Book Review: 'Basic Economics' by Thomas Sowell
Of all fields of knowledge, few inspire as much dread as economics: there’s a reason Thomas Carlyle’s label of the “dismal science” rings true even among those who don’t share his proto-fascist tendencies. As such, it’s only appropriate that a trained economist would take it upon themself to shed some light on this much-maligned, much-misunderstood subject, as Thomas Sowell does in Basic Economics. Generally regarded as conservative (he believes to this day that the Iraq War was justified, long after even some of its architects have admitted that that catastrophic venture was, at the very least, a mistake), his writing on economics, his main area of expertise, has nevertheless garnered acclaim from libertarians for its empirical case for capitalism as much as its clarity of meaning. This latter quality goes a long way in demystifying Carlyle’s dismal science and supporting Sowell’s thesis that economics, rather than part of some master plan by greedy capitalists or other sinister forces to keep the rest of us poor, is a social phenomenon that can be observed across the human experience the way gravity can be observed whenever someone - black or white, male or female, communist or "that wasn't real" communist - tries to fly.
Much of the book is devoted to bridging the gap between the theoretical concepts underlying economics and the observable effects they have when applied in the real world. To that end, Sowell discusses big abstract ideas like trade and deficits as well as more specific, practical details like how minimum wage laws don’t necessarily translate to actual increases in workers’ wages. This often takes the form of Sowell introducing a key concept like price controls and then illustrating how said concept works (or, rather, doesn’t work) with a real world example. One of the examples he uses in the case of price controls is how the US government actively destroyed food during the Great Depression, even as thousands of Americans starved, in order to maintain artificially-high prices for products like milk and pigs (with the feds at one point going as far to purchase 6 million hogs and killing them just to keep the meat they would otherwise provide from going to market). It’s a shocking and shameful example, but it demonstrates the absurdity of trying to fix prices without regard for what people want (to say nothing of how much they’re willing to pay for it) as much as it does the strength of Sowell’s method of explanation and persuasion.
Undergirding this power of persuasion and explanation is Sowell’s prose, which can best be described as simple enough for lay readers to understand but not dumbed down enough to patronize them. Granted, it’s an economics textbook, so there are passages that you’ll have to read several times over to make sure you understand but it still feels like a relatively quick and digestible read for a 600 page-plus book. This down to earth approach should not be confused with detached disinterest, with Sowell displaying a dry, often dissmissive attitude toward policies and mindsets he disagrees with. He is also fond of drawing contrasts between his straightforward language and the euphemistic jargon often thrown around by his fellow economists and intellectuals: he suggests, for instance, that the Federal Reserve adopted the vague, abstruse phrase “quantitative easing” over the honest, uncomplicated “printing money” because the latter was more liable to be directly tied by voters to inflation down the line and thus politically inconvenient for supporters of said policy. Incredibly, he gets through the book without including a single graph or chart, something that will come as a relief to the mathematically challenged (a group that includes this writer) who want to learn about economics but fear the onslaught of numbers that often accompanies it.
Such a broad subject can only be tackled with an equally broad sampling of examples across the world and history. Indeed, Sowell cites episodes from colonial India, the Soviet Union, modern America, and even ancient Greece to demonstrate that the laws of economics transcend time and cultural context. He often returns to the example of the USSR throughout the book, with him frequently citing the work of Soviet economists Nikolai Shmelev and Vladimir Popov regarding the inefficiencies and inanities of that country’s economic system. However, Sowell goes beyond mere questions about (going by Lionel Robbins' description of economics) “the use of scarce resources which have alternative uses” to deeper questions about the limits of knowledge - perhaps, after time, the scarcest resource of all - humanity’s capacity to understand the world around it, and the relationships between different individuals and groups that make it go round. The ends to which capital (whether money, machinery, or other assets) are put, of course, is a question every entrepreneur and creator faces. But without the knowledge of how these various resources intersect, need to be used, and how many people would be willing to pay for the end product, most productive ventures would fail miserably, thus depriving consumers of the goods and services that make life not just easier but more enjoyable as well.
Although Sowell doesn’t hide his bias in favor of capitalism and laissez-faire solutions, he’s not at all afraid to engage with other schools of economic thought, devoting a whole chapter toward the end of the book to them. This includes mercantilism, which can be described as the ancestor of the Trump-style protectionism of today with its preoccupation with a “favorable” import-export balance, and Keynesianism, which posits that some degree of government intervention may be necessary during major downturns like recessions and depressions. Throughout the book, Sowell also touches on the various iterations of communism and socialism that have been tried around the world and yet ultimately unable to achieve the utopia their practitioners set out to establish. Indeed, while acknowledging that free-market capitalism is - as is the case, Sowell might say, “with all human endeavors” — far from perfect, he makes a thoroughly compelling case that it’s the system most receptive to the economic phenomena that make our world work and, as such, the best one. Others like mercantilism and socialism have tried to disregard these phenomena for their own visions or agendas yet the result has largely been disaster, whether it be the widespread poverty that characterized medieval Europe or the state-engineered famines that ravaged communist Russia and China.
Another key takeaway that Sowell derives from his study of economics is that the market, as Jeff Goldblum once said of life, finds a way: many white employers in apartheid-era South Africa, he notes, sought black workers despite laws strictly forbidding such arrangements simply because it made no sense to deny themselves a willing source of labor. Meanwhile, minority groups like the Chinese in Malaysia and Jews all over the world have overcome oppression and persecution to provide valuable services and even become wealthy in societies that regarded them with fear and loathing. Ironically, Sowell devotes little attention to one of the most noteworthy examples of economic activity as an organic phenomenon: immigration.
Reflecting his conservative sensibilities, Sowell briefly acknowledges that immigrants play an integral role in economic activity before interjecting that there are “other” non-economic considerations (i.e. potential increases in crime and cultural incompatibility) to take into account when crafting immigration policy. While such considerations deserve just that, another writer generally sympathetic to Sowell’s perspective, Alvaro Vargas Llosa, provides compelling evidence in his book Global Crossings: Immigration, Civilization, and America that the benefits of immigration far outweigh the costs. In fact, Llosa’s findings indicate that declines in Mexican immigration to the US are likely correlated not with increased border security and deportations but with an improved economic climate in Mexico. We can throw all the money we want on increased patrols, high-tech cameras, and a big, ugly wall, but people will keep risking their lives to enter this country as long as there's demand for workers here and labor that only they can supply.
It would be a mistake to believe that this book is the final word on all questions economic (something that Sowell himself would probably tell you.) What Basic Economics is, however, is an excellent introduction to a vast, multifaceted topic with important implications for society and the way we interact with each other. These implications are humbling, to say the least: if human knowledge is limited, then how could we possibly trust others, who have this very same limitation, to make economic and (by extension) other decisions for the rest of us? This is the key question underlying much of libertarian thought, and one that can only be answered through additional study of Sowell’s not-so-dismal science.
The views expressed in this article are those of the author and not necessarily the views of the Libertarian Party of Orange County.
Reggie Peralta is a native of Santa Ana and UCLA graduate with a BA in Political Science. In addition to helping out as Blog Editor for the Libertarian Party of Orange County, he has volunteered and written content for local arts and cultural organizations like The Frida Cinema, Makara Center for the Arts, and LibroMobile.