Egonomics in One Lesson


For much of human history before the Enlightenment and the birth of economic science in the 18th Century, power, pretense, and superstition plagued the thinking of men. Some people today, often under the banner of “socialism” or “progressivism,” seem determined to turn the clock back to those benighted times.

Pick a century before 1700. Any of them after the fall of the Western Roman Empire would suffice for my purpose here. In terms of ideas about society, what makes it tick, and who should be in charge of it, the changes over those centuries were painfully glacial compared to the explosion of intellectual liberation and creativity in the 18th.

The consensus in the Middle Ages held that certain men (and occasionally some women too) were meant to rule and everyone else was meant to take orders. If the king or queen or their minions didn’t run our lives for us, chaos would reign. Where there was order, it wasn’t of the peaceful, Hayekian “spontaneous” variety; it tended to be the result of fear of those with political or ecclesiastical power.

Then along came the thinkers of the Enlightenment—men with names like Diderot, Bacon, Descartes, Locke, Hume, Ferguson, Spinoza, Montesquieu, Voltaire, and Smith. They stressed reason over the irrational; proof and evidence over baseless assumption; the sanctity of the individual and his rights over the arbitrary dictates of monarchs and priests. The “Century of Philosophy” bequeathed to the world a new understanding of things like liberty, markets, science, human potential, toleration, separation of church and state, and limited, representative government.

Economics as a discipline of its own was born in this period. In France, the philosophes pioneered in suggesting that the clock of society need not be wound by presumptuous government, that there are natural forces at work that can propel us to progress without the ham-handedness of despots playing God. Adam Smith pulled it all together in The Wealth of Nations, wherein he explained the marvelous mechanism of “the invisible hand” and proclaimed that “in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.”

Before Smith and the Enlightenment, pompous men who rationalized power for themselves over society believed in what I call “Egon