Economics is one of the most important and influential fields of study one can enter: the ramifications of its theory have changed our world, and will of course continue to do so. When we think of powerful men of the past, our minds turn to politicians and leaders — the Churchills, Ghandis and even the Stalins and Hitlers who led men to glory, freedom, or doom.
However, the economists on whose systems and counsel these giants of the modern age based their policies have had no less of an influence, indeed arguably even more of an impact, on our world. Had any of these men or their ideas not existed, the history of humanity would no doubt be very different.
10. Friedrich Hayek (1899–1992)
Born in the final year of the 19th century, Friedrich Hayek might be considered the poster boy for the Austrian School of Economics. Influenced and mentored by Ludwig von Mises, a prominent figure in the Libertarian movement, Hayek was awarded the Nobel Prize for Economics in 1974. An Austrian native, his experiences serving in WWI inspired him to work for a better world that would steer clear of the same errors that led to the war. While working at the London School of Economics he publicly opposed Keynes and his theories of government spending as the solution to the Great Depression, arguing instead that private investment was the path to prosperity and development. Written in the early 1940s, his book The Road to Serfdom was a rallying cry against central planning, combating the idea that fascism was a capitalist ideology. Hayek was a big influence on Ronald Reagan and Margaret Thatcher as well as the former communist states in Europe. He was an inspiration for the neoliberalism of the 80s and 90s and has had a profound effect on the economic policies of many Western nations.
9. Thomas Malthus (1766–1834)
Before Thomas Malthus, the common view was that society was on a steady route to ever-increasing improvement and, in theory, perfection. Born in 1766 in England, Malthus diverged from this idea, writing that increases in population would make unlimited progress impossible due to the effects of famine and disease. Educated at Cambridge, he became an Anglican curate in 1798, and his faith and belief in the inability to change human nature profoundly affected his work. He saw poverty for some sections of society as natural and inevitable, arguing that it served as a curb on population growth. His views were so influential that Prime Minister Pitt the Younger withdrew a bill that was intended to offer extended relief to the poor and introduced the first modern British census in order to assess the issue. Malthus’s views continued to make important contributions to how the UK government treated the plight of the poor throughout the 19th century as well as inspiring writers and theorists of the 20th century.
8. Friedrich List (1789–1846)
Born in 1789, Friedrich List was imprisoned in Germany in 1822 after activism and work in favor of administrative reforms. Upon his release in 1824 (he first escaped before returning to finish his sentence) he emigrated to the United States where he was inspired by the work of Alexander Hamilton. List’s economic theories centered on the idea that individual nations had specific economic requirements and as such was opposed to absolute free trade, and suspicious of developed nations that advocated in its favor. He believed that for Germany to prosper it needed to expand its territory to the coast in both the south and the north while protecting — in order to rapidly grow — its industry. If his economic ideas seem familiar, that’s because they influenced the Nazi regime and were also used to underpin the formation of the European Economic Community. Japan has also followed List’s model, and some argue that the Chinese policies that emerged after the death of Mao were likewise inspired by the German economist.
7. Irving Fisher (1867–1947)
One of the first American neoclassical economists, Irving Fisher might also be considered the first true “celebrity” economist. Fisher made the founding contributions to “monetarism” with his quantity theory of money research, and had significant input into general equilibrium and utility theory. Prominent economists of the modern era, not least Milton Friedman, consider him the greatest American economist ever to have lived. Unfortunately, his star waned in 1929 when, three days before the terrible calamity that was the Wall Street Crash, he stated authoritatively, “Stock prices have reached what looks like a permanently high plateau.” For months he assured shareholders that a recovery was on its way — potentially encouraging people to continue to invest and so damn themselves to poverty. Fisher’s debt-deflation ideas — although largely ignored through the Great Depression due to his serious errors of judgment during the stock market crash — have become more popular in the last 30 years as echoes of the 1929 crash and ensuing depression are felt in our current economic situation.
6. John Stewart Mill (1806–1873)
Philosopher and economist John Stewart Mill is rightly considered one of the most important thinkers in history. Born in Britain in 1806, he contributed to the development of the scientific method and is well known for his theory of liberty. Mill’s thoughts on economics were no less influential, supporting free markets as a principle of his utilitarianism, with flat taxation as the fairest of systems — although in his later years he adopted a more socialist point of view. In 1848 he published the first edition of his book Principles of Political Economy, which served as the successor to Smith’s Wealth of Nations as the world’s leading economics text, shaping economic and political thought for the best part of a century.
5. Alan Greenspan (1926 –)
With America still the world’s economic powerhouse and leading influence on the global economy, the Chairman of the Federal Reserve is a powerful man. Alan Greenspan was appointed to this position by Ronald Reagan in 1987, and was reappointed every four years until he retired in 2006. With almost 20 years in the post, he is the second-longest serving-Chairman in US history. Influenced by “Objectivist” author Ayn Rand, Greenspan supported Social Security privatization and tax cuts in the face of budget deficits, leading to criticisms from the Democratic Party that he was bringing politics into his position. During his tenure he dealt with the 1987 stock market crash and the Asian financial crisis of 1997–1998. Then, within months of his retirement, the subprime mortgage crisis grabbed world headlines. Greenspan was an often-controversial figure: George Bush Sr. held the Chairman’s policies responsible for his defeat in his second presidential bid; some say his interest rate rises in 2000 caused the bursting of the dot com bubble; and Time magazine considered him to be number three on a blame-list for the financial crisis.
4. Milton Friedman (1912–2006)
A winner of the Nobel Prize for economics and a leading figure in the Chicago School of Economics, Milton Friedman taught at the University of Chicago for over 30 years. His research focused on a number of areas, including monetary theory, monetary history, consumption analysis, and stabilization policy. Many figures both within and outside of his field consider him to be one of, if not the, most influential economists of the last century. Friedman’s work focused on challenging “naive Keynesianism” and opposing government policy based on these theories. As an adviser to Ronald Reagan and his administration, he profoundly contributed to policies based on free market and minimal interventionist principles, and the 1980s saw his views reflected in government policy. His advice, communicated via letter, was taken on board by Augusto Pinochet in Chile, and graduates from the Chicago School were given high profile positions in the dictator’s regime. Less controversially, his theories recently played an important part in the Federal Reserve’s response to the global financial crisis — although Keynesian economists actually regard Friedman’s free market philosophy as being responsible for the economic unrest.
3. Adam Smith (1723–1790)
Born in Scotland in 1723, Adam Smith is widely considered the founder of modern economics, with his magnum opusThe Wealth of Nations viewed as the first true work in the field. All modern economics owes a huge legacy to Smith’s work, and it is hard to imagine what the economic landscape would look like without him. The phrase most often associated with Smith is of course “the invisible hand” (the oft-quoted metaphor for the self-regulating nature of the marketplace); and this, together with his idea that individuals acting in their own self-interest promotes the interests of society, are the very basics of capitalism. Smith’s works have been dissected, referenced, critiqued and defended by various economists and economical schools, but none can dispute his tremendous influence on both the field he helped found and the world at large.
2. Karl Marx (1818–1883)
Karl Marx’s The Communist Manifesto, published in 1848, and Das Kapital, which reached its final form in 1894, are among the texts that have had the profoundest effect on the world we know today. Building on the thought of Hegel and others, Marx’s critique of capitalism influenced numerous political and economic movements, including Bolshevism, Stalinism, Mao and his supporters, and social democracies. Without Marx and his work on socialism, we would likely not have seen the Cold War, the current Chinese state, or the trade union movements that drove forward workers’ rights. Love him or loathe him, his ideas undoubtedly changed the world; indeed, some consider the entire history of the 20th century to be his legacy.
1. John Maynard Keynes (1883–1946)
John Meynard Keynes was born in 1883 and died in 1946, but his ideas and economic thoughts have lived on, influencing a variety of policies and ideologies throughout the past 100 years. Refining ideas of business cycles, he was an advocate of government intervention, regulation and spending in order to control and mitigate depressions and recessions. His work in the 1930s revolutionized contemporary economic thought, bowling over the prevailing belief in free markets as the way to full employment and instead focusing on the effects of aggregate demand. And the 1950s and 1960s saw his theories adopted by basically all capitalist governments. While the 1970s saw criticism from Friedman and others cutting in on such policies, Keynes’s work has been used since the global financial crisis as the basis for the response by many global leaders, including George W. Bush and Barack Obama.