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Speed Review: A Brief History of Economic Genius

Speed Review: A Brief History of Economic Genius

Speed Review: A Brief History of Economic Genius

by Paul Strathern

When great minds tackle economic theory, new ideas can emerge which can change the way we all view trade and the marketplace. Many of these great intellects have been born over the years, and their ideas have shaped the ways people live and economies grow. Strathern, a seasoned novelist, biographer and historian, has compiled brief histories of several of these economic geniuses into an informative collection of theories and historical facts that contain many of the most important ideas ever developed about economics. Among the great minds he explores are John von Neumann, Karl Marx, John Law, John Graunt, Sir William Petty, John Nash, and John Maynard Keynes.

Review

Centuries of Great Economic Minds
When great minds tackle economic theory, new ideas can emerge which can change the way we all view trade and the marketplace. Many of these great intellects have been born over the years, and their ideas have shaped the ways people live and economies grow. Strathern, a seasoned novelist, biographer and historian, has compiled brief histories of several of these economic geniuses into an informative collection of theories and historical facts that contain many of the most important ideas ever developed about economics.

When John von Neumann was introduced to economic theory and began to dissect the theories that were once the foundation of economic thinking, he created game theory. His "minimax" theorem involves the idea that a "competitor should analyze each move he could make, and calculate the maximum possible loss the others could inflict upon him if he made this move." In this line of thinking, the best strategy is to make the move that "could involve him in the minimum maximum possible loss." This will ensure that even if somebody loses, they will suffer less.

In 1943, when von Neumann's game theory was combined with the ideas of Oskar Morgenstern, the two created the 600-page Theory of Games and Economic Behavior. This tome extended game theory beyond the comparative simplicities of the minimax theorem. When applied to the economic behavior of companies that compete on the open market, or to consumer choice, the theories of these men explained the critical elements involved in zero-sum games (win-lose situations) and non-zero-sum games (win-win and lose-lose situations).

The Real Dr. Strangelove
Along with von Neumann, who Strathern explains became the prototype for the title character in Stanley Kubrick's film Dr. Strangelove, many other unique economic geniuses and their theories are described in the pages of Strathern's book. Among them is Luca Pacioli, the man generally regarded as the monk who popularized double-entry bookkeeping through Europe in the late 1400s. He would teach mathematics to Leonardo da Vinci, and some experts see the spread of his bookkeeping technique throughout Europe during the Renaissance as the birth of capitalism.

Another interesting character to play a pivotal role in the history of economics was John Graunt, whose early work introduced the world to the idea of statistical inference. Strathern explains that this makes him the father of statistics, which are "the factual foundations on which economic theory could build." Another man to make his way into the economic history books, and a friend of Graunt, is Sir William Petty, a pioneer in economic thought who saw money as a way to exercise power and promote moral qualities, but perhaps oversimplified individual human nature by favoring measurable abstract generalizations.

The Richest Man in History
John Law became the first economic mind to control the operations of an entire country when he took over in France during the early 1700s. This was the man who might have been the richest man in history when he owned the French central bank that held the entire French Louisiana territory (the equivalent of almost two-thirds of the present United States). He was also the person who was the first to suggest the idea that a government should issue credit notes "against its own ability to raise money in the future, such as through taxation," an idea that is the basis of all our paper money today.

Some of the more modern characters in Strathern's book include Karl Marx, whose theories placed economics within the larger context of society, John Maynard Keynes, a British economic genius who in 1919 became "the leading economic oracle in the land," and John Nash, who won the Nobel prize for economics after becoming the first theorist to distinguish a difference between cooperative and non-cooperative games.

Why Soundview Likes This Book
Strathern's depiction of economic history focuses on the men who have influenced our current perspective on economics, and brings to life theoretical abstractions with the quirky and sometimes nutty details that infuse these men with more humanity than their abstract theories reveal. With a sharp wit and an ability to weave fascinating tales from historical records, he creates a cohesive perspective on the personalities that have shaped the world and continue to influence everybody with their far-reaching effects. Using character dramas and personal histories, he is able to turn economics into a dynamic subject that involves some of the most interesting people to ever walk the planet.