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, like it does feel like some of that stuff is just being like overtaken 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.
I was about to ask what an Edgeworthian interpretation of AI and the economy would be like. There might be parallels.
Yeah, I think there definitely are, because I think this moment feels so much like basically 1800. So about that, basically 1800. 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. 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 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. 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, everything has changed, and we need to understand it.
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway and I'm Joe Weisenthal. 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. Sure, 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.
Yeah, I'm actually very fascinated by the same thing, the concept of pre-internet virality. Yeah. It's like somebody says something online and everyone retweets it, like, all right, I get how that says something on a podcast or something, 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, 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 it get around so far? Yeah. It's like really, I'm fascinated by this question.
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, you know, through novels, through stories, as you just pointed out. Right? Yeah. And it's interesting because, like, you know, 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 idea. I'm just going, like, rationally, it makes sense to me. And then I'll either adopt this idea or I will discard it, etc. But a very powerful way of spreading ideas is to like things that are fun, or things that make us feel good to read, etc. And to your point, I think people forget that. Like, you know, the transmission of ideas is not just like a sort of calculation. It's through art, it's through stories, it's through poetry, music, etc. And that almost never gets discussed in a sort of intellectual context.
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. Prior to having prepped for this episode, had you heard of her? No, I had not heard of her. I think this is really neither as an economic thinker nor as a novelist. Yeah. And so I'm very intrigued by this. 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, you know, currently view as like 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 or 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. And who gets the credit now?
Yeah, I'm excited about this one. 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, Jeanna Smialek. She is a former colleague of ours at Bloomberg, now bureau chief, Brussels bureau chief over at The New York Times, previously seen in many Fed press conferences. That's right. Questions in a previous version. That's exactly right. And the book is The Invisible Hand of Maria Edgeworth: How a 19th Century Novelist Taught the World Economics. So, Jeanna, welcome back to the show.
Thank you for having me. I'm excited to be here.
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.
So 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 Heilbroner'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 Maynard, 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 all of history, was really good friends with this woman named Maria Edgeworth, called Maria 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 Heilbroner. 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, of course, I googled her and discovered that she had been outselling Jane Austen in her day and age, which was, you know, extremely surprising to me. And so I just went down a rabbit hole and here we are.
I don't, should we call her Maria?
Maria. Then in the sort of modern era people usually call her Maria. And she's still well-read in Ireland, actually, and they call her Maria.
Okay, 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 are reading today may not have any correlation to who people were reading back then. It's very hard to know, like, who will actually be durable. And sometimes people get rediscovered. Can you explain that? Like, why if she was outselling Jane Austen in her day, does everyone read Jane Austen and not Maria?
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 jealous of this. Actually, it's very funny. 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. She got forgotten. 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, 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. It's less hitting 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 a sort of an irony there.
Well, okay, 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, sorry, 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?
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. So the children's audience, she is writing very much to be read in the nursery as sort of 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 Ennui, which is one of her more famous novels at the time. And in my opinion, the one that still stands the best in modern reading. So if listeners want to read, start with it, an Maria Edgeworth book, I would recommend Ennui. It's a fun book. But that one has a very sophisticated take on economics. It's extensive. 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. 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. But so I think it really varies between extremely simplistic and very sophisticated.
I like some of them. Okay. Some of them are a slog because she's writing at a time when books are very long, when books are very dry, sometimes she's trying. 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 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, but they're very clearly novels.
Oh, interesting. You know, it's funny. Have you heard of Russell Roberts' The Invisible Heart, an economic romance? If you know this book, Russell Roberts is an economist. And like, 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, let's say like free market libertarian market ideas. So like people like wrote econ novels, etc. And I'm sort of curious, like, because you said you're trying to hit people over the head a little bit. Maybe that's why they're not read as much. Like I was, I'm curious how it compares to like the other efforts over the years, like let's teach children the importance of free enterprise by like writing, like, well, like, well, what was, well, did she have an ideology? Was, is there an overarching lesson 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. Oh, yes. Okay, okay. I think the important distinction here and the context that's really important is she is writing in sort of 1795. Yeah, 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 is working in. He doesn't know Smith personally, but he knows all of Smith's best friends. And so she's got a really front row seat as early economics is being developed, and she's doing her best to popularize the 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. Why don't you take a look at this? And she thinks, I think almost uniquely at the time when she's starting to write things, 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 a state of flux and change. The Industrial Revolution 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 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 practicable for the real world. Yeah.
So give us maybe a concrete example. So when I initially, you know, 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 Smithsonian? Smithsonian, I don't know, Smith, Smith, Smith-esque ideas that were embedded in that book.
Fun fact, it's Smith in this. Oh, thank you. Okay, this is actually a word that exists. I did not know this prior to researching this book. But yes. So she writes Rackrent, which is literally the name of it, is bought straight from Smith that he talks about rack rent, which is a rent that's too high to allow the renter to productively make a profit. 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, you know, of The Wealth of Nations in large part. And there's actually a lot of literary history and work that sort of analyzes the ways in which this pulls directly from Smith. 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 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 Rackrent is, where do you set rents? 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. 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 storefronts that have been empty for years and years and years and you're like, well, yeah, well, why doesn't the landlord just lower the rent and rent it out to someone rather than keeping it empty? I've ventured this question a bunch of times. I'm never satisfied. No answer. Everyone is like, oh, it's just like banks and tax and valuations, valuations, and like, I've never understood this. So I'm so curious.
You know, the funny, so thinking about economics today, it's just like especially academic, academic economics specifically, like you may as well in some cases like be reading geometry or math or something like that. There's a lot of equations, etc. 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 in the real world, etc. And then, you know, especially you read a lot of old economics and it's like people maybe not literally writing novels, 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? It was like political economy, political economy, like this sort of like telling stories and stuff like that. How is it like, when did that die off? Like, when did the, when was the end of economics taught as a sort of like almost like a, you know, moral instruction?
Yeah. So this is a fun plot twist that I'm kind of going to give away, because the important part of the book actually. But her nephew is a big part of this transition, actually. Yeah. So Maria Edgeworth's nephew is Francis 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. And it's really the 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 what some people will, some economic historians will call physics jealousy that sort of springs up in the mid-1800s where economists are, they want to be a science. Yeah, they're looking around and they're like, oh, if 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 started, they formed 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. 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. 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.
