Lost Prophets: An Insider's History of the Modern Economists

Lost Prophets: An Insider's History of the Modern Economists
By Alfred L.

Malabre, Jr.
2003/04 - Beard Books
1587981807 - Paperback - Reprint - 266 pp.
US$34.95

Of Interest:

Business and Capitalism: An Introduction to Business History

In this eminently readable book, prize-winning author Alfred L. Malabre, Jr. charts the rise and fall of economic schools of thought from Keynesianism to monetarism to supply-side economics. Capturing the people and places as well as the ideas, his anecdotal history illustrates how the advice of our most noted economists has both helped and hurt the economy over the years. Economics and its practitioners have come to dominate political and business decision-making to an extent unimaginable before World War II. More often than not, their theories have proved embarrassingly different than anticipated, with much damage to the economy.

... Our economists are here to stay, concludes Malabre. For all their miscalculations, he predicts that their counsel will be sought but will focus more on practical solutions to everyday economic problems and less on theories conceived in ivory towers, which time and again have been discredited by events.

Alfred Malabre's personal perspective on the U.S. economy over the past four decades is firmly grounded in his experience and knowledge. Economics Editor of The Wall Street Journal from 1969 to 1993 and author of its weekly "Outlook" column, Malabre was in a singular position to follow the U.S. economy in recent decades, have access to the major academic and political figures responsible for economic affairs, and get behind the crucial economic stories of the day. He brings to this critical overview of the economy both a lively, often provocative, commentary on the picture of the turns of the economy. To this he adds sharp analysis and cogent explanation.

In general, Malabre does not put much stock in economists. "In sum, the profession's record in the half century since Keynes and White sat down at Bretton Woods [after World War II] provokes dismay." Following this sour note, he refers to the belief of a noted fellow economist that the Nobel Prize in this field should be discontinued. In doing so, he also points out that the Nobel for economics was not one originally endowed by Alfred Nobel, but was one added at a later date funded by the central bank of Sweden apparently in an effort to give the profession of economists the prestige and notice of medicine, science, literature and other Nobel categories.

Malabre's view of economists is widespread, although rarely expressed in economic circles. It derives from the plain fact that modern economists, even hugely influential ones such as John Meynard Keynes, are wrong as many times as they are right. Their economic theories have proved incomplete or shortsighted, if not basically wrong-headed. For example, Malabre thinks of the leading economist Milton Friedman and his "monetarist colleagues" as "super salespeople, successfully merchandising…an economic medicine that promised far more than it could deliver" from about the 1960s through the Reagan years of the 1980s. But the author not only cites how the economy has again and again disproved the theories and exposed the irrelevance of wrong-headedness of the policy recommendations of the most influential economists of the day. Malabre also lays out abundant economic data and describes contemporary marketplace and social activities to show how the economy performs almost independently of the best analyses and ideas of economists.

Malabre does not engage in his critiques of noted economists and prevailing economic ideas of recent decades as an end in itself. What emerges in all of his consistent, clear-eyed, unideological analysis and commentary is his own broad, seasoned view of economics-namely, the predominance of the business cycle. He compares this with human nature, which is after all the substance of economics often overlooked by professional and academic economists with their focus on monetary policy, exchange rates, inflation, and such. "The business cycle, like human nature, is here to stay" is the lesson Malabre aims to impart to readers interested in understanding the fundamental, abiding nature of economics. In Lost Prophets, in language that is accessible and jargon-free, this author, who has observed, written about, and explained economics from all angles for several decades, persuasively makes this point.

From Rudiger Dornbusch
Columnist, Business Week and Ford International Professor of Economics, MIT:

Economics from the bleachers, heroes and villains, what the issues were, who was right, and why supply-side economics was a hoax --- economic journalism as lively and informed as it comes.

This is a reprint of a previously published work. It deals with the modern economists from Keynes to the mid 1990s and how their predictions have often been misguided and detrimental to the American economy.

If you are like me, you were probably turned-off by economics in school with all the graphs and formulas to determine how many widgets to make, and sell at what price. I have found over the years though, that having an understanding of economic theory is very important to critical thinking, especially in terms of management, politics, and economics in general.

Malabre's Lost Prophets is a very friendly introduction to the various economic thinkers of the last 100 years. His journalistic writing style draws the reader into the thinkers realm, and explains the theory and history related to each "prophet."

The book is well written and easy to read. I have found it to be a complement to my other scholarly reference material.

American presidents are often swayed by economic advisors who hold to one or another grand theory (remember the term "supply-side" from the Reagan years). Unfortunately, argues Malabre (a former economics editor for The Wall Street Journal) these theories are often proven dramatically mistaken by the unfolding of events. He looks at the various economic theories and their proponents that have held sway at various times in post-World War II America and discusses his views on why they were mistaken. This is a paperbound edition of a work originally published in 1994. Annotation ©2003

While Malabre overtly presents an "insider's" study, this is really a sophisticated inquiry of the intricate, strained relationship between the country's business and political history and the "prophets" of economic thought. His coverage of the 1944-1992 period is filled with astute observations about the "seminal" theories and often hidden foibles of the individuals who advanced them. Malabre, a Wall Street Journal reporter, follows the rise and apparent "decline" of economics in Washington, academia and on Wall Street. His recap of his newspaper's role in the ascendancy of Arthur B. Laffer's supply-side theories is pungent, as are his thoughts on Bretton Woods, forecasting and the inevitability of business cycles. Profiles of Keynes, Milton Friedman, Arthur Burns, Alan Greenspan, etc., are superb, although material on the "younger" economists (including Laura d'Andrea Tyson) is skimpy. This study should find its place next to Robert Heilbroner's The Worldly Philosophers as intelligent reading on Carlyle's "dismal science." Photos not seen by PW. Copyright 1993 Reed Business Information, Inc.

Malabre, a veteran Wall Street Journal reporter, assesses the influence of leading academic economists and government officials on economic policy-making in Washington in the post-World War II era. He also explores the theories that shaped their views. Whether followers of influential British economist John Maynard Keynes or Milton Friedman and his monetarist doctrines, they were practicing a pseudoscience and engaging in a guessing game, often wildly inaccurate, Malabre concludes. Though such conclusions might emerge from an impartial and rigorous analysis, Malabre bases his case on highly opinionated anecdotal evidence. The result is a lively and highly readable narrative that does not convince one of his thesis. An optional purchase for large research libraries; suitable for specialists in the field.
- Harry Frumerman, formerly with Hunter Coll., New York. Copyright 1993 Reed Business Information, Inc.

Malabre, a reporter for the Wall Street Journal tells his side of the course of US economics 1944-92, analyzing the tension between the different theories, the interplay between academic and political forces, and the personal characteristics of such players as Keynes, Galbraith, Greenspan, and Friedman. Annotation copyright Book News, Inc.

A prize-winning author and front-page columnist and editor for The Wall Street Journal, Malabre has covered the economy for nearly 40 years. Here he paints a provocative picture of the Keynesians, the monetarists, and the supply-siders and tells how their advice has both helped and hurt the economy over the years.