Review of “The Women Who Made Modern Economics” by Rachel Reeves: Examining the Significance of Values in Economics.
Rachel Reeves certainly knows her mind. She is also, as the title of this original book suggests, a passionate and convinced feminist. Any number of great female economists from across the political spectrum helped create the discipline she loves. They suffered misogyny, sexism and prejudice – to an extent that sometimes made this male reader squirm – yet they won through. Their contribution is too little recognised and acknowledged. Reeves is determined to right that wrong and does so persuasively.
This book holds a unique significance as it is written by a potential future chancellor of Britain, who would make history as the first woman in the role. Not only does she provide personal and intellectual insights into a series of intriguing female economists who have been overlooked, but she also offers concise and straightforward evaluations of their ideas. The author emphasizes the importance of values in economics, which is not a value-free field, echoing the sentiments of one of her inspirations, Joan Robinson. It is evident that Reeves holds strong values and beliefs, although she does not address the issue of plagiarizing up to 20 sources without proper credit, which was reported by the FT. However, the overall writing style and expressed opinions are clearly her own.
She is an open-minded and practical follower of the economic theories of Keynes, who is highly conscious of the flaws within a capitalist system, including its instability and tendency towards monopolies. She is dedicated to being an outside force for change that will improve and promote fairness within the system. She strongly opposes the gender pay gap and notes that at current rates, it will not be resolved until she is 80 years old. She recognizes the importance of the everyday economy, such as care work, cleaning, transportation, food production, and retail, in supporting the overall economy, alongside technology and financial services. It is crucial for all aspects to be functioning properly.
She is impartial in her opinions. She strongly opposes Harriet Martineau, who advocated for the benefits of free trade, free markets and a small government in her popular 19th-century magazine series Illustrations. However, she acknowledges Martineau’s remarkable success in promoting political economy despite facing discrimination – and recognizes that a dedication to complete free market had some positive aspects. It fueled her activism against slavery and for equal pay.
The author acknowledges the importance of Anna Schwartz, who co-developed the theory of monetarism with Milton Friedman. However, the author criticizes Friedman for accepting the Nobel Prize while Schwartz did a significant amount of the work for which it was awarded, which is particularly egregious given Friedman’s sexist tendencies. The author also acknowledges the contributions of Carmen Reinhart and Kenneth Rogoff in attempting to prove that exceeding certain levels of national debt leads to a decrease in economic growth. However, the author quickly dismisses both theories as flawed and points out that the data used to support them was manipulated. This only strengthens the author’s skepticism towards right-wing economics.
Treasury officials as they prepare for her chancellorship, beware. Their probable new boss will come unambiguously from the left. She certainly knows the detailed arguments, say, for and against development aid or what caused the Great Depression – unlike, I suspect, the current chancellor. But she also knows who were members of the 1930s “Cambridge Circus” and that it is the second Sunday every January that Rosa Luxemburg’s murder is commemorated in Berlin’s Friedrichsfelde central cemetery.
Four economists have left a lasting impression: Beatrice Webb, Joan Robinson, Janet Yellen, and, personally, Mary Paley Marshall, who may not be as well-known as her famous economist husband, Alfred. While Beatrice and Sidney Webb were equal partners, the same cannot be said for the Marshalls. Paley Marshall’s Economics of Industry brought her recognition (and caused Alfred to become envious) and is still considered a fundamental book by Reeves. It explains the economics of thriving industrial clusters, where growth is self-sustaining due to the close proximity of all the necessary factors such as skills, funding, supply chains, knowledge exchange, and market opportunities. Labour’s green prosperity plan will utilize Paley Marshall’s relevant insights to develop high-growth clusters in green industries, ranging from hydrogen to tidal power.
Reeves, a devoted member of the Fabian society, holds Beatrice Webb in high regard. He believes her minority report during the 1905-1909 Commission on the Poor Laws and Relief of Distress, which advocated for a national welfare system without income restrictions and including education and health benefits, greatly influenced William Beveridge and laid the groundwork for the British welfare state. If elected, Reeves promises to create a welfare system that aligns with Webb’s principles and would make her and the founders proud.
Joan Robinson, despite briefly embracing Maoism and the Cultural Revolution which was deemed unacceptable, remains a significant influence. She demonstrated that the ideal of a free market with numerous competing firms, as advocated by free-market economists, is not feasible. Instead, the market is dominated by firms that function as mini-monopolies due to inherent imperfections in power and knowledge. Her research reinforced Keynes’s belief, the hero of Reeves, that the notion of capitalist economies naturally achieving the optimal outcome is false. It was truly unjust that she was not honored with the Nobel prize.
The final person mentioned is Janet Yellen, a practical follower of the economic theories of John Maynard Keynes. She was previously the chair of the United States Federal Reserve and is now serving as the treasury secretary. Yellen, like Reeves, is a trained economist who has successfully put her knowledge into practice. Both women strongly believe that the lack of representation of women in economics is unacceptable. Yellen is known for her contributions to “Bidenomics,” a significant departure from the neoliberal policies of the past. This new approach includes a substantial investment in eco-friendly technologies and a revitalization of the country’s infrastructure, with the goal of stimulating a rebirth of American industry. Reeves shares this vision and is determined to implement similar changes.
Reeves and Yellen are correct in criticizing the misogyny present in economics. However, it is worth considering how economics would have been different if it had been more gender-balanced. According to moral philosopher Mary Warnock, there is no distinction between male and female perspectives in fields such as philosophy and mathematics, only the subjects themselves. While some economic concepts, like the multiplier effect and opportunity cost, may appear gender-neutral, Reeves’ book has convinced me otherwise. Not only do many male-female partnerships in economics perpetuate structural inequality, but economics itself is not impartial. Women, who have experienced gender inequality firsthand, have a different perspective on the world and are intimately connected to the everyday economy. They strive for improvement. Having a progressive woman as chancellor will have a significant impact. It will benefit Britain and create more opportunities for British women.