The story of economics

The legitimacy of economics as an academic discipline and economic policy tool has been under constant attack since at least the financial crisis of 2008. Few critics, however, attempt to deal with the question of where this discipline actually came from and what purpose it was supposed to serve. Both of these questions have now been highlighted by Antara Haldarová, a lawyer and academic from the University of Cambridge, in her new bookEveryman: The Untold Story of Economics.

Her delivery is fabulous — in more ways than one. It really is a fable, constructed in three acts as a theater play with allegorical characters named Neo, Tina, Tek, Finn, Davos and others. It is written in a mixture of literary styles that include homages to John Steinbeck, Oscar Wilde, Ernest Hemingway and others, and its vividness puts to shame the monotonous conformism of mainstream economics. The result is an economics "story" like no other: equal parts imaginative and true.

Haldarová tells the story of two families — both equally dignified. The first refers to the "invisible hand" metaphor ofThe wealth of nationsAdam Smith, as later interpreted by Friedrich August von Hayek, Lionel Robbins, Milton Friedman and the Montpellier Society. The second begins with John Maynard Keynes and continues through his "Circus"—Joan Robinson, Richard Kahn, Nicholas Kaldor, and Piero Sraffa—only to turn toward Hayek again in the person of Paul Samuelson and finally disappear, failing to deliver the Golden Calf that Keynes promised.

The story Haldar tells is that of mainstream academic Anglo-American economics—and to a lesser extent its postcolonial peripheries in South Asia and Latin America—as influenced by hard-line Central European refugees of the mid-20th century. Marx and his followers are conspicuously left out.

So it is the story of the rise and as yet unfinished decline of "Nea" —homo economicus. Already at the turn of the 20th century, Thorstein Veblen described this abstract, amoral human being as a "lightning calculator of pleasures and pains", which moves like a homogeneous drop of the desire for happiness under the pressure of stimuli that move it here and there, but do not change itself in any way.

Haldar's Neo is Friedman's son and Hayek's grandson, who referred to Smith, although the authorTheory of moral feelingscan at the same time be considered a distant ancestor of Keynes. The supposed difference between Smith's two great works lies in the relations between men: vThe wealth of nationsprogress is supposed to come from self-interest and the magic of the market. INTheory of moral feelingswith Smith much more concerned with social ties.

Other proponents of the relational view — especially Veblen and the American pragmatists and institutionalists — do not appear here. My father, John Kenneth Galbraith, is labeled a "leftist" even though in his heyday he was one of the recognized representatives of what was then called liberals in the United States. Haldar's second mention of him as a "giant" is generous and justified.

On the fringes of this mainstream narrative hover dissidents, horrified by the damage done by Neo — and also by Tina, the personification of Margaret Thatcher's "There is no alternative"; Tek, technology; and Finn, finance.

These include the metaphorical sisters Gini — named after the inequality indicator — and Palma, named after a ratio indicator created by a Cambridge economist, as well as the "builder of worlds" Tara, whose name means "there are real alternatives".

These beings offer the confused Eve — Eve R. Y. Man — hope for a better way of thinking and a better world. As Palma tells Eva:

"You're not lost—you've been deliberately disoriented. By him [Neem]. To him, you're a rat in a maze. Controlled by sugar and a whip."

A key source of inspiration for Haldar and her heroines is the economic historian Karl Polanyi. The author evokes him as a "slender figure with glasses", "sparkling eyes and an aura of warmth, humanity and endless curiosity".

At the imaginary christening of Keynes's "grandson" in 1946, Polanyi emerges from the background to warn of "a world turned on its head, in which the 'fiction' of money dictates the 'facts' of labor and land."

Haldar Polanyi foresees the "human psyche" rebelling against what Neo has caused, and offers the child a gift of "embeddedness in community"—a message with which Haldar herself fully identifies.

I came across this passage on Saturday, and the next day I took it with me on the drive from southern Vermont to a nursing home in Montreal, where I read it to Kari Polanyi, Karl's daughter, now 103 and in her last days.

Haldar's basic moral message is obvious. Neo was an artificial creation, his intellectual triumph a chimera, and the policies he inspired brought instability, existential uncertainty, inequality and crisis.

His friend Finn suffered a cardiac arrest, and Neo himself—although still in full control of the academic world—lost his position in the real world to Tek, a descendant of Joseph Schumpeter.

Creative destruction is all the rage today — and the more uncontrolled, reckless, and cruel it is, the better.

However, the forces of doubt and potentially justice — Gini, Palma and Tara — are not sleeping. Can they prevail and lead Eva back to the light of Polanyi? Or will the disaffected crowd led by demagogues win?

I admit that even at the end I wasn't sure — maybe because the story wasn't over yet. However, I have no doubt that Haldar dealt Neo a severe blow from which he will not easily recover if her book reaches a wider audience.

In conclusion, I would like to make one reservation.

It refers to the basic metaphor of Neo's creation myth: the invisible hand.

Haldarová describes it as "a motif of strength that brings a wonderful harmony to the actions of people who are otherwise not connected in any way".

But this is a mistake — a mistake which here, as in most citations, is covered by an omission.

Smith actually wrote:

"By preferring the support of domestic industry to foreign, he has only his own safety in view; and in directing that industry in such a way as to make its production of the highest value, he has only his own profit in mind. And yet, as in so many other cases, he is led by an invisible hand to promote an end which was no part of his design at all."

In other words: the invisible hand works precisely because peoplethey are interconnected— in this case as members of one nation.

Smith's "nation" is a community.

There are no two Smiths, and his two books are not two estranged twins. Smith being drafted into service as Neo's—and Davos'—patron was a kidnapping.

Perhaps when the spirit of Polanyi and his allies finally prevails, Smith will be freed from their grip and allowed to rejoin those economists who can rightfully claim him as their own.

JAMES K. GALBRAITH

James K. Galbraith is a professor at the LBJ School of Public Affairs at the University of Texas at Austin. He is the co-author of the bookEntropy Economics: The Living Basis of Value and Production(with Jing Chen, University of Chicago Press, 2025). His forthcoming bookThe Power to Destroy: How Obsolete Economics Drove American Declinedue out in 2026.