What a paper. If there is any more proof on the importance of history for making economics interesting it is papers like these.
Craufurd Goodwin of Duke University looks at these landmark children books -Robinson Crusoe and Gulliver Travels. Econs have used Robinson Crusoe to state the importance of trade fair bit of times (highly mathematical though). However, this paper adds something more interesting – Gulliver Travels – which does not really favor trade.
So just like you have debates on whether globalization is beneficial or not, Crusoe and Gulliver seems to have argued the same points way back in 18th century:
Early in the 18th century, before the birth of political economy as a discipline, two of the earliest novels in the English language were published: Robinson Crusoe (1719) by writer and economic entrepreneur Daniel Defoe, and Gulliver’s Travels (1726) by the cleric and political adviser Jonathan Swift. The first was widely perceived as an entertaining adventure story, the latter as a pioneering work of science fiction. Both contain indirect comment on the foreign policy of Britain at the time. When viewed from the perspective of the modern economist, however, the works appear to be expressions of opposing positions on the desirability of a nation pursuing integration within a world economy. Crusoe demonstrated the gains from international trade and colonization and even the attendant social and political benefits. He explores the instinct to trade overseas, stages of growth, and the need for careful cost-benefit calculations. By contrast Swift warned of the complex entanglements that would arise from globalization, especially with foreign leaders who operated from theory and models rather than common sense. He makes a case for economic autarky.
The highlight of the paper is explaining crucial economics issues using these two novels in plain english. I guess students should be first given this paper to understand the basis and then they should be introduced to modelling crusoe economy.It is usually math first and lucky ones get the English translation laters..
He divides the Cruose novel in 3 parts:
The first part of Robinson Crusoe is a story of how a curious, well-motivated and rational Englishman discovers that there is easy money to be made and prosperity to be gained by international trade and settlement of new countries, even when the circumstances are most trying. All that is required for successful economic development is the sensible application of reason. The simple economics of globalization, he implies, are that it is a win-win situation for all concerned.
The second part of the book contains observations similar to those made popular by Milton Friedman more than two centuries later, that global integration and the growth of international trade and development could have salutary social and political effects, as well as economic ones. Crusoe escapes from his island but retains dominion over it because of his labor invested in it: “the whole Country was my own meer Property; so that I had an undoubted Right of Dominion” (II, 30). Accordingly he sets out to encourage additional settlement and to construct a society on the island rooted in hard work, property rights, self-interest and a well motivated incentive system
The last part of this novel is concerned with how best to construct an empire using the development model perfected on Crusoe’s island. Defoe makes various thoughtful suggestions, as for example that colonies be supplied with sufficient weapons to protect themselves from invaders but not enough to menace their neighbors (III, 70).
Gulliver travels are based on four travels. Not getting into it.
What are the lessons?
So what might an Enlightenment thinker on economic questions have observed from these two novels? And what may we take away today? First, there were methodological lessons that might be learned. In these two works of fiction taken together some of the most pressing economic issues of the day were laid metaphorically before the public with both sides presented in a rather balanced and sympathetic fashion, almost as if by two barristers in a court of law. A reader of these two works would not have had great difficulty in preparing from them a cost-benefit calculation for a nation of greater integration within a global economy. It cannot be claimed that the arguments on either side present in these novels were unfamiliar at the time, but in these books they were assembled in a form that was entertaining and easily accessible to the reader.
The second methodological innovation was the use of “conjectural history” to illustrate arguments (Turk 2010). This method was employed later most prominently by Adam Smith in The Wealth of Nations through his device of “a state of nature.” No such state ever existed, of course, but through the conjecture it permitted conditions to be contemplated very much in the same way as through a modern economic model. There never was a time when land was not in short supply or capital goods were not required for production, but through a conjecture one could ask “what if there had been?” In the same way there certainly never had been Crusoe’s island or Gulliver’s travels, but “what if there had been? In both cases something like ceteris paribus conditions were postulated so that relationships between key variables could be made clear.
The cynical observations of Swift may have been as stimulating as the upbeat reflections of Defoe, and some of them are thought-provoking even today. Swift was deeply suspicious of high theory and complex technique in the formation of public policy. Moreover, he noted that welltrained policy makers who lacked a moral compass could do more harm than good. He noted that nations could easily become unbalanced and paranoid and could engage in foolish conflict for which there was no economic (reasonable) justification. The only way to understand such behavior was by exploring the culture, history, and institutions of people rather than by postulating them all to be rational actors. An international economic policy to be seriously considered by nations, Swift implied, was not globalization but autarky.
Finally, it is worth reflecting a little on the use of fiction in this first globalization debate to reach a wide audience and to simplify arguments that were not always easy to grasp in the abstract. It is striking that this device has disappeared from the scene today. Is this to be applauded or regretted?
Superb read. Highly recommended. Should be part of basic course reading…