Literature and Economics: Two Sides of the Same Coin?
It is often said that literature and economics are different disciplines, and never shall the twain meet. However, the theme of money has arrested and animated the imagination of writers since time immemorial. The converse is also true, with economists like Adam Smith deploying literary techniques in his magnum opus, The Wealth of Nations. These seemingly divergent disciplines may actually be two sides of the same coin. This article features quotes from a related podcast with Dr. Fredrik Tydal, from the English department at Stockholm School of Economics.
Division and Dialogue Between Academic Disciplines
Although literature and economics are well-defined and distant fields today, that was not always that case. Philosophers of old regarded society as an indivisible phenomenon that was difficult, if not reductive, to distill different components into separate disciplines. How, then, did the hyperspecialisation of academic disciplines take place?
One would have to hark back to the 1820s, when French philosopher, Auguste Comte, called for a new science with humans as social animals as its subject. He had envisaged a single encompassing science of society. Other luminaries of the time–Bentham, Marx, and Spencer–also saw the study of society as a unified enterprise. They would have scoffed at the notion of splintered disciplines like economics, political science, sociology. However, the specialization within the burgeoning field of social science had won out by the mid-19th century. Several distinct social science specialisations emerged, including non-classical languages, political science, literature and economics.
Economics was the first discipline to distinguish itself among the social sciences. The process and operation of prices, rents, interest, and wages in the 18th century undergirded a separate and distinctive field within economics. This was later termed as “political economy” in the 19th century. Leading lights of the Age of Enlightenment–Adam Smith and Thomas Malthus–benefited from observing society through a prism of multiple disciplines. Their works constitute the canon of political economy texts which establishes an intellectual lineage for classical liberalism.
Today, there is an overwhelming tendency to frame these canonical texts within current developments. Foisting such a framework is reductive and holds ransom to the myriad of meanings and plausible interpretations. The plurality of voices in the text is often whittled down to a singular, authoritative voice which may be oversimplistic. This approach is diametrically opposite to that taken by literary scholars when analysing fictive writing. Literary analysis embraces the ‘many voiced’ nature of a text, the possibility of ambiguity and the changes of meaning consequent upon the changing point of view of the reader and of protagonists in the narrative (Brown, 1994). A literary approach to economics lends insight into the significance of metaphor and the role of narrative in the development of economic argument.
Conversely, literature is a discipline that lacks both a unifying theoretical paradigm or method and a definable stable object of research (Eagleton, 1983). Literature and literary studies stand to benefit from the systematic approach of economics. It can also provide much-needed elucidation on the prevailing economic hardships associated with the novel’s period setting.
Adam Smith: The First Literary Economist?
In creating a dialogue between economics and literature, it would be productive to return to the most important source of economic thought–Adam Smith. Smith’s dual identity as a moralist and economist imbues his text with a “literary charm” (Gide, Rist, 1948). Dr. Fredrik Tydal, from the English department of the Stockholm School of Economics, acknowledges this:
“Smith’s background was that of a moral philosopher, having published ‘The Theory of Moral Sentiments’ before ‘The Wealth of Nations’. So he was already steeped in that humanistic type of thinking. When we think about ‘The Wealth of Nations’, we think about those ideas that he was able to capture so eloquently in a literary way.”
In particular, Dr. Tydal notes the distinct use of literary devices, such as alliteration:
“The very way that he uses alliteration in that passage is why it’s so easy to remember: ‘It is not from the benevolenceof the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’ That alliteration is quite intentional and is why that line sticks so firmly in our consciousness.”
Smith also deploys metaphors and devotes a substantial portion of the book to purely narrative explanations. Most notably, Smith deploys the visual metaphor of the pin factory, as a way of animating the classical liberal tenet of the division of labour:
“To take an example, therefore, from a very trifling manufacture, but one in which the division of labour has been very often taken notice of, the trade of a pin-maker: a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty.”
– Adam Smith, The Wealth of Nations.
Smith’s fictive pin factory could be seen as a kind of social realism, based upon observation, or a type of a ‘field’ method. The travesty today is that Smith’s ideas in economic textbooks are expressed through formulas or other ahistorical ideas. It lacks the appreciation of Smith’s keen social awareness.
(Left: Adam Smith, Right: The Theory of Moral Sentiments)
The genre of literary realism further extends Smith’s ideas, with regard to both ethics and psychology, as outlined in The Theory of Moral Sentiments. The realist novel is, in effect, a distinct approach and it, like Smith’s treatise, places special emphasis on sympathy. Morality can be an abstract concept and it benefits our imagination if we can experience the predicaments of others. In this way, the realist novel creates a discursive strategy which allows readers to follow a character’s thoughts from within and illuminates the potential dialogues those thoughts might provoke if shared by others. The main point is to allow a better understanding of psychological and moral processes that, as Smith noted, remain invisible to others in real life.
Money as the Mainstay of Society
Literary writers have recognised money as both the root of many evils and, in Marx’s words, “the truly creative power.” Like many scholars, Dr. Tydal finds money to be a peculiar commodity:
“Money is both familiar and strange. It’s something that’s part of our everyday lives, yet its seeming normality belies a certain mystery and abstraction. With the advent of paper bills, money was divorced from its intrinsic value, and as a result, the idea began to emerge that money has no value in and of itself, but only the value we assign to it.”
As Dr. Tydal has proffered, there is no inherent value to money. It mainly exists in our collective imagination, something that Yuval Noah Harari, author of Sapiens, has also echoed:
“Dollars have value only in our common imagination. Their worth is not inherent in the chemical structure of the paper, or their color, or their shape. In other words, money isn’t a material reality–it is a psychological construct. It works by converting matter into mind.”
Money, as a figment of our collective imagination, is a piece of fiction as well. We have laddened money with more intrinsic meaning than it is due and this has been a perennial source of contention for writers across all time and age. Money props up trade flows and transactions in society, creating a universal and efficient system of mutual trust. (Harari, 2014) Money as an irreplaceable instrument of exchange has evolved into a social institution.
The Great Gatsby: Plotting the Novel and the Curve
‘The Great Gatsby’ by F. Scott Fitzgerald has been described by many as the quintessential American novel. It bears the timeless appeal of the American dream–that anyone with talent, energy and ambition can succeed no matter their starting point in life. This premise still holds meaning today but is challenged by soaring inequality seen in the past three decades. In fact, today’s economic divide between the rich and the poor parallels that of the Roaring 20’s–the temporal setting of Fitzgerald’s novel.
What is particularly intriguing about the novel is that it predicted that the Roaring 20s, the height of American extravagance, would eventually plunge into unprecedented economic ruin. Dr. Tydal chalks this up to the prophetic nature of literature:
“Even though [The Great Gatsby] depicts the time period that is often characterized as one of prosperity, one could say that Fitzgerald in many ways anticipates the Great Depression. If we look at the story as a whole, things doesn’t end up well for Gatsby. His dream is not realized and he perishes at the end. And so, in that sense, the novel as a whole has a foreboding quality to it, even though it was written in 1925. It still has that sense of impending doom that these good times can’t go on forever now. Literary scholars would attribute that to a certain inherent prophetic quality of literature.”
However, Dr. Tydal also notes that it also depends on who you ask:
“If you ask economic historians how Fitzgerald could have been able to predict the depression and what would ultimately happen, [they] could point to… the fact that there had been smaller, but often overlooked [financial] depressions earlier in the decade. Fitzgerald might have been thinking of this earlier crash and how it could potentially repeat itself on a larger scale.”
(Left: F. Scott Fitzgerald, Right: The Great Gatsby)
Whether Fitzgerald was an astute economic observer or a wildly imaginative writer, the welding of the economic realities and the imagination enriches both disciplines. Neither economists nor literary writers hold a monopoly on hard-and-fast truths. Dr. Tydal shares this in his closing thoughts on Fitzgerald:
“So that’s like a very tangible example of the value of a dialogue between these two disciplines, because economists could also learn from fiction and its capacity to foretell and predict things.”
An example of the synthesis between economics and literature is “The Great Gatsby Curve”. It was first coined in 2012 by American labour economist, Alan Krueger. His speech was focused on the social inequalities and consequences in the US.
‘The Great Gatsby Curve’ above illustrates the relationship between “income inequality” and “generational earnings”
In the novel, Gatsby only lasted a mere two weeks at St. Olaf College before leaving. A chance encounter with a yachtsman brought Gatsby into the world of wealthy people. He never had much money of his own until he began bootlegging after World War I. The tragic Gatsby, whether for love or pride, strived for wealth comparable to the well-heeled Buchanans in the novel. However, Gatsby’s hard work and practiced charm did not thrust himself into the upper echelons of the Buchanans. This underpins Fitzgerald’s point that the Buchanans’ wealth was dynastic wealth, or ‘old’ money.
Likewise, the Great Gatsby Curve shows how wealth perpetuates the advantages of those who are well-off in society. It is, perhaps, poignant to recall what Fitzgerald wrote about inequality in the novel:
“Whenever you feel like criticising any one, just remember that all of the people in the world haven’t had the advantages that you’ve had.”
In summary, economists can benefit from humanistic values such as empathy, judgement, and wisdom. Conversely, humanists can learn from economists how to think about scarce resources, the nature of efficiency, and the importance of rational decision making. Establishing a creative nexus between the two disciplines allows for a cross-pollination of ideas that will ultimately enhance academic discourse.
For more on this topic, tune in to our Governance and Policy Podcast episode on Literature and Economics.