Review: The Shortest History of Economics

22 March 2024

To be a stimulating read, histories of a subject should typically focus on two tasks: outlining the major events and ideas of the discipline to provide a sense of context and providing anecdotes to enliven the story. Andrew Leigh’s The Shortest History of Economics does both admirably. In simple, clear and well-edited prose, Leigh spans the history of human economic activity, beginning in prehistoric times and ending with the modern day.

Leigh begins his account with some statistics to demonstrate just how far humans have come in terms of economic efficiency. He notes that to produce as much light as a regular household light bulb gives off in an hour it would have taken our prehistoric ancestors 58 hours of foraging for timber. Today, less than one second of work will earn a person enough money to run a light bulb for an hour, suggesting that work today is worth 300,000 times what it was in prehistory.

Such contextualisation is continued throughout. It is an exercise that should be done more often by economists, who have a habit of assuming that, at least in the last few decades, economic output has stayed much the same, so looking only at the monetary system gives a reliable picture of long-term trends. That is not the case. What a dollar buys now is not the same as what a dollar bought in the 1950s, not just because of inflation but also because of increases in efficiency and innovation.

There is no still point. Production systems are constantly evolving, and looking only at financial transactions will not reflect such change. Not only can we easily purchase things now that used to be out of reach of most people, we can buy things that used not to exist. Even something as simple as an ATM service is relatively recent; you cannot compare the cost of them in the 1950s because they did not exist. Such changes are not fully reflected in the transactional system.

Leigh sets out to outline what economists take to be constant truths, such as the idea that economics is always concerned with managing scarce resources, and that all market pricing is a function of supply and demand. He also points to the importance of specialisation, inevitably citing Adam Smith’s story about the pin factory in his The Wealth of Nations — perhaps the most referenced quote in all economics.

Smith wrote that if one person tried to produce pins, he would

ECONOMICS

Review: The Shortest History of Economics

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