What if economics were a material science? In Economics as Science: A Critical History of Economic Thought, Bernard C. Beaudreau presents a critical overview of the evolution of economic ideas through the lens of science. He argues that, if economics is to be considered a material science, it must not violate the laws of the physical world, such as those of thermodynamics (p. 6). The book traces the development of economic thought in five fields: growth theory, income distribution, macroeconomics, price theory, and international trade. Each field has a dedicated chapter flowing in chronological order, where Beaudreau examines whether the contributions of various economists were truly scientific or ideological.
The book opens with a brief introduction in which Beaudreau explains his motivation as an attempt to understand, in his words, “why have we, despite over two centuries of structured thought, failed to understand the workings of highly advanced, highly complex systems of wealth creation? Put differently, why has the body of knowledge commonly known as economics come up short? Where did we go wrong?” (p. 1). Beaudreau’s answer is that economics was born out of moral philosophy rather than science, which set it on a path away from the scientific method. He argues, for instance, that Alfred Marshall and William Stanley Jevons sought to justify the existing economic and social order by asserting that capital is physically productive; an assumption that contradicts classical mechanics, since only energy (i.e. force) can be considered physically productive. In this way, Beaudreau argues that “for economics to move forward, it must shed the cloak of ideology and embrace science, whatever the outcome” (p. 3).
In Chapter two, Beaudreau presents three core principles that economics should not violate. He begins with a discussion of how knowledge is always increasing as time passes. Hence, he attempts to establish certain principles that have evolved over time and are important for the sciences. His focus is to explain how wealth is created. Beaudreau uses physics to formalize the concept of wealth, which is extremely important because, for him, economics is defined as “the study of material wealth” (p. 6). Wealth is understood as a set of goods and services produced as the result of value-adding material processes. Consequently, wealth is “the value of all material processes in an economy” (p. 8). Beaudreau does not view value as subjective but rather suggests that value creation should be understood as a physical transformation process, akin to natural phenomena such as photosynthesis (p. 7). The first core principle is based on the Energy–Organization (EO) approach, which states that output increases as a function of energy consumption. This is in contrast with the standard approach in political economy, where capital and labor are responsible for increases in output. The second core principle concerns information and coordination strategies (ICSs), which refers to the dichotomy between command economies and decentralized economies, with the former significantly underperforming in the presence of technology due to high coordination and information costs (p. 31). The third and final core principle concerns the industrial exchange sequence (IES). This principle emphasizes the importance of time in firms’ decision-making: “Its advantage lies in the fact that it highlights the temporal nature of production and the role of time in decision-making, both at the firm level and at the aggregate, economy-wide level” (p. 37). Throughout the book, it is the first core principle that takes the spotlight.
Chapter three is the first to dive into the history of economic thought. Up to this point, the author had been advancing the core principles that economics, as a material science, should uphold. To give a brief preview of the next five chapters, Beaudreau proceeds chronologically, analyzing the work of numerous economists; from classical political economy to radical political economy and neoclassical economics. Before jumping into the history of thought, there is a historical background to give context. In most of the chapters, the conclusion is that the majority of economists throughout history have been ideologically driven and unscientific. Consequently, “the bulk of what is considered to be modern economic thought is unscientific either because it violates the laws of the physical world, because it either cannot or has not been tested, or both” (p. 38).
For instance, when discussing the history of growth theory, the first target is Adam Smith. Given the difficult task of keeping the book concise, the section is understandably brief, offering limited engagement with Adam Smith’s work. However, it is sufficient for Beaudreau to arrive at the following conclusion regarding the nature of Adam Smith’s work as ideology or science: “The absence of any reference to classical (i.e. Newtonian physics) as well as the absence of any data/evidence, or for that matter, any testable hypotheses forces us to conclude that the Wealth of Nations is, in large measure, ideology/propaganda” (p. 59).
Claims like this are repeated throughout the book, reflecting a somewhat pointless effort to fit economists into ideological boxes. The most problematic aspect, from a history of ideas perspective, is that this claim is only partially true. It is correct that Adam Smith does not reference Newtonian physics in The Wealth of Nations, but many of his claims are indeed testable, and he uses data throughout the book; a groundbreaking methodological step for his time, especially given the inherent limitations of eighteenth-century data. Just to make the point of how testable The Wealth of Nations is, Morgan Kelly and Cormac Ó Gráda (“Adam Smith, Watch Prices, and the Industrial Revolution,” Quarterly Journal of Economics, 131 [Fall 2016]: 1727–1752) test Adam Smith’s claim that, due to technical progress and the division of labor, the prices of watches declined. They confirmed his hypothesis.
If one of Beaudreau’s genuine tasks is to distinguish, within the history of economics, what is ideology and what is science, it will inevitably do so poorly. The reason is that economics is not a material science; it is a social science. Why, then, didn’t Adam Smith mention Newtonian mechanics, even though we know he was familiar with Newton through his writings on astronomy? The book is framed for a naïve reader of economics to conclude, as the author clearly suggests, that Adam Smith is an ideologue. The same holds true for most theories in the other fields discussed in the following chapters. That is why, in Chapter 9, most Nobel laureates’ contributions are considered ideology. Simon Kuznets, Milton Friedman, F. A. Hayek, James Buchanan, Robert Solow, George Akerlof, and many other economists’ works are all classified as ideology.
Beaudreau defines economics as the science of wealth, but none of the above scholars viewed it that way. It is like saying that quantum mechanics is not a science because it does not conform to the laws of relativity, or vice versa. The issue is that both theories deal with different domains within the natural world. Economics, more drastically, deals with human beings, where the complexity of the unresolved mind–body problem still haunts us to this day. The author misses a great opportunity to debate definitions of economics in the history of thought. It would be fair to claim that most economists follow a variation of Lionel Robbins’ definition of economics found in his work An Essay on the Nature and Significance of Economic Science (Macmillan & Co., 1932, 15): “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” They were studying not wealth or material processes per se, but human behavior within a framework of scarcity.
Beaudreau’s idea of what economics is truly about stems from his physicalist ontology that denies the epistemic primacy of subjective value. As a result, there is an excessive emphasis on Marx, even though we know today, as shown by Phillip Magness and Michael Makovi (“The Mainstreaming of Marx: Measuring the Effect of the Russian Revolution on Karl Marx’s Influence,” Journal of Political Economy, 131 [Summer 2023]: 1507–1545), that Marx was largely irrelevant among economists prior to the Russian Revolution. However, given Beaudreau’s definition of economics, Marx naturally receives considerable attention, since he adopted a materialist view of the discipline. This view also results in an underwhelming explanation of the marginal revolution, which is understandable, since that very episode challenges Beaudreau’s entire thesis by placing human beings and the subjectivity of value at the center of economic analysis. For the same reason, the treatment of the Austrian School is also lacking.
For a discipline that, at its heart, recognizes the independent and deeply complex nature of the human mind, describing economics as a material science in which the realm of ideas is unimportant is a serious mistake that, in my opinion, limits the purpose of the book. Those within the niche of scholars who seek to consolidate economics as a material science and remove its social science dimension will find great value in this work. However, for any neoclassical economist, there is little to gain from reading it beyond engaging in a hypothetical thought experiment about what economics would look like if it were not about choice and human beings. For someone who has never studied economics before, using this book as a first contact with the discipline would be catastrophic, as it would lead to a profound misunderstanding of its aims.