The Forgotten Godmother of Economic Literature

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0:18 Hello and welcome to another episode of the Oddlots Podcast. I'm Tracey Alloway.

0:22 And I'm Joe Weisenthal.

0:23 Joe, something I like to think about is how ideas, specifically economic ideas— go viral, how they get popularized. And so you think about something like the invisible hand.

0:36 Sure.

0:37 A lot of people will recognize that phrase and have a sort of basic understanding of what it means, even if they've never actually read the works of Adam Smith.

0:46 Yeah.

0:46 I'm actually very fascinated by the concept of pre-internet virality.

0:51 Yeah.

0:51 It's like someone says something online and everyone retweets it. Like, all right, I get how, I get how that works.

0:55 Or says something on a podcast.

0:57 Or says something on a podcast, whatever. But like, how did ideas spread back? I mean, especially before electronic media. But they did. I mean, they did spread. You know, I always think about like, it's a little different, but like school children, like rhyming games and stuff like that. And how like all around the world and all around the country, children will be like doing roughly the same, like sort of like games and stuff. Like, how did they, how did it get around so far?

1:22 Yeah.

1:22 It's like, really, I'm fascinated by this question.

1:24 It's a good question. And before there was social media, before there was podcasts, one of the ways that ideas would get spread around is through fiction, basically, through novels, through stories, as you just pointed out.

1:37 Right. And it's interesting because we think of ideas, particularly economic ideas, as you said, you referred to the invisible hand. We think of ideas as being like, okay, I'm going to read some ideas. It's going to rationally make sense to me, and then I'll either adopt this idea or I will discard it, et cetera. But a very powerful way of spreading ideas is through things that are fun or things that make us feel good to read, et cetera.

2:03 And to your point, I think people forget that the transmission of ideas is not just a sort of calculation. It's through art, it's through stories, it's through poetry, it's through music, et cetera. And this almost never gets discussed. In a sort of intellectual context.

2:17 No, and Adam Smith never wrote a novel to popularize his ideas. But someone who did write about economics through the medium of fiction is going to be our subject for today. We're going to be talking about Maria Edgeworth. who was a very successful novelist in the early 1800s, I guess during the Regency era, who was also very, very involved with shaping the future of economic thought. And she was reading all these people like Adam Smith and actually injecting some of those ideas into her various stories.

2:48 Prior to having prepped for this episode, had you heard of her?

2:52 No, I had not. Have you?

2:53 I think this is really interesting.

2:54 Neither as an economic thinker nor as a novelist, actually.

2:58 And so I'm very intrigued by this.

2:59 Yeah. So this is something else that I'm very interested in is like who gets to decide who gets the credit for various economic ideas and which theories we currently view as rational and reasonable. But I know of her now because I read this book. And it's been described as Bridgerton for nerds, which I kind of love because it's a Regency era novelist. And I always thought Bridgerton, like if there's one thing it could use, it's more discussion of agricultural productivity and rent seeking behavior on the part of the wealthy class. So that's what we're going to do today. We're going to talk about Maria Edgeworth, her contribution to economics, and I guess how her ideas, you know, kind of got forgotten in And who gets

3:42 the credit nowadays?

3:44 I'm excited about this one.

3:45 It's a really good book. And I'm very happy to say we have the perfect guest to discuss it. We're going to be speaking to the author, Gina Smilak. She is... A former colleague of ours at Bloomberg, now bureau chief, Brussels bureau chief over at the New York Times.

3:59 Previously seen in many Fed press conferences.

4:03 That's right.

4:03 Asking questions in a previous version.

4:05 Of her job. That's exactly right. And the book is The Invisible Hand of Maria Edgeworth, How a 19th Century Novelist Taught the World Everything. economics. So Gina, welcome back to the show.

4:15 Thank you for having me. I'm excited to be here.

4:17 So how did you discover Maria Edgeworth? Because as Joe and I were saying prior to the publication of your book, I had never heard of her either in an economics or a literary context.

4:27 So I was, it was about a decade ago. I was working here actually, and I was covering the Federal Reserve and I was relatively new on the Fed beat, trying to learn as much as I could about the ideas I was covering. I didn't have an economics degree at the time. And so I just thought that I needed a little bit more background than I had. And so I was reading a lot of economic history and I read Robert Hillbronner's, The Worldly Philosophers, Seminal History of the Field. And, you know, that book is excellent. It's a fun read, but it's also like, Adam, Bob, John, Mark, you know, you move through history and it's a very male-dominated industry. But he has this little aside that Ricardo, David Ricardo, obviously one of the most famous economists of

5:11 all of history, was really good friends with this woman named Mariah Edgeworth, called Mariah at the time, called Maria today. And she was probably the first woman to think about economics. And that's the extent of the aside. It's only in some editions of Hale Bronner. So people who have read the book may not even recognize that because he's only got it in the later editions. And it really struck me that I had never heard of this lady. And then I, of course, I Googled her and discovered that she had been outselling Jane Austen in her day and age, which was extremely surprising to me. And so I just went down a rabbit hole and here we are.

5:44 Should we call her Maria or Mariah then?

5:47 In the sort of modern era, people usually call her Maria. She's still well-read in Ireland, actually, and they call her Maria.

5:54 That's actually interesting that in her day she outsold Jane Austen because that raises a second question sort of related to what you're talking about. So, like, who we're reading today may not have any correlation to people who people were reading back then. It's very hard to know, like, who will actually be durable, and sometimes people get rediscovered.

6:15 Can you explain that? Like, why, if she was outselling Jane Austen in her day, does everyone read Jane Austen and not Maria?

6:23 Yeah, so I actually think this is really fascinating because I think two things are true. Sometimes people get forgotten, and she got forgotten in an almost surprising way. So she was extremely famous in her day. Lord Byron once said that she had replaced him as the lion of the season, and he was extremely.

6:40 Jealous of this. Actually, it's very funny.

6:41 He's got a whole little sequence in his letters where he's being jealous of her. She was read by the royals. She was, you know, across the British Empire. The Americans were really excited about her writing. And so she was incredibly famous.

6:53 She got forgotten.

6:54 And I think that a huge part of that is actually that she was putting a lot of pedagogical material in her novels. She took her writing very seriously. She saw it as a way to communicate ideas. And you get into sort of the Jane Austen era. So Maria is really active. Maria is really active from 1795. through sort of 1815 is sort of her heyday. Jane Austen's slightly later. She's sort of like the early 1800s. And so you get into the Jane Austen era and things become a lot more naturalistic. The storytelling is less pedagogical.

7:28 It's less like hit you over the head with some ideas. And so that is part of why she gets forgotten. I think that actually, ironically, the economics that she's including in her novels is part of her problem. And so I think there's sort of an irony there.

7:42 Well, OK, so talk to us about when we say that she tried to illustrate economic ideas through her writings, what would be an example of that? And I have to say, I read your book. I did not read. I didn't have time to read one of Edgeworth's actual books. I did read a short story for children called The Cherry Orchard, where she kind of gets into the division of labor. It was a very boring story, I got to say, and to your point, very much sort of hitting you over the head with its message. But like what did her writing actually look like and how did she deal with economics?

8:17 Yeah. So a bunch of her. So she was prolific. She wrote a lot. Not all of her work deals with economics, but quite a big portion of her catalog does. She does it differently for different audiences.

8:28 Okay.

8:29 So the children's audience, she is writing very much to be read in the nursery as sort of a like early learning when you're learning how to read kind of text. And so it's very simplistic. She has a slightly more complex version of economics for adults and particularly for elite adults. So an example of that is her novel On We, which is one of her more famous novels at the time.

8:50 And in my opinion, the one that still scans the best in modern reading. So if listeners want to start with a Mariah Edgeworth book, I would recommend On We. It's a fun book. But that one has a very sophisticated take on economics.

9:02 It's extensive.

9:03 There's essentially a chapter and a half that's just solely dedicated to economics. And then the rest of the book has it kind of woven in and out throughout. And she also at times just basically does essays. So she's got a book called Letters for Literary Ladies, which is, you know, it's framed as fiction. It's a bunch of letters in between various people discussing whether women should be in the labor market. It's very much building on Adam Smith.

9:25 She's writing just after Adam Smith. This is her first book. And so it's very much sort of an argument, but she's making it in a fictional format because she's a woman and she is not allowed to publish academic papers. So I think it really varies between extremely simplistic and very sophisticated.

9:43 Do you like her books?

9:46 I like some of them. Some of them are slog because she's writing at a time when books are very long, when books are very dry sometimes. I think it's important context for readers to know that or listeners to know that. at the time that she is writing, the novel is still in its formation. It has not solidified into the format that we know today. She actually helps it to do that, as do most of her contemporaries. And so they're not really sure what they're doing. It's an era of experimentation. And so you see a lot of her novels really ranging with that experimentation. Like as people are trying to figure out what these should look like, she's changing her style. And I think she also is making them slightly boring and making them slightly wonky in the

10:28 service of making them seem serious. So at the time, novels are mostly written by women for women. They're seen as light and stupid and trivial. And so she's trying to say, like, no, these are not light and stupid and trivial. There's a way to take these seriously. She actually calls her novels moral tales, somewhat hilariously, because she doesn't want them to get, like, stained by the label of novel.

10:48 But they're very clearly novels. Oh, interesting.

10:50 You know, it's funny. Have you heard of Russell Roberts' The Invisible Heart and Economic Romance? Have you heard of this book? No. Yeah, so Russell Roberts is an economist. It was sort of popular in the early 2000s. there was a lot of, you know, like sort of like Koch brothers, George Mason University-esque money that was put forth towards let's create art that like smuggles in, basically like free market, libertarian market ideas. So like people like wrote econ novels, et cetera. And I'm sort of curious, like, cause you said trying to hit people over the head a little bit, maybe that's why they're not read as much. Like, I'm curious how it compares to like the other efforts over the years. Like, Let's teach children the importance of

11:38 free enterprise by writing. Did she have an ideology? Was there an overarching lesson?

11:44 When you said Koch brothers and romantic economic literature, I thought you were going to go in a very different direction. But the Koch with a K brothers.

11:52 Oh, yes.

11:53 K-O-C-H.

11:54 Yeah. I think the important distinction here and the context that's really important is she is writing in sort of 1795, sort of her start date. So Adam Smith has just written The Wealth of Nations in 1776. She's generation one. Like she's the first set of people starting to understand economic ideas. And so I think because I think, you know, most people date the start of modern economics to 1776 and The Wealth of Nations. And her dad is friends with the crowd that Smith working in. He doesn't know Smith personally, but he knows all of Smith's best friends.

12:27 And so she's got a really front row seat as early economics is being developed. And she's doing her best to popularize this set of ideas that nobody knows yet. So I think while sort of modern takes on this are more like, believe my ideology, she is more like, there's a new way of thinking about the world in town.

12:47 Yeah, I see.

12:48 Why don't you take a look at this? And she thinks she, I think, almost uniquely at the time when she's starting to write, thinks that these ideas need to be translated for normal people. So she's writing just in the wake of the French Revolution. People have democratic power that they hadn't necessarily had before. The American Revolution has just happened as well. Sort of the whole world is in the state of flux and change. The Industrial Revolution is is very much in the sights. It's not really fully in form yet, but it's clear that it's coming and the elites understand that. And so she's really thinking about like a new world is dawning. How do we educate people to be ready for it? And she thinks

13:24 that economic education is an important part of that. And so I think that a lot of her ideology is really surrounding how do we apply the ideas in the wealth of nations in broader ways? And a lot of her early contributions are basically taking the ideas that she finds in the wealth of nations and making them more for the real world.

13:42 Yeah. So give us maybe a concrete example. So when I initially looked her up as I was reading this book, the book that came up first was Castle Rackrent, which it turns out is directly borrowed from the Adam Smith text, this idea of rack rent. What were the Smithian, Smithsonian, I don't know.

14:02 Smithian.

14:03 Smith-esque ideas that were embedded in that book.

14:07 Fun fact, it's Smithian. This is actually a word that exists. I did not know this prior to researching this book. But yes, so she writes Rack Rent, which is literally the name of it is pulled straight from Smith. He talks about racked rent, which is a rent that's too high to allow the renter to productively make a profit.

14:24 And so she pulls the title directly from Adam Smith. The book, this was actually the first Maria Edgeworth book that I personally read. And it is just like a regurgitation of the wealth of nations in large part. And there's actually a lot of, literary historian work that sort of analyzes the ways in which this pulls directly from Smith.

14:44 So this is not an unknown fact. I am not the first person to observe this. But she pulls very directly from Smith. She talks about a lot of ideas that he talks about in The Wealth of Nations, but applies them to Irish estate owning. So she is Anglo-Irish. She's an English elite who owns an estate in Ireland. Obviously, this becomes much more problematic throughout her life. But when she's young, this is, though, basically the way that Ireland is run. And she's talking about how you can be a landlord in sort of a more moral and productive way, like how this old system can fit into our new capitalistic system. And so so much of what she talks about in Rack Rent is where do you set rents?

15:23 How do you pay wages? How do you incentivize workers to be more productive? And how do you not squander your resources in a way that sort of runs your estate into the ground? And so she's really taking the stuff that Adam Smith put out very abstractly, simplifying it and applying it to the real world.

15:41 And these are all ideas that still apply to today. Joe, you and I, we both live in New York, and I know we've walked down streets where you have shop faces that have been empty for years and years and years. And you go like, well, why doesn't the landlord just lower the rent and rent it out to someone rather than keeping it empty?

15:57 I've asked this question a bunch of times. I'm never satisfied by the answer. Everyone is like, oh, it's just like banks and taxes. Valuations. Valuations. And like, I've never understood this, so I'm still curious. So thinking about economics today, it's just like, especially academic, academic economics specifically, like you might as well in some cases like be reading geometry or math or something like that. There's a lot of equations, et cetera. There's a lot of, I don't, you know, I'm more sympathetic to them than I used to be, but seeming disconnect from like anything else. in the real world, et cetera. You know, especially you read a lot of old economics and it's like people maybe not literally writing novels,

16:41 though in this case it was, but like sort of stories. And, you know, I think, what did they used to call economics before it was economics?

16:47 It was like- Political economy.

16:49 Political economy. Like this sort of like telling stories and stuff like that. When did that die off? When was the end of economics taught as a sort of like almost like a moral instruction in a way.

17:03 So this is a fun plot twist that I'm kind of going to give away because it's an important part of the book, actually. But her nephew is a big part of this transition, actually. Yeah, so Mariah Edgeworth's nephew is F.Y. Edgeworth, who your listeners may be familiar with because if they took Econ 101 and they studied the Edgeworth box, so the sort of four-way trade-off that you get in Econ 101, that is her nephew who came up with that idea. And so a lot of microeconomics that we still learn today actually is based on the ideas of Edgeworth.

17:33 And it's really the.

17:34 Application of utility to economics that takes it from the realm of philosophy to the realm of sort of math and physics. Okay. So there's, there's what some people will, some economic historians will call physics jealousy that sort of springs up in the mid 1800s where economists are sort of.

17:51 They want to be a science, right? Yeah.

17:53 They're looking around and they're like, oh, people are taking these scientists seriously. And so they really want to become more serious. They want to be involved at universities. At the time, there are very few economists working out of universities. Thomas Malthus is the first sort of academic economist, but it's a relatively rare posting. There aren't a lot of them at the time. And so they start, they form this thing called the Political Economy Club. They don't invite any of the women working in economics at the time to the Political Economy Club. And they start working really hard to sort of make economics a little bit mathier.

18:24 Ricardo had kind of started with this abstraction, but it's really the marginalists. So the group of people who take utility theory and apply it to economics, who kind of successfully make this transition happen because they successfully sort of write down models and say that these models describe the world.

18:40 And so you see the sort of early marginalists, including Edgeworth, but it's sort of the entire crowd of people working on these issues throughout the 1850s, transition this into a very academic pursuit.

18:51 Why were they called the marginalists?

18:53 Because they were.

18:54 Working with marginal utility. So utility was originally a philosophical idea.

18:58 Yeah, right.

18:59 Utilitarian, Jeremy Bentham, all those guys.

19:01 Exactly. Exactly.

19:02 And actually, very interestingly, Mariah Edgeworth was extremely interested in utilitarians and was friends with a lot of them. And so she actually– her only sort of known academic work that kind of touches on an economic issue– was an anonymous essay that we only know exists because she had some surviving letters that sort of got through that describe it.

19:23 She was very set on this essay saying secret, not being attributed to her. But in it, she reviews a translation of Bentham. And in doing so, translates it back. The translation of Bentham is in French. She translates it back into English and simplifies Bentham for the average reader. So she was very interested in utility theory. There's some academic research suggesting that the utilitarian ideas that her nephew came up with probably actually originated with her. And so, yes, so this transition happens. She's kind of on the leading edge of it probably. But what we know for sure is that by sort of the mid-1800s, the political is dropped from political economy. It becomes economics with Alfred Marshall's

20:05 seminal textbook. And it really becomes an academic sort of, you know, at university pursuit from there.

20:11 This is sort of, I guess, a cultural or historical question, but, you know, why didn't she ever publish under a male pen name? Because it's not like it was unheard of. Maybe later in the 1800s, the Bronte sisters published under a male pseudonym. Her father was an economist. I guess she had her nephew who became an economist as well.

20:33 Why did she choose to publish under her own name?

20:37 So I think there are a couple of reasons. One is that she's writing fiction, and so it's acceptable for women to do that. And at the time, there were several women publishing under their own name. Frances Burney is writing simultaneously to her. This is a fairly vibrant era for female novelists. It's just after the French Revolution. The full backlash to women being active in sort of the intellectual sphere has not started yet. And so there are other women publishing under their own names. It's fairly common for women at this time to publish anonymously first. It's fairly common, actually, for everybody to publish anonymously first. And she does publish anonymously at first. But she becomes so

21:15 incredibly famous that people start taking credit for her work. And she really does not love that. So when she writes Rack Rent, at least, I mean, there's very little historical corroboration of this, but her stepmother says that when she writes Rack Rent, they find out that there's a man in England who has produced a, like, pretend manuscript trying to claim that he had written Castle Rackrent because it was, you know, the premier bestseller of the age.

21:41 And so he wanted to take credit for it. And so after that point, it's anonymous at that point. After that point, she always publishes under her own name. So I think it was really a part of it was about taking claim to her own authorship. But like I said, when she wrote anything more heavily economic, she would often either publish it anonymously in the case of this essay we know about, Or she would get a male colleague or a male relative to write it and publish it under their name. So some of her sort of most academic writing, for example, there's a draft essay on education at Oxford that never got published but was intended for publication.

22:15 It would have been published under her father's name. She was never intending to publish it under her own name. It's written from his perspective. It is written in her hand with his notes. And just based on his notes, it seems very clear that a lot of the ideas are actually her and not him. But so she really sort of did take on the guise of men, but she took on the guise of real men.

22:33 She just wrote under other people's names. Can I ask about the potato correspondence? Oh, yes. So you mentioned she was friends with Ricardo earlier, and there's a chapter in the book where they basically go back and forth about potatoes in Ireland and the risks that growing lots of potatoes may or may not cause.

23:06 Yes. I think this is probably one of the more interesting chapters of her life, particularly to anyone interested in sort of the formation of economic ideas. She became very good friends with both Thomas Malthus and David Ricardo during her time. She used to visit London quite a lot. She had a little bit of a socialite sort.

23:24 Of aspect to her.

23:26 And she was friends with both of them. And after she became friends with Ricardo, they started a very sort of aggressive letter writing campaign to each other in which they were like very friendly, but literally always disagreeing. And so they had a very active debate about economics going on. And the question that they most you know, centrally debated was whether it was okay for Ireland to exclusively specialize in potatoes. Historians read these letters multiple ways, and I think it's very difficult to know for sure what her goals were. But basically, Maria Maria writes to Ricardo and says, I think that we should totally specialize in potatoes. Like I think Ireland should just go all in on the potato,

24:05 trade for everything else.

24:06 This is classic comparative advantage. If you can grow potatoes well, then that's what you should do.

24:10 This is comparative advantage. She is literally parroting Ricardo's own idea back to him. She's saying, you know, like I buy it. Like comparative advantage works. We should just go all in on the potato. I think it's possible she's playing devil's advocate here. And it works if that's what she's doing because he comes back to her and says, ah, not sure about that. Like, I think it may actually be risky to so totally specialize in the potato. The potato is prone to failure. It's not worth you know, the profitability that comes with that kind of specialization if it leaves you capable of starving a nation, essentially. And so Ricardo complicates his own idea in a way that he really never does in his actual written texts. And

24:53 in a way that he certainly never does in his arguments with Maltus. Like this, he basically argues what Maltus has been arguing to him for years in his letters to Mariah Edgeworth, which is fascinating from a historical perspective because it seems like he's complicating his own ideas. Very sadly, he then gets an ear infection and dies. And so he never, we never actually get this from Ricardo in any of his academic texts. It does not become part of his sort of, you know, legacy. Like he has a very simplistic view on trade. And that is what sort of becomes part of the canon. But we know that he complicated that because he did in these letters.

25:28 But he was also right when it came to potatoes because Ireland then had a very famous potato famine.

25:33 Tragically, right?

25:34 Yes.

25:34 Yeah. And I think that this is actually a really interesting moment in Maria's development as an economist because it's very clear. Like I said, she may have been playing devil's advocate to some degree in these letters, but it is very clear from her writings that she is a devoted free trader up until the potato famine. She is very devoted to laissez-faire economics. She does not believe in any kind of handouts to the poor. Like she has taken the word of Adam Smith and she has interpreted it very literally. And she thinks that it should be applied pretty absolutely for much of her life. She then gets to the potato famine and everybody in her neighborhood is dying. It's like a huge tragedy. It hits her

26:15 part of the country hard. It hits the whole country hard, but including her part of the country. And so she really sort of starts to revise her views, including with the sort of potato famine that predated the one we all know about. So there are two potato famines that hit in succession. The first one starts to complicate our views.

26:31 The real one that we know about really, really complicates our views. She starts to come around to the idea that you might need to do some kind of government spending in times of extreme crisis, that you might have to just do handouts to get the economy back in action. She sort of comes around to an early version of what we would today call Keynesianism. Keynesianism obviously won't be developed for another 80 years.

26:52 Until Keynes.

26:54 But yes. And so she really does change her views during the potato famine. And I think she, in particular, reflects on this conversation with Ricardo and thinks that she was wrong. In a very interesting turn of events, when she is dying, she actually, you know, people ask her, you know, you were so famous. You were the most famous author in the English language for a time. Do you want to write an autobiography? And she's like, no, but I would like to dictate some projects I didn't get to. And the first project she dictates basically is that somebody should think about the potato as a national food for Ireland. And she suggests that people look at David Ricardo's letters to her as a starting point.

27:30 Can you explain like, what was it about her story? Why was she so popular? Like, what was it about them in general?

27:37 Yeah, because again, if you read The Cherry Orchard, to be completely honest, I know it's for kids in the early 1800s, but not that impressed, not that compelling.

27:47 So some of her children's literature, The Cherry Orchard, I will agree with you, not a joy to read. Some of her children's literature is more engaging and people found it very fun. Actually, Queen Victoria, when she was a child, used to try and write in the style of Maria Edgeworth because she thought she was so much fun. So yeah, so they were quite popular at the time with kids, which is interesting. The adult literature, I will say, is very funny. So Ennui is a good example of this.

28:12 She has a sort of dry, cutting humor. She's very witty. And so that really shines through in her literature. And her characters are... caricatures of real people. And so it kind of does, it does work, I think, even today in Anhui's case. And at the time, it is just seen as wildly entertaining. And so she's very popular because these books are fun. She's also popular because people do want to learn these ideas at the time. I think it's worth noting that, so she obviously is putting these in pure fiction. She has mentors and is very good friends with a woman named Jane Marseille, who then sort of takes the idea of putting this stuff into fiction and takes it one step further and kind of puts it in what I think you can consider an early

28:56 economics textbook. It is framed as a conversation between three women, but it is basically, for all intents and purposes, a textbook. It's an absolute bestseller. Like, it is a runaway hit. And so I think that, you know, what people are choosing to read at this time is a little bit different than what we think of as the bestseller list today.

29:12 People were really curious about this stuff. And I think it's also worth noting what they've got to read at the time is The Wealth of Nations, which I don't know if you've ever read The Wealth of Nations, but it is not.

29:23 A joy to read.

29:23 It's very, very dense. Yeah, it's very dense. It's difficult to understand what he's saying sometimes. And at the time, when these ideas are all new, it's really difficult. Like people don't understand it. And so I think the ability to read these books, get a better sort of analogy, of what the Wealth of Nations is trying to say, and then to be able to talk about the Wealth of Nations in an informed way is actually really attractive.

29:48 You also write about, she had an important disagreement with Smith on one thing. So she agreed about the free trade aspect and But she disagreed about the value of labor. So I guess Smith had this idea that unless you're producing something like a potato or, I don't know, a factory component or something like that, it didn't really have value.

30:10 Whereas Maria argued that people who are producing other things like, I don't know, lawyers or accountants, those are ephemeral, non-physical things, but because they're making people's lives better. Maybe not in the case of lawyers. Because they're making people's lives better, that that still has some value. Can you talk to us about that disagreement and how that kind of played out in the future of economics?

30:33 Yeah. So she was early to an idea that we basically still think is right today, which is that Utility is kind of the basis of value as opposed to labor. So Smith is labor theory of value. This is somewhat complicated. He is not actually as clear on his theory of value as I think some historians make him out to be.

30:50 And I think there's a reassessment going on about what he thought about the basis of value. But certainly the classical economists in general, Ricardo Maltese, think that labor is the basis of value. And She comes in and she really questions that. And she questions it in a very subtle way in her literature. She, the character who sort of like wins in Castle Rackrent, who takes over, is trained as a lawyer. And so, you know, I think she's basically saying, you know, you can have, in this new economy, in this new world we're forming, you can have productive people.

31:24 Physical labor is not the be all and end all of the economy.

31:27 Exactly. And so she's coming in and saying, like, something has changed here and we should reconsider it. It's very subtle there. It's much less subtle in some of her correspondence and in particular, her father's correspondence. It's pretty clear from her father's correspondence that Maria and her father are thinking about utility as a basis for value and think that Smith is wrong about this. He at one point in time says in a letter to one of the Benthamites, you know, I think we could correct some errors in Adam Smith's thinking with this concept. And so She's very much early to this train. And I think that, you know, in a way that ends up becoming influential and really sort of the way that we think about value now.

32:07 So So when we think about the transition of economics from its early political economy days, where you have Adam Smith writing these kind of dense treatises, treatise, treatise? I never know how to- Treatises. Treatises, thank you, about economics. And then you have someone like Maria, who's trying to illustrate them in a sort of practical behavioral economics manner.

32:46 And then you have the evolution into abstract models of Are we at a moment in time where people are kind of, it feels like people are still trying to meld those two worlds together and we constantly get the swing from practical behavioral economics back into theory. And then, I don't know, it feels like it's just the pendulum swinging back and forth constantly.

33:08 Yeah, I do think the pendulum is swinging back and forth constantly. I do think that one thing that is particularly interesting, you know, as somebody who's covered these issues for a long time and that I thought about a lot while I was writing the book, is that one lesson from this era is that people who were applying economics in a really absolute way often ended up finding that to be problematic. And by, you know, with the benefit of time. And I think I've also seen that play out in my own career and my own observation of modern economics. You know, I think there are rules in economics. They are not like physics. And I think that every few years we have a reappraisal where we have some model that was supposed to work absolutely and

33:54 has started to break down. And, you know, everyone is reassessing.

33:57 Crops fail or people make the wrong decision or people get greedy. And that deviates from the model. Yeah.

34:03 Or we misunderstand some variable in the model and how it will affect everything. And so, you know, I do think that, you know, we can get a little bit overly DSGE reliant. And I think that there's something to be said for, you know, remembering that this is a philosophy at its root and it's not physics. And so, you know, I think there are some interesting applications to today.

34:24 Do you miss the Fedbeat?

34:26 Oh, of course I miss the Fed beat. The Fed beat was a fun beat. I mean, geopolitics is fun too. So it's not like I'm doing something boring now.

34:33 How much overlap is there between European parliamentary politics and the Fed beat? What's the connective tissue there?

34:40 There is a lot of overlap between the European Commission, which is sort of the beating heart of the regulatory and trade state in European Union politics, and Fed reporting, because it is similarly trying to make policy for a constituency of 27. And so there are lots of little fiefdoms and there are lots of coalitions and lots of people who need to be satisfied. And it feels quite similar to the Fed with its 12 districts where you've got various people who are going to sort of weigh in on the issue and who you have to satisfy with one central decision.

35:18 It's interesting because in some sense, macro is super interesting right now. Inflation is still elevated, highly uncertain. On the other hand, and I think we all, Tracy and I feel it, a lot of people feel it, the big questions of the day do not feel cyclical. It's like these big structural questions. What is the long-term future of Europe as a coherent block? What is the long-term future of the US-China relationship? What is the long-term future of how AI will change the economy? And so on some level, Even though it is very interesting to still listen to the press conferences and watch the CPI, the jobs report and all that, it does feel like some of that stuff is just being overtaken by stuff that these month-to-month

36:04 things just don't matter to people the same way they used to.

36:08 Completely. And not to literally talk my own book here, but I feel like it does feel kind of like the early 1800s right now. You know, it's like it feels a little bit like the dawn of the Industrial Revolution.

36:18 I was just about to ask what an Edgeworthian interpretation of AI and the economy would be like. There must be parallels.

36:25 Yeah, I think there definitely are because I think this moment feels so much like basically 1800. Say more about that.

36:33 Basically 1800.

36:33 Yeah. It's the very dawn of the industrial revolution. You can see it coming. The division of labor is starting to be applied. Factories are becoming a lot more efficient. London is kind of industrializing and everything is changing. Agriculture has just recently become significantly more efficient. The economy is just in a state of absolute flux. And it seems very clear that there are going to be a lot of people who were previously farmers or sharecroppers or sort of just traveling around doing sort of menial jobs who are going to be disenfranchised by this or who are going to have their lives fundamentally change. There's a lot of concern that factories are going to turn people into robots because they're just going to be doing repetitive tasks

37:13 without having to apply any real critical thinking to them. And at the same time, we're seeing huge political ruptures. You know, it's the wake of the French Revolution. Everybody is afraid that there are going to be uprisings elsewhere. There are, in fact, uprisings elsewhere, including in Ireland in 1798.

37:30 And so there's a huge sort of political sort of populist wave that is playing out. Then there's the backlash to that populist wave. And it's colliding with a bunch of economic forces that are fundamentally changing everything. And this is really how we get modern economics. It's because the world is trying to find a new way to explain itself, essentially.

37:49 Everything has changed and we need to understand it. And so I feel like that has a lot of parallels to today, right? Like we can see that AI is happening. We can see that it's going to change everything. It's not, I mean, we can quibble about the numbers, but I think we can probably agree that it's not fundamentally changing everything yet. Like you see it in the data, but it has not caused some sort of like seismic wave yet.

38:10 But it seems likely, and many people think that it's coming. It's clearly changing the way economic actors relate to each other. And it's coming at the same time that we're seeing these populous waves across Europe, but also obviously here in the U.S. And we are also seeing this sort of reshuffling of the global order as China becomes becomes whatever China is now becoming. And as the rest of the world tries to react to that, and as the rest of the world reacts to the shift in American trade policy.

38:35 And so huge moment of flux, really kind of challenging, I think, the way we understand the modern economy. And so in that way, I think there's a real parallel.

38:44 But this was also, and I'm just parroting your own book back to you, but this was Maria's reason for writing about economics in the way that she did, right? Her argument was that in a time of economic flux, one of the things you can do to empower displaced people and workers is educate them about how all of this stuff is supposed to work or could work.

39:05 Yeah, and I think basically what she was hoping to do is give people the tools for flexibility, essentially. I think she thought that if you were educated and if you were capable of sort of understanding the world around you, you had the ability to have some kind of economic mobility. And so I think there are some interesting parallels to that today. You know, I think a lot of our companies are probably pushing us to learn as much about artificial intelligence as we can in the hope that we can understand how to apply it as whatever comes down the pipeline comes down the pipeline. I feel like that feels like a somewhat similar moment.

39:37 Yeah. All right, Gina, thank you so much for coming back on All Thoughts. The book, again, is The Invisible Hand of Maria Edgeworth. Thanks so much. Thank you for having me. Joe, I love that conversation.

40:00 Yeah, me too.

40:01 It's such an interesting aspect of economic history that, again, I had never heard of before today. It's kind of depressing that we have an influential female economist who was working and was popular at the dawn of political economy as a sort of academic subject. And her legacy was basically completely erased.

40:23 It's fascinating how that can happen. That she wasn't just sort of influential within economics. She was popular among people, among readers. The fact that someone can be like, oh, in their day, they outsold Jane Austen. And then it's like literally no one has heard of this person.

40:42 And you can't blame it completely on. Shifts in literary taste because there are plenty of important historical authors who you go back and read now and they're terrible and you're like what is this stuff yeah one question i want to ask you you know we were talking about children's books and children's stories are children's books nowadays still really moralistic they're a lot.

41:03 Yeah they're a lot it's a real it's a real mix some aren't some are just like sort of normal there's definitely a lot of like Yeah, moralistic children's books.

41:15 When I was reading about the cherry orchard, I remembered a book that my mom gave to me, my Austrian mother. And I don't know if anyone in America would have heard of it. It's called like, slovenly peter or something in english.

41:29 Have you ever heard of this book it's.

41:31 Absolutely terrifying it's an old book from i want to say like 1800s in german and it's all it's like tales of children dying from doing stupid things like lighting themselves on fire but it's illustrated oh wow No one look it up unless you want nightmares. To be disturbed. But I think I would have preferred reading a book about the division of labor as a child versus don't set yourself on fire.

41:55 That's so funny.

41:56 All right. Shall we leave it there?

41:57 Let's leave it there.

41:58 This has been another episode of the All Thoughts Podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway.

42:04 And I'm Joe Weisenthal. You can follow me at The Stalwart. Follow our guest, Gina Smilick, at Gina Smilick. And check out her new book, The Invisible Hand of Maria Edgeworth. Follow our producers, Carmen Rodriguez at Carmen Ehrman, Dashiell Bennett at Dashbot, Kale Brooks at Kale Brooks, and Kevin Lozano at Kevin Lloyd Lozano. And you can chat about all these topics 24-7 in our Discord, discord.gg slash oddlots. And for more Oddlots content, check out our daily newsletter, which you can find at bloomberg.com slash oddlots.

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43:01 Thanks for joining. Thank you.