E. M. S. Anno II n. 3 Settembre-Dicembre 2010 Ricerche/Articles

(TITOLO IN INGLESE!!)

Andrea Pitzalis

considerations on

richard bronk’s The Romantic Economist

(Cambridge, Cambridge University Press, 2009, pp. 400)

Richard Bronk is currently a Visiting Fellow in the European Institute of the London School of Economics and Political Science. Educated at Merton College, Oxford, where he gained an MA in Classics and Philosophy, Bronk spent the first part of his career in the City of London and acquired a wide expertise in international economics, business and politics¹⁶⁴. So the starting point for The Romantic Economist, as Bronk said in an interview for the website www.rorotoko.com on the May 22, 2009, was “an observation made during seventeen years working in the world of finance”. Bronk was struck by “an important mismatch between the way economists usually model economies and the way markets often work in practice. Economists normally rely on essentially static equilibrium models to make predictions about markets, and they assume that economic actors optimise their trading possibilities on the basis of rational expectations. Yet, as we are daily reminded, markets are dynamic and creative processes characterized by relentless innovation, self-reinforcing emotional spasms and massive uncertainty. And, in this uncertain world, individuals are driven as much by emotion, sentiment, intuition and imagination as by rational calculation and probability forecasts of future utility”¹⁶⁵.

This makes the book an attempt to explain why economics should take romanticism seriously and how the ideas of romanticism can be incorporated into the practice and research of economics. According to Bronk, the term “romantic” includes a broad range of poets, philosophers and thinkers, mostly of Anglo-Saxon tradition of the last two centuries. In fact, some of his favourites are, for example, Byron, Coleridge, Wordsworth, Carlyle, Keats and Kant. But the Romantics are an extremely heterogeneous group. They may include representatives of different literary schools, like Keats and Wordsworth, and different political views, as the ‘British Cicero’ Edmund Burke and the German Friedrich List, just to name a few. Their peers, and almost certainly not themselves, did not see them as part of one movement, but historians later identified them as such because of emphasis they placed on imagination, intuition and human emotions in reaction to the emphasis on the contrary placed on reason by the ‘Enlightened’ eighteenth century. Bronk mainly focuses on their rejection of utilitarianism and excessive rationality, two current mainstream economic fundamentals.

The main message of the book can therefore be summarized into the consideration that imagination, complexity and creativity have always had a place in economics, but it is finally time for them, as the recent crisis seems to confirm, to ask for the main stage in Political economy taught in our universities, in the economic policies of our governments and in research initiatives. To a more general level, the book argues that the ‘two cultures’, literature and science, have much to gain from a mutual intellectual confrontation¹⁶⁶.

The purpose of the book seems therefore to make the foundations of economic theory accessible to readers of primarily humanistic education and, conversely, to make the Apostles of the dismal science appreciate romantic thought. The belief is that we must look for new models and metaphors to help us understand how imagination, feelings and emotions operate alongside purely economic behaviour and Romanticism may be, in this sense, an incredibly fertile source. The romantic poets and philosophers have explored the emotional aspects of human nature and of imagination with great insight and depth; economists, therefore, relying on their intuitions, can certainly enrich the microeconomic foundations of their discipline. They also made extensive use of metaphors drawn from biology to explain the mechanisms of growth and interdependence of complex systems, rather than resorting to mechanical similarities based on Newtonian physics¹⁶⁷. Let us now briefly analyze the structure of the book.AscoltaTrascrizione fonetica

In the preface and the first part of this book, Bronk presents a history of ideas in which he argues that the Romantics have more in common than some modern writers credit. In the first four chapters he presents his vision of the historical debate on the Romantic thought and about changes within mainstream economics. Bronk introduces four observations that pervade the whole book, that are also four broad Romantic themes: - the first is, as already mentioned, the use of organic metaphors for understanding social interaction. The essential idea is that the models of economists reduce the economic reality to a simple reality in which we see more easily the results of the social forces at work, but where we lose the results of the historical and cultural heritage of each nation. Bronk therefore questions the ability to transpose the dominant economic model, often calibrated on ‘Anglo-Saxon’ capitalism, to other times and places. He also points out that many of the early political economists, like Adam Smith himself, had in mind an organic reality of competition and the economic system; - the second is the idea that imagination and feelings are both fundamental to understand the economic realities and the economic discipline. In support of its argument Bronk gives the example of entrepreneurs who need to create new products to satisfy consumers (who, perhaps, have not yet revealed any preference and perhaps have non). Similarly, consumers need imagination to consider things that they have not yet tried, just as policy makers must use creativity and imagination when they create unprecedented institutions ; - the third observation is on the role of language in the definition of thinking the world. This means in practice that in reality anything that can act as a truly universal language exists, and then every language and specialist language (including that of economists) has a political value as soon as you open your mouth and say something Finally, Bronk stresses the importance of the acceptance of value pluralism and of incommensurability.

In the second half of the book Bronk develops theoretical and practical lessons to be drawn from romantic thought for contemporary economics. He focuses mainly on an overview of different schools of thought in economics that he feels more in line with the romantic thought, such as the theories of complexity or the numerous attempts to incorporate within economic reflection the role of imagination or the uncertainty of the future. Thus, in Chapters 5 and 6 Bronk refers to a number of institutional economists (from Friedrich List to Douglass North), who stress the importance of nationalism and national institutions for the economic reality, with the complexity theory which is seen as an "organic alternative" to the more static neoclassical theory. In chapters 7 and 8, then, he deals with the endogenous growth theory and argues that, since there is not in reality a unique and unchangeable criterion to evaluate the mechanisms of human choice, cost-benefit analysis is impossible. Chapters 9 and 10 seek to define the concept of Homo economicus, Homo sociologicus and Homo romanticus, moving on a more philosophical field in search of the real possibility of a paradigm shift in economic science. Finally, Chapter 11 is devoted to his conclusions.

In the end, a lot of Bronk’s suggestions are clearly sensible, as real economic agents are not cold, rational utility maximisers. One certainly positive aspect of the book is that it is able to combine the literary with the scientific aspect. Although this does not always make easy and accessible reading to all audiences, Bronk’s education, namely that of a humanist who has worked mainly in the financial sector and studied economics, can strengthen his statements and conclusions in the various chapters. What is striking, and perhaps not expected, is that the author was able to make a large amount of reading and analysis, making the book fully up-to-date on the most recent and current economic research. Although it clearly draws its main inspiration from English Romanticism 200 years ago, the book could well be a good introduction on the state of the economy of institutions, public choice, behavioural economics and so on.

On the other hand, many of its conclusions are not so original. So, rather than building optimising models that are predicated on the existence and attainment of equilibria, modern economists should take inspiration from chaos theory. The gross domestic product measures of welfare are too simplistic and more nationally specific models can capture the influence of institutional structures on human behaviour. How can one possibly disagree with the conclusion on page 296 that we need “horses for courses”, or “having several models at our disposal and choosing the one most suited to the particular problem we are trying to solve”? Present-day economists should embrace the lessons of Romanticism, Bronk argues, but a question arise: what implications does this have in practice?

Some small relief that could be done to the work of Bronk relates to few points in which he misunderstood the theoretical statements of economists, even if they absolutely are not crucial mistakes in themselves, because they do not negate the essential observations of the author, but rather small errors in which it is almost inevitable to fall when you have to deal with such a large area of knowledge.

For instance, one can look at what is said in the book about the equilibrium model of Arrow-Debreu. The Arrow-Debreu model, also known as the model of Arrow-Debreu-McKenzie (ADM model), holds that, given certain assumptions (i.e. convexity into the preferences of an individual, perfect competition and demand independence ), you can identify a set of prices which are such that aggregate supply will be equal to the aggregate demand for all goods in a given economic system in which individuals can rationally make exchanges with each other on the basis of a pre-defined set of preferences. It is a central model of general equilibrium theory, often used as a reference for other microeconomic models. On page 290 Bronk said that this model shows that there is a balance or an optimal solution in which all markets are collocated. But this is not correct. Formally, markets do not 'tend' to something in the ADM template. Indeed, one cannot even speak properly of market, as the balance of the Arrow-Debreu prices are sets for which there is no explanation of the process by which they were achieved. Bronk seems not to have really understood the fact that the ADM template does not actually provide practical guidance on the applied economics. It should be seen simply as an attempt to codify a set of basic concepts used to think how the markets should function (low information costs, maximize equipment and production, consistent choices etc), but it is of no empirical use (Arrow, Debreu, 1954: 265-290).

The author also seems to be more versed on the 'macro' rather than on 'micro' side of economics. While he seems to be aware of the extensive literature on the "varieties of capitalism", as well as on growth theory literature, of which he proposes a broad critical review., Not the same can be said about evolutionary and behavioural economics, both relatively recently flourished as a response, on the micro-economic side, to the evident shortcomings of the paradigm of rational choice. Bronk gives the impression to overestimate the level of grist that these new branches of the discipline are able to bring for his mill: often, the only attempt they make is to expand the utility function of the subjects and to incorporate it in the concept of time, which is not neutral with respect to the preferences of individuals, rather than replace Homo economicus with a completely irrational human being. Moreover, from what I understand, most of these authors are convinced utilitarian. The actors in the economic theories of people like Smith, Kahneman and McFadden, for example, still fall well within the theory of individual optimization¹⁶⁸.

The message Bronk is never tired of repeating is that economics should integrate into its standard model and assumptions the suggestions derived from romantic poetry and philosophy that can be valuable to understand better the creative and emotional aspects of markets. This is, in my opinion, the most important and valuable aspect of the book, or the fact that it draws our attention to the singular circumstance that, living in an uncertain world, imagination and creativity can be both the cause of and also our best tools to deal with this uncertainty. The Romantic Economist was written largely before the current recession and does not directly address the subject, but the financial crisis of 2007-2009 also occurred because of an incorrect assessment of the extent to which the uncertainty is an inevitable product of innovation and human capacity to imagine new options in banking as in other contexts¹⁶⁹. Often there is no way to pre-determine in advance all the possible outcomes of a certain action or of creating a new product and what we should never forget is that innovation always involves a major fracture in the regularity of behaviour handed down from the experience of the past, even a recent one.

References

Akelorf George A., Shiller Robert J., 2009, Spiriti animali. Come la natura umana può salvare l'economia, Milano: Rizzoli.

Arrow Kenneth J., Debreu Gerard, 1954, “Existence of an equilibrium for a competitive economy”, Econometrica, n. 22, pp. 265-290.

Bronk Richard, 1998, Progress and the Invisible Hand. The Philosophy and Economics of Human Advance, London: Little, Brown Book Group.

Kahneman Daniel, 2007, Economia della felicità, Milano: Il Sole 24 Ore Libri.

Krugman Paul R., 2009, Il ritorno dell'economia della depressione e la crisi del 2008, Milano: Garzanti Libri.

Kuhn Thomas S., 2009, La struttura delle rivoluzioni scientifiche, Torino: Einaudi.

Mccloskey Donald N., 1988, La retorica dell'economia. Scienza e letteratura nel discorso economico, Torino: Einaudi.

McFadden Daniel, Smith Vernon L., Kahneman Daniel, 2005, Critica della ragione economica, Milano: Il Saggiatore.

Popper Karl R., 2009, Congetture e confutazioni. Lo sviluppo della conoscenza scientifica, Bologna: Il Mulino.

Rodrik Dani, 2008, One Economics, Many Recipes, Bognor Regis,West Sussex: University Presses of California, Columbia and Princeton.

Snow Charles P., 2005, Le due culture, Venezia: Marsilio.

Viale Riccardo (a cura di), 2005, Le nuove economie. Dall'economia evolutiva a quella cognitiva: oltre i fallimenti della teoria neoclassica, Milano: Il Sole 24 Ore Libri.

Abstract
on the brink: between science and humanities.

considerations on richard bronk’s The Romantic Economist: imagination in Economics

JEL Classification codes: B00; N; Z1

Università di Firenze

a
ISSN 2036-3907 EISSN 2037-0520 DOI: 10.4406/storiaepolitica20100309
ndreapitzalis@hotmail.com

Rosanna Marsala

Riflessioni sul libro di Eugenio Guccione

(Palermo, S. F. Flaccovio, 2010, pp…)

Il libro si snoda in quell’intreccio costante fra teoria e prassi, cifra distintiva di tutta la vita di Luigi Sturzo, riuscendo in tal modo ad offrire al lettore un quadro completo ed efficace del pensiero e dell’azione di uno dei principali protagonisti della storia italiana ed europea del XX secolo. Ogni aspetto della vita di Luigi Sturzo risulta scandagliato: dai primi anni, subito dopo l’ordinazione sacerdotale, avvenuta nel 1894 a Caltagirone sino agli ultimi giorni della sua esistenza terrena che, come è noto, si concluse a Roma nel 1959.

“Gli anni della scalata”, così li definisce l’autore, segnano l’esordio di Sturzo alla vita pubblica. La scelta di dedicarsi all’attività sociale anziché alla speculazione filosofica, verso la quale egli, per altro, si sentiva portato, fu determinata, o quantomeno influenzata, sia dal magistero di Leone XIII, sia dai numerosi incontri che egli ebbe durante la sua permanenza a Roma con esponenti del movimento cattolico come Giuseppe Toniolo, Romolo Murri e Filippo Meda. Aderisce, quindi, all’Opera dei Congressi, al movimento democratico cristiano, collabora attivamente a giornali, quali il «Domani d’Italia» e «Cultura sociale».

Ritornato a Caltagirone, di fronte alle condizioni di povertà e sopraffazioni in cui versava il popolo della sua Sicilia, terra alla quale egli rimarrà sempre legato, e constatando il miserevole stato culturale e sociale di gran parte del clero siciliano, Sturzo non ha alcuna esitazione e sente come mandato ineludibile impegnarsi in prima persona in un campo che sino ad allora sembrava essere prerogativa dei socialisti. Essere il “prete sociale”, il “prete fuori dalla sacrestia” divenne per Sturzo una vocazione preminente, mai però disgiunta dal suo essere sacerdote, anzi come egli stesso ebbe a scrivere la vocazione politica «fu una conseguenza non cercata della mia attività religioso-sociale presso operai e contadini» (Sturzo 1996: 41). In tal senso il giornalista Francesco Lalli scriverà di lui «Se la fede è intesa come azione, come il “bene in cammino”, tutta l’opera di Luigi Sturzo è il simbolo d’una sola e costante preghiera» (Lalli 1946: 24). Naturalmente il suo impegno a favore delle classi più deboli, le sue roventi battaglie contro i gabelloti e l’usura non furono esenti da ostacoli. D’altra parte, «questo giovane prete - scrive l’autore - tanto dinamico quanto intrigante, era una figura più unica che rara nella Sicilia dell’800, specialmente in una città come Caltagirone, in cui mafia e massoneria controllavano uomini e cose» ( Guccione 2010: 13).

La lunga esperienza come amministratore locale (prima consigliere comunale all’opposizione, poi prosindaco per 15 anni nella sua città e consigliere provinciale) rafforza e vivifica quell’idea di società e di stato organico che rappresenterà il concetto guida e il principio attorno al quale si costruisce e articola tutto il pensiero sociale di Luigi Sturzo. La concezione organica è, infatti, per lui «un’esigenza nello stesso tempo teoretica, perché conforme alla struttura e natura della socialità umana, ed etica, perché conforme all’intrinseca razionalità della morale socio-politica» (Di Giovanni 1981:16). Per questo egli sin da allora «avvertì l’esigenza e l’urgenza che lo Stato italiano si desse tramite l’autonomia degli enti locali, un’articolazione organica» (Guccione 2010: 29). Contro lo Stato liberale giolittiano soffocante e accentratore Sturzo parla di decentramento, di autonomie locali e di regionalismo e sin dal 1901, si fa promotore, coniando un nuovo termine di una «federalizzazione delle regioni».