Monday, April 15, 2013

Book Review: Madmen, Intellectuals and Academic Scribblers

Earlier this month in our Friday Afternoon Workshop, we discussed the new book by economists Wayne Leighton and Ed Lopez, Madmen, Intellectuals and AcademicScribblers: the Economic Engine of Political Change.  The Workshop was well attended by our faculty and students, I imagine because not only is the book an engaging read, but the book was written while Lopez was on the faculty with us at SJSU.

The authors present a framework for understanding political change, drawing especially on their deep knowledge of public choice theory.  But they are well-read students in the history of thought more broadly and their framework draws upon an impressive array of ideas, old and new.  

The central characters in their framework are those mentioned in their title.  The nonstandard names they have chosen for these characters were taken from quotes from two economists who are about as far away from each other philosophically as possible.  From John Maynard Keynes we get “Madmen” and “academic scribblers”, and from Freidrich August von Hayek we get “intellectuals.”  It is important to grasp that in this framework, academics are not the same as intellectuals!  Here is the famous original quote from Keynes:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

John Maynard Keynes, The General Theory of Employment, Interest and Money (1935), p. 383 emphasis added.

And from Hayek:

The term "intellectuals"...does not at once convey a true picture of the large class to which we refer… The typical intellectual … need not possess special knowledge of anything in particular, nor need he even be particularly intelligent, to perform his role as intermediary in the spreading of ideas. 

Freidrich August von Hayek, “The Intellectuals and Socialism,” University of Chicago Law Review (1949)

An oversimplification of their framework, which diminishes the careful thought the authors put into developing it, but that does give a reader the flavor of what the book is about, is to say that academic scribblers (scholars like Keynes and Hayek) come up with ideas, which are in turn popularized by intellectuals (i.e. journalists, teachers, etc.) and finally madmen in authority (politicians) act when the ideas have caught on among the public.  However this is a vast simplification of their framework, and the whole second half of the book is spent describing the inner-workings of the top-down depiction of the process I outline above, and they also emphasize the bottom-up influence ideas can have on the process of political change, again, drawing on an impressive array of ideas both old and new. 

The first half of the book is a crash course in the history of political thought, economic theory, and public choice theory.  The second half builds up the framework and applies it to four examples of political change, including airline deregulation and welfare reform.  I would recommend the whole book, but someone short on time who is familiar with the history of economic thought could skip ahead and read chapter 5 directly after the introduction.

The book is a contribution to the scholarly literature, and arguably its main contribution is to create a framework with a central role for what they term “political entrepreneurs.”  These are individuals whose actions are central for bringing about policy change.   Other people have written about how changing ideas and attitudes were critical precursors to the deregulation movement of the 1970s and 80s, (for example, Richard H.K. Vietor’s Contrived Competition: Regulation and Deregulation in America.)  However focusing only on the role of ideas neglects the critical role played by certain individuals (like Alfred Kahn in the case of airline deregulation.)

I don’t want to give the impression that the book is not a fun to read just because it makes a contribution to the scholarly literature, because in addition to applying and organizing some very deep ideas, this book is also packed full of interesting anecdotes and neat tidbits; students, professional economists and educated lay audiences will all learn new things and will remain entertained throughout.  Some of the fun facts I took away from this book include that Larry Summers, former top advisor to President Obama, is Paul Samuelson’s (the second economist to win the Nobel prize in economics) nephew.  Nor did I know that Ronald Coase got the idea to auction off rights from a University of Chicago law school student.  The name of the boat that stranded the castaways in the 1960s television sitcom Gilligan’s Island, the S.S. Minnow, was chosen because the then FCC chairman Newt Minow had spoken harshly about the television industry.  And on and on.

Having just finished reading this book before giving a lecture on regulation in my Industrial Organization class, my performance noticeably improved.  I liberally ripped-off lines I had gotten from the book.  I plan to continue to do this in my teaching!  

In order to facilitate conversation in our workshop, I came up with questions for each of the book’s seven chapters.  I will make them available here so that others reading this book, or assigning it to their students, may benefit.  (Take note, allocation economists, I am providing free public goods! ; )

For more information about the book, I suggest visiting the publisher’s website ( or the author’s blog (