The Best Book on General Economics in Many a Year


Knowledge and Decisions, by Thomas Sowell, New York: Basic Books, 1980, 422 pp., $18.50.

More than a year ago, a quick glance through this book had so fascinated me that I took it with me on my summer vacation with the intention of carefully studying it and writing a lengthy review. Misfortune would have it that some infection put me out of action for much longer than I felt I could spare from a piece of work of my own on which I was then and still am engaged. I thought it therefore necessary to put this book aside until I had completed my own.

Now that I have at last studied Professor Sowell's book, I know that that decision was wrong. I would have made more rapid progress with my own if I had postponed returning to it until I had fully digested his. I can now no better express my mature judgment than by the title I have given to this review article.

I trust the reader of this review will not be misled to believe that my enthusiasm is due to the author's frank statement of how his interest had initially been guided to the problems to which his book is devoted: by work I published 35 (and, partly, nearly 45) years ago. I gladly acknowledge this, and it in no way diminishes my admiration for his original achievement.

I have myself continued to work on the same problems and am glad to find in his book conclusions that I endeavor to draw in my current work. This is what one hopes to find in the writing of an acute younger mind who continues what one has commenced. The rare surprise is that in a wholly original manner he has not only broadened the application of the ideas and effectively carried the approach into new fields that I never considered, but he also succeeds in translating abstract and theoretical argument into a highly concrete and realistic discussion of the central problems of contemporary economic policy.

Professor Sowell is one of the rare minds who, after they have ascended from the infinite variety of concrete facts to a general view accounting for the structure of the complex world, find their way back to the wealth of particulars from which they started and in which ordinary people, other than economic theorists, are alone interested. Although his exposition of economic theory is impeccable and contains many original contributions, the strength of the book, its impressiveness and liveliness, is due to his always having before his eyes the concrete phenomena. Simple and vivid illustrations make us aware of the practical implications of his theoretical insights.

Another great merit of the book is that the author has really and wholly freed himself of that animistic prejudice that still lurks in the thinking of many supposed social scientists who can see a social structure only as the creation of some intellect. Few writers in our field have so radically purged themselves of the search for design in grown structures; few have made central to their analysis the process whereby scattered information that nobody possesses as a whole is transmitted and utilized.

It is the profound philosophical insight that unobtrusively stands behind the very realistic discussion of problems familiar to all of us that gives the book its unique character. In recent years, a number of students have done a considerable amount of work on that process of communication of knowledge effected by the market. But most of this work is available only in studies done by and for specialists. Professor Sowell's is probably the first comprehensive attempt to apply it to all the major issues of economic organization, which is essential for understanding current affairs.

It does not unduly simplify but succeeds in being intelligible to the attentive reader. Nobody can make these things quite easy, but the clarity and precision of Professor Sowell's exposition is exemplary. I so much approve and admire the argument of the book that I find myself concerned more with whether it explains those important insights as effectively as possible than with its originality and correctness, although it is rich in both of these, also. Professor Sowell is unusually careful and precise with his language. I may sometimes hesitate about the terminology that he chooses but that presumably is more familiar to a younger generation (incremental, trade-off, authentication, fungibility, referral, incumbent, sequential); yet these may well be better terms than those we had to use in the past. And in various other instances, where I at first wish that something were put more concisely, I usually find that I do not really know how that could be done.

I will not claim that it is an easy book to read for the laymen. Unfortunately, the self-generating order of economic activities is not easy to explain, and the task of any honest and competent book must be to show that what off-hand may seem the most plausible explanation—that somebody has arranged things thus in his own interests—is outright wrong. What this book offers is not much more than the minimum of understanding required to talk sense on the most acute issues of public policy, but very much more than is offered by most of the books that in recent times have been great popular successes in this field.

It is difficult not to reflect on how much good it would do to the world at large if a book of this quality could achieve the kind of popular success that a large number of very bad and influential books have achieved. It is an intoxicating dream to imagine how much more sense current politics could make if as many opinion makers were to study and absorb its teaching as have been guided by the bestsellers of the John Kenneth Galbraiths or Robert L. Heilbroners, Gunnar Myrdals or Jan Tinbergens, not to speak of the surviving Marxists and Keynesians.

What I mean by the heading I have given to this review is that if I should now be asked by persons capable of exact thinking but ignorant of technical economics (and there must be hundreds of thousands of them who have great influence on policy) what single modern work would give them the best introduction to the present knowledge needed to judge the wisdom or folly of current policies, I would without hesitation refer them to Professor Sowell's book. Though to derive full gain from it, it needs to be studied carefully and consecutively, it contains so many gems that I could mention any number of passages in the book that I wish were read and digested by every person who utters an opinion on public policy. To anybody who would wish first to sample the book, I would recommend, for example, pages 45-46, 67-72, 232-37, 250-52, 318-19, 328-31, and 353-55. Even if a prospective reader at first feels that he has not time enough to work through close to 400 pages, from reading these passages I believe he will wish to master the rest. And I trust that precisely those with great public responsibility, such, especially, as judges of the Supreme Court, will recognize it a duty to digest it.

I have perhaps done an injustice to the work by calling it in the heading a book on economics. It is of course much more, and the title the author has chosen for it is very appropriate, though I doubt whether most potential readers will understand its implications. It deals with those parts of economics that every social philosopher ought to understand but, I am afraid, even many economic specialists do not. It confirms to a high degree what I have said many years ago, offending many of my professional colleagues: that an economist who is only an economist cannot even be a good economist.

While an understanding of the market order is a necessary condition for the understanding of our civilization, one has to possess much knowledge of other aspects of civilization in order to comprehend what the market does. In this sense, the book might with justice be described as an important philosophical work, and I would regret nothing more than if my remarks about it should deter any of those who have a dislike of technical economics.

It is also a very courageous book. A generation ago it would have offended current prejudices of the dominant intelligentsia so much as to be buried by silence. There is, for example, his discussion of "affirmative action," which I am prevented from calling a masterpiece only by my awareness that I know little about the particular facts. I challenge all those who in the fashionable scandalous manner might endeavor to refute its intellectual argument, which they will dislike, by imputing to its author, a là Marxism and "sociology of knowledge," any selfish motives.

Of course, the many topics covered in this book deserve detailed discussion, but this must be reserved for the reviews in technical journals and cannot be attempted in a general report for the nonspecialist reader. I have not hesitated to express my enthusiasm frankly about the overall achievement of the author, but since I have been led to use praising language that I have never used before in such a connection, I ought perhaps to add that I scarcely know the author in person. An accidental meeting at a luncheon at a faculty club with a deceptively youngish-looking scholar about whose distinguished earlier work, to my shame, I knew nothing, is all I connected with his name before this volume came into my hands.

I now hope I have not done more harm than good by expressing my considered view about it so frankly. But I trust the time is past when it was possible, as happened 32 years ago at a meeting of the American Economic Association, for an unknown young author whom I congratulated on the achievement of a book of his I had just read to afterwards be teased by his friends for having been seen receiving the kiss of death. But at that time the author of The Road to Serfdom could not expect to receive mercy from young American intellectuals. May I now be forgiven for being delighted to have lived to see the seed I had been planting at that time now sprouting luxuriously?

F.A. Hayek, who was awarded the Nobel prize in economics in 1974, is the author of numerous books ranging from The Road to Serfdom (1944) to Law, Legislation and Liberty (3 vols., 1973, 1976, 1979).