My Take | Why Daniel Defoe is the best and worst role model of homo economicus
- Modern economists had read the wrong book by the 18th century author, otherwise there might have been more common sense in a discipline that considers itself a science but is often exploited by powerful interests as an ideology
When my kid was in junior high school, I bought him a copy of Daniel Defoe’s Robinson Crusoe; it was required reading. Now that he is finishing university, I have ordered from Amazon Defoe’s A Plan of the English Commerce as a graduation gift. Well, actually, I want to read it but couldn’t justify paying US$60 for a book just for myself; my marginal utility preference, as economists say, would not allow it.
Now that he is going into the real world, I think it’s time he learns how it really works.
The mandatory introductory economics he once had to take at university is sometimes called the “Robinson Crusoe” economy. Out of an idealised one person’s economic model with just two goods, say, coconuts and fish, and the need for trade-offs between Crusoe’s utility preferences for, say, seven coconuts and three fish as opposed for five coconuts and five fish, a whole neoclassical economic discipline has been built.
That is the sanitised version of modern economics, which does not mean it is not dangerous with harmful real-life consequences, as we shall see. But that doesn’t mean it’s not intellectually elegant and satisfying; I could see why some people would love it as I skimmed through my kid’s old textbooks.
And then there are the down-and-dirty realities of economic life. In A Plan, Defoe offers us front-row-centre seats to watch the unfolding of the first Industrial Revolution and globalised trade, in many ways, not very different from our own age.
He explains how the English economy took off under the Tudors, with intellectual theft, industrial spying, bribery and tariff protectionism to develop England’s own wool manufacturing and to steal market share and eventually ruin the Dutch industry. That is how most countries in the modern era got rich, and it’s not a pretty picture. It is also not the picture that your children are taught for an undergraduate degree in economics. Either they are not taught about export controls, infant-industry protection and subsidies, government-sponsored industrial espionage and technology theft, or they are told how evil and counterproductive they are for an economy’s development.