Many people think that economics is called the “Dismal Science” because of its tendency to be a bit on the boring side and its mind-numbing, never-ending stream of numbers, equations, and arcane phrases. Those are reasons enough, no doubt, but the truth goes back a few years, and it may, in fact, surprise you. Let’s start with a common myth.
A couple of centuries ago, when the first generation of disciples of Adam Smith was shaping modern economics, the discipline took a decidedly negative turn. Perhaps inspired by the plight of factory workers in the early days of the British Industrial Revolution and the abject poverty of the displaced masses, these folks came up with some ideas that make today’s worst doom-and-gloomers look like Santa Claus.
One of those persistent pessimists was David Ricardo, the modestly educated son of a stock broker who made a fortune in his own brokerage career, became a member of Parliament, and was one of the most singularly brilliant thinkers of his age. One of Ricardo’s best known (if not most insightful) ideas was known as the “Iron Law of Wages.” In essence, he argued, technical progress would bring labor-saving machinery, thus leading to layoffs and downward pressure on wages. Any temporary gains in the plight of workers would lead to population increases, less fertile land being cultivated, and a return to subsistence. Ricardo recognized the existence, but not the promise, of advancing technology.
Another noted commentator of that era was the Reverend Thomas Robert Malthus. Although by all accounts he was a right pleasant fellow in temperament, his theories were anything but comforting. The good parson maintained that while the food supply would only increase linearly over time (1, 2, 3, 4, . . . .), the population would expand exponentially, doubling every 25 years, (1, 2, 4, 8, . . .). As a result, the world would be in a constant state of starvation and base survival, with equilibrium being maintained by war, famine, and disease. Although they were friends and carried on a vigorous correspondence for years, Ricardo and Malthus were intellectual rivals and disagreed on many issues (including the possibility of increasing production through investment), though both of their prognostications were grim indeed. (Ironically, their diverse approaches led to the simultaneous discovery of the Law of Diminishing Returns. The two of them and their contemporary, Robert Torrens, published the theory independently within a span of three weeks in 1817.)
The myth is that the pessimistic predictions of the trader and the preacher led Thomas Carlyle, the erudite essayist and historian, to label economics as the “Dismal Science.” It is indeed true that Carlyle gave us our ignoble name, but it had nothing to do with Ricardo and Malthus. In reality, Carlyle’s less than enthusiastic response to economists was aimed at John Stuart Mill (whose father, James, had encouraged Ricardo to turn his keen mind toward such matters). The reason for the attack was the fact that Mill, perhaps the greatest intellect of any generation, supported the abolition of slavery. Carlyle and other scholars of the day, such as John Ruskin and even Charles Dickens, thought slavery was a good thing and urged that the practice be aggressively expanded. If supporting individual freedom makes one “Dismal,” I’m happy with the title.
In any case, if Reverend Malthus had but listened to his father, David, a supporter of the Enlightenment who embraced the possibilities of technology, he would have recognized the boundless possibilities for growth and prosperity. Similarly, Ricardo’s greatest intellectual breakthrough, the notion of comparative advantage in trade, is the foundation of the global business complex. The problems of the world have certainly not been solved, but the progress we have made owes a huge debt of gratitude to these “not-so-dismal” forefathers of modern economics.