British economist John Maynard Keynes. (Tim Gidal, Getty Images )
The Story of Economic Genius
Simon & Schuster: 559 pp., $35
Today's economy may seem the bleakest in recent memory: plunging consumer confidence, slumping home prices, a stubbornly high unemployment rate. But as Sylvia Nasar reminds us in "Grand Pursuit: The Story of Economic Genius," in 1933 a full 25% of the nation was out of work, suicides were rising sharply, and stocks were trading at one-fifth of their 1929 prices.
Then, as now, public leaders struggled with solving the spiraling economic crisis. In 1934, President Franklin Delano Roosevelt met with John Maynard Keynes, a British economist known for his love of art, his taste in young men and his brilliant if controversial theories. He urged the president to spend more on stimulus programs to shake the country out of its stupor. At a New York dinner the next evening, Keynes told some of his colleagues that every dollar spent by the government — deficit or no — would have a great effect on the nation's economy.
"Were the seven wonders of the world built by thrift?" he once asked. "I doubt it."
Keynes and his theory about the benefits of deficit spending still resonate today, as is evident by the debate over the Obama administration's stimulus program. The exploits of Keynes — he bullied Britain's National Gallery into buying hundreds of modernist paintings from a fire-sale auction in Paris on the eve of World War I, securing a Cezanne and two Delacroix for himself — would be enough to fill a book. But Keynes is just one of the economists Nasar features in "Grand Pursuit."
Beginning her book in the era of Charles Dickens, "when the specter of hunger was stalking England," Nasar takes us through the times that influenced economic thinkers and the theories they put forth. We see Marx — a lazy procrastinator who impregnates his wife and a housekeeper in the same year — walking through the streets of London with his generous, patient sponsor Engels, "their extreme myopia and the sulfurous yellow London fog obscur[ing] everything more than a foot ahead."
We also see Joseph Schumpeter, who theorized that entrepreneurs were the key to economic progress and who had a habit of challenging university librarians to duels and arriving at lectures in jodhpurs. Beatrice Potter Webb, who advanced the idea of a welfare state and advocated for a government safety net, arrived at that conclusion only after a failed love affair with Joseph Chamberlain, the father of a future British prime minister. Alfred Marshall, a founder of modern economics, wore a handlebar mustache and took up knitting during an illness, and discovered, Nasar writes, that businesses didn't just exist to produce a profit for their owners. He realized they were also meant to "produce higher living standards for consumers and workers."
It is the quirks and personalities of these economic thinkers that bring "Grand Pursuit" to life. Nasar argues that the details of their personal successes and failures — along with the weighty history revolving around them — inspired their individual conclusions about how the system works.
But the book can seem at times like just a grab bag of different economists, countries and ideas. In "A Beautiful Mind," Nasar's 1998 biography of John Nash Jr. that was made into a movie and nominated for a Pulitzer Prize, the author focused in depth on one man's theories and personal life. In "Grand Pursuit," Nasar tries to tackle dozens of men and women, and at times the book gets confusing as different characters — Milton Friedman, for example — wander in and out of chapters. Chapters on Indian economist Amartya Sen and on Joan Robinson's adulation of the communist governments of Russia and China feel superfluous, making the reader want to jump back to the early 20th century, which Nasar paints more vividly.
Still, through Nasar's ambitious storytelling, we see Western society evolve from one in which most people live in poverty to one in which government tries to grapple with unemployment and inflation and raise the standard of living for all. If Nasar puts perhaps too much emphasis on the influence of early economic thinkers — who after all were observing conditions rather than creating them — she does show how fully the profession has become entwined with the way governments run. We see the rise of economic forecasting in her pages, as well as the increasing influence of figures like Keynes on leaders like Roosevelt. The number of economists in Washington, D.C., she says, shot up from 100 in 1930 to 5,000 by 1938.
Much of "Grand Pursuit" may be a reminder that as bad as things seem now, they have been worse — much worse — and that those difficult times can shed light on what is happening today. Economists have always tried to come up with theories about how to stimulate flaccid economies. The reader finishes Nasar's book wondering what brilliant and quirky thinker may fill in the next chapters of our economic history and come up with an idea that shakes our current economy out of its funk.