Where's the Beef?

• Author: Henderson, David R.

Cogs and Monsters: What Economics Is, and What It Should Be

By Diane Coyle

257 pp.; Princeton University Press, 2021

In her latest book, Cogs and Monsters, University of Cambridge economist Diane Coyle, co-director of the Bennett Institute for Public Policy, undertakes an ambitious project: to say what we need to change about economic thinking inherited from the 20th century to help us explain, understand, and make economic policy for the 21st century. Unfortunately, she rarely goes into specifics. Whether it be about how to measure well-being, what antitrust policy should be for an economy with industries in which one firm is dominant, or how large the role of government should be, she typically fails to pull the trigger. Along the way, she gives good examples of mistaken 20th century economic thinking without seeming to realize that her refutations can be accomplished with 20th century economic understanding. Although she has flashes of insight and affirms some important economic truths that economists have understood for more than a century, such flashes and affirmations are too rare in a 200+ page book.

The cogs in the title are "the self-interested individuals assumed by mainstream economics, interacting as independent, calculating agents in defined contexts." The monsters are "snowballing, socially-influenced, untethered phenomena of the digital economy, the unchartered territory where so much is still unknown." Coyle advocates that economists start thinking less about cogs and more about monsters.

Why the straddles? / In surveying 20th century economic thinking, Coyle gives some credit where it's due. She highlights, for example, economists' belief in school vouchers and trade liberalization and she seems to second those beliefs. She also quotes a beautiful passage from economist Paul Seabright about the international origins of the various components of a shirt, a quote that is reminiscent of Leonard Read's 1950s essay "I, Pencil." She could have titled the quote "I, Shirt." She understands Friedrich Hayek's insight, expressed in his 1945 article "The Use of Knowledge in Society," that only a market can aggregate individuals' local knowledge and that a central planner would not have access to that knowledge. Coyle also points out that economists' "market-oriented instincts" do not depend on understanding higher-level math. She writes, "Markets are far more useful in practice than they are in theory." Nicely said.

At times, though...