of the Invisible Hand ,self interest,and the division of labor creates major undepletable,negative externalities(social,intellectual,martial,political,and moral) that impact practically the entire work force.The only way to counteract this is through government action.Foley needs to completely change the title to David's(Ricardo),Jeremy's(Bentham),and James'(Mills)Fallacy.
5 of 5 people found the following review helpful
4.0 out of 5 stars Read Heilbroner First 7 Jun 2010
By not me - Published on
Format:Paperback|Verified Purchase
"Adam's Fallacy" tells the story of economics through the ideas of the "great" economists -- principally Smith, Malthus, Ricardo, Marx, Keynes, Schumpeter and Hayek. The author is refreshingly heterodox and devotes the longest chapter of the book to Marx. The writing is succinct and clear, though a few sections (such as the one on marginalism) are too compressed. The focus is on ideas and analysis, not biography or social history.

Inevitably, the book has been compared to Robert Heilbroner's "The Worldly Philosophers." Bottomline: "The Worldly Philosophers" is a FAR better introduction for students coming to economics for the first time. "Adam's Fallacy" can't be appreciated without a fair amount of background knowledge, as much of it is written to defend the relevance of Classical economics to current problems and to criticize neoclassical ways of thinking about economics. A neophyte wouldn't understand what the fuss is about.
15 of 20 people found the following review helpful
5.0 out of 5 stars Interaction of Capitalism and morality 13 Jan 2007
By Karl Hess - Published on
Format:Hardcover|Verified Purchase
Foley has taught Economic History for many, many years and has a very nice summary of the thinkers in economics since Malthus. It is very readible and free of ideology - unusual for this topic.

He reviews the efforts economists have made since Smith to avoid the entanglement of the mechanisms of capitalism from the social and political results and judges they have all failed.

Good reading, and answered questions I've been pondering for a long time.
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But society as a whole can only achieve these potential gains by going beyond capital accumulation to distribute the resulting wealth. &quote;
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he also addresses more directly than anyone else the central anxiety that besets capitalism-the question of how to be a good person and live a good and moral life within the antagonistic, impersonal, and self-regarding social relations that capitalism imposes. &quote;
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Since workers and capitalists still meet as antagonists in the market, there is no reason for capitalists to share the increases in labor productivity with workers as higher wages. &quote;
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