“Adam Smith did Humanomics: So Should We”

Abstract

Economics ignores persuasion in the economy. The economics of asymmetric “information” or common “knowledge” over the past 40 years speaks of costs and benefits but bypasses persuasion, “sweet talk.” Sweet talk accounts for a quarter of national income, and so is not mere “cheap talk.” Research should direct economics and the numerous other social sciences influenced by economics back towards human meaning in speech – meaning which has even in the most rigorously behaviorist experiments been shown to matter greatly to the outcome. Sweet talk is deeply unpredictable, which connects it to the troubled economics of entrepreneurship, of discovery, and of innovation. The massive innovation leading to the Great Enrichment of modern economic growth since 1800 is a leading case in point. Economic historians are beginning to find that material causes of the Great Enrichment do not work, and that changes in rhetoric do work, such as the Enlightenment and the Bourgeois Revaluation and above all Adam Smith’s “liberal plan of equality, liberty, and justice.” It is not, however, the new institutional economics, which is Samuelsonian economics redux. A new economic history emerges, using all the evidence for the scientific task: books as much as bonds, entrepreneurial courage and hope as much as managerial prudence and temperance.