Sometime during 2004 I sent a book proposal to Edward Elgar Publishing. Such is the way of the world, the book was only published last week, on 30 June to be exact. My first copy arrived today. The original title was to be, A Spectator’s Guide to the Economy. It is now titled, more accurately in my view, Free Market Economics: an Introduction for the General Reader. This is part of what I wrote in my book proposal those seven long years ago, and it is this book, with some variation, that has now been published.
On one level it will be exactly what the title suggests. It will be a work on how economies operate designed for the non-specialist. It will be for someone who wishes to understand what goes on in an economy aimed at individuals with no particular knowledge of economic theory. But at a deeper level the aim is to bring into the twenty-first century the economic understanding found in two of the greatest economics texts of the nineteenth and early twentieth centuries.
Amongst the most formidable economics work of the early nineteenth century was John Stuart Mill’s Principles of Political Economy. It is a volume that is even now endlessly instructive and with many now-lost insights into the operation of the economy. Although he does not say so explicitly, Clay’s own text was unmistakably based on Mill’s but was updated both in content and language for the contemporary reader of 1916. I would like to update Clay’s update of Mill.
But there is a second aspect to what I have in mind. Both Mill and Clay are pre-Keynesian. Their understanding of economic issues is unaffected by the Keynesian Revolution and this is entirely the case even with Clay’s second edition of 1942. I would therefore want to write what is, in effect, a work on economics as if Keynes’s General Theory had never been written.
This will be a book that explains economic theory using the same conceptual approach taken by Mill and Clay (and for that matter the entire classical school). The book itself would be about understanding economic concepts such as capital, rent, interest, unemployment, inflation and the business cycle but in ways which are sharply different from the approach generally used today.
In my view there is a genuine market for a book that explains economic concepts simply but in depth, and that gets past the Keynesian demand-side orientation of virtually all present-day macroeconomic writing.
A book dealing with macroeconomic issues without a discussion of aggregate demand will be a novelty (although no longer a complete novelty) but its classical orientation, having been acknowledged and discussed as part of the introductory comments, will thereafter be kept in the background.
As a general framework, I would use an amalgam of the structure adopted by Mill and Clay. It would build from first principles, with the core based on the concept of capital as originally understood and the notion of value added. With these as the foundation, the book would discuss the nature of economic activity and the way in which wealth is created on the one side while various economic problems persist on the other.
My aim in writing this book is to provide a primer on economic issues that conforms to classical thought which in itself will mean that it conforms to common sense. What has been missing from much of what passes for economic material for the non-economist is a feeling for how economies prosper because of the ability of individuals to create a surplus without it being dissipated through graft, corruption or public waste. Building an understanding of the true dynamics of the work ethic embedded in a culture of investment where property rights have real meaning will give a proper perspective on what makes an economy tick.