Three Worldly Philosophers Rule the World: Who’s on Top Now?
“By the collision of different sentiments, sparks of truth strike out, and political light is obtained.” — Benjamin Franklin
Last week, I was walking through the exhibit hall of the American Economic Association (AEA) conference in San Antonio, Texas, and saw an interesting display called “VOTE.” I noticed a poster with a picture of the “Big Three in Economics” — Adam Smith, Karl Marx and John Maynard Keynes — on display. See below photo.
Mark Skousen with Amy S. Cramer of the VOTE program.
Then, suddenly, a woman manning the booth came up and saw my nametag, started jumping up and down, and said, “You’re my hero! I’m your biggest fan.”
Her name is Amy S. Cramer, Ph.D., who has begun a VOTE campaign to “inspire the next great economic thinkers” by exposing students to the three major schools of economics — free markets (as represented by Adam Smith), radical socialism (Karl Marx) and big government/welfare state (John Maynard Keynes).
Her book introduces all three philosophies in terms of how to deal with poverty, wages, economic growth, inequality and environmentalism in an objective way and then lets the students “VOTE” on which philosophy they believe is best.
VOTE stands for “Voices on the Economy,” with the subtitle, “How Open-Minded Exploration of Rival Perspectives Can Spark Solutions to Our Urgent Economic Problems.”
Who Are the ‘Big Three’ in Economics?
So, why am I her hero? She told me that the “Big Three” philosophy approach is based on my book “The Making of Modern Economics” where the “Big Three in Economics” are highlighted, as shown in the Totem Pole of Economics.
In the Totem Pole of Economics, Adam Smith represents free markets, Karl Marx represents radical socialism, and John Maynard Keynes represents big government and the welfare state.
Cramer said that some free-market economists insist that the representative for free markets should be Ludwig von Mises or Milton Friedman. She disagrees, pointing to my book to make the case that the ideal representative of free markets should be Adam Smith.
I like Mises and Friedman, but Adam Smith is the best representative of free-market economics. Both Mises and Friedman consider the Scottish professor the founder of free-market economics:
“Smith laid the keystone of a marvelous system of ideas and presented the essence of the ideology of freedom, individualism and prosperity with admirable, logical clarity and in an impeccable literary form.” — Ludwig von Mises (1966).
“Adam Smith was a radical and revolutionary in his time — just as those of us who preach laissez-faire are in our times.” — Milton Friedman (1978).
How Do Students Vote?
Amy Cramer surveys college students before and after taking her course on the “Big Three in Economics.” Before the course, she says that the majority of students identify themselves in the “radical” or “socialist” camp.
After they take her course, she says that they are equally divided into the three camps.
‘Adam Smith as Hero: The Single Best Book in Economics Today’
I suspect that students would switch more to the Adam Smith camp of laissez-faire if they took my course at Chapman University and studied my book, “The Making of Modern Economics: The Lives and Ideas of the Great Thinkers.” They would quickly learn why Adam Smith is at the top of the Totem Pole of Economics. Keynes would be second, and Marx would be the low man on the totem pole.
Adam Smith and his “system of natural liberty” are the heroes of my book, now in its fourth edition, published by Routledge.
Every economist is judged by whether they sought to improve upon the “House that Adam Smith Built” (French laissez-faire, Austrian, Chicago and Supply-Side schools) or wanted to tear it down and build their own new model (Marxists, Keynesians, socialists). I have chapters on each school of thought.
I demonstrate why Adam Smith’s free-market model leads to the highest standard of living, peace, property and liberty. And students learn what the fundamental flaws are of both Marxist and Keynesian economics.
To find out what’s in each chapter, go here.
Who’s Winning?
So, who’s winning the battle of ideas? All three! Keynesian economics is popular today, as evidenced by the growth of government, never-ending deficits and the welfare state.
Marxism is still expanding its influence in countries like Venezuela, and on campuses in the West.
But Adam Smith’s model of liberty is also making a comeback, as evidenced by growth of the Republican-controlled “blue states” offering tax relief and limited government (Texas and Florida, for example), and the victory of Javier Milei in Argentina. He just addressed Davos in Switzerland, and we’ve invited him to address us at FreedomFest (no confirmation yet).
My guidebook, “The Making of Modern Economics,” is growing in influence, being adopted on campuses throughout the country and being translated into several foreign languages.
So is my free-market textbook, “Economic Logic,” now in its 6th edition. It’s available for only $39 at www.skousenbooks.com. (Retail price is $129.99!)
What Others Are Saying
John Mackey, the former CEO of Whole Foods Market, says, “Mark’s book is fun to read on every page. I’ve read it three times and recommend it to all my friends.”
Greg Feirman, manager of Top Gun Financial, writes: “Skousen is a brilliant and prolific economist as well as writer of a popular financial newsletter, Forecasts & Strategies, for decades now. Because of his interest in financial markets, Skousen is an economist obsessed with the real-world applicability of his economic ideas. He has written over 20 books, including “The Making of Modern Economics,” the best history of modern economics around.”
The late great William F. Buckley, Jr. wrote, “I champion Skousen’s book to everyone. I keep it by my bedside and refer to it often. An absolutely ideal gift for college students.”
And Richard Rahn states, “Mark Skousen has produced the single best book on virtually all of those who have had a significant impact in economics. It’s a delight to read cover to cover.”
Routledge and Amazon charge over $59 for my book, “The Making of Modern Economics.” But I offer a major discount — only $37 — at my website, www.skousenbooks.com. I autograph each copy and mail it for no additional charge within the United States.
Special Bonus: If you order any of my books, I’ll include, at no extra charge, my popular essay, “The Economics of Life Made Simple.” This essay has been called by a subscriber as “the best brief in economics I’ve ever read.”
Upcoming Events
THIS SATURDAY! Orange County AAII Conference, Saturday, January 20, 2024: If you live in Southern California, please join me for my two-hour presentation on the outlook for stocks, commodities and real estate, 9-11 a.m. at the Center of Founder’s Village, 17967 Bushard Street, Fountain Valley, CA 92708. Parking is free, but there is a $5 charge for attending this event sponsored by the Orange County chapter of the American Association of Individual Investors. For more information, go to the AAII Orange County Webpage. To confirm your attendance, email Stephanie at sdavis388@gmail.com. I will be autographing copies of my books at this event. Jim Woods, co-editor of Fast Money Alert, will be attending.
Las Vegas MoneyShow, Feb. 21-23, Paris Resort: I will be giving a keynote address. Jim Woods, co-editor of Fast Money Alert, will also be speaking. Other speakers include Steve Forbes, Nicholas Vardy (all the way from London), Keith Fitz-Gerald, Jeff Hirsch, Dave Phillips, Louis Navallier, Mike Turner and Kelly Wright. The standard price is only $99 per person. To register, go here or call 1-800-970-4355. Be sure to mention you are a Skousen subscriber.
Special Announcement: Next week, I will be announcing on big-name keynote speaker at this year’s www.freedomfest.com. Stay tuned!
Good investing, AEIOU,
Mark Skousen
You Blew it!
All the Banks Blew It (But Not This One!)
“Bad government drives out good business.” — Gresham’s Law (updated)
A great many studies have been made of the cause of the financial crisis of 2008-2009. The latest is a well-researched and enlightening book entitled “The Banks Did It: An Anatomy of the Financial Crisis,” written by Berkeley sociologist Neil Fligstein. You can buy it here. I picked up a copy at the Harvard University Press exhibit at the AEA meeting.
Fligstein does a great job in describing the development of a dangerous elixir of government, banks and Wall Street that created an unsustainable boom in the mortgage market that eventually collapsed in the worst economic crisis since the 1930s. At one point, Fed Chairman Ben Bernanke said that 11 out of the top 12 financial institutions in the country were within weeks of collapse. The government intervened massively to bail out the banks and Wall Street, and somehow, we survived.
My only complaint is that the author left out the story of one bank, the 14th largest in the country, that completely avoided the financial crisis and in fact made money in 2008: BB&T Bank and Trust in North Carolina run by John Allison, who later became chairman of the Cato Institute and now teaches management at Wake Forest University.
His bank insisted on maintaining the old-style “prudent man” rule and refused to engage in any subprime and no doc mortgages. Allison even refused to take TARP money because he said the bank didn’t need it, but Bernanke forced his bank to take the funds, which they promptly paid off the next year.
Here is Allison discussing his response to the banking crisis.
Allison has written two excellent books on how his bank avoided the crisis. I especially like “The Leadership Crisis and the Free Market Cure” (McGraw Hill, 2014). I make it required reading in my course “Libertarian CEOs” at Chapman University. You can buy it here.
