– January 12, 2020

Edward Harwood was an engineer by training but ended up being a major contributor to economic theory in the 20th century. His 1928 essay on the business cycle forecasted coming economic trouble based on a credit-cycle model very similar to the one worked on in greater detail by Ludwig von Mises and F.A. Hayek in Vienna a few years later. 

Throughout the 1930s, he went toe-to-toe in public forums with John Maynard Keynes, exposing the failings of the New Economics. He fought gold confiscation, bank closing, price controls, regulations, and inflation, and made the case for a society that is always moving toward a more perfect freedom. Mostly, he founded the American Institute for Economic Research in 1933. AIER distinguished itself in the world of ideas for its constant stream of research and analysis of current affairs for decade after decade, and today is a leading champion the world over for research in the importance of markets. 

Harwood’s lack of formal academic training in economics did not block his capacity for making a huge dent in the way economics came to be understood, particularly from the point of view of the common person. The key for Harwood was his ongoing, passionate, deep reading in the classics of economic thought. He recommended that everyone do the same. 

To form The Harwood Reader, we took Harwood’s own list of readings and put together what amounts to a Harwood-style education in economic theory, history, and policy. The result is spectacular in my view. Many of these readings are difficult to find, and they’ve never been put together in this way before. The point is to provide a consistent and shared knowledge among our students, fellows, interns, and visiting scholars, allowing the Harwood legacy to persist into the future. 

We begin with the most famous and still challenging verse by Bernard Mandeville, which asserts a fundamental tenet of the free society, that not every intention realizes its social consequences, and even bad intentions can yield socially beneficial results provided humans are free to act, adapt, and innovate. The piece shocked people when it first appeared, and even today, it is capable of causing a complete rethinking of the relationship between intentionality and social systems. 

Further within the vein of early economic thought, the writings of Richard Cantillon on entrepreneurship, prices, and markets are presented, along with the remarkably prescient observations by David Hume and the wrong but important contribution by Thomas Mathus on population. 

John Locke and Thomas Paine take us into the core of classical liberal theory, until we arrive at the great father of economics, Adam Smith. His writings here show that he was much more than an economist. He was also a moral philosopher of the highest order. As you read his work on the division of labor, you can’t help but be struck by how much we still have to learn from him. 

David Ricardo and John Stuart Mill are the central voices to what came to be known as classical economics, and their most important essays are herein collected. The key writings of Karl Marx are next, along with a sound refutation by Philip Wicksteed. And this takes us to the next great stage of evolution in economic ideas: the marginalist revolution, with the work of the master Carl Menger. 

Two great Americans that Harwood admired were Alexander Hamilton, who, to my mind, is sometimes wonderful and sometimes regrettably attached to mercantilist ideas, and the widely misunderstood Henry George, a fierce champion of free trade. George was hugely important in his time for having rejected the pessimism and reactionary attitudes of his time in favor of a view of the future distinguished for its hope for universal prosperity for all. Harwood was also a big fan of Frédéric Bastiat, the French journalist whose works became more popular in 20th century America than they were in France even during his lifetime. 

Finally this collection ends with a point and counterpoint between John Maynard Keynes, the famous champion of managed markets, and Harwood, who saw Keynes as a counterrevolutionary seeking to turn back the gains of freedom. The last essay by Harwood, once fully processed in one’s mind, provides a hugely important model for understanding the most central point of any historical narrative: does a trend bring more freedom or less? This seemingly simple model is rooted in deep reading and sophisticated theory drawn from a lifetime of reflection on important topics. 

With this reader, we all have the opportunity to gain an understanding into his intellectual achievements, as well as to why and how he was able to exercise such moral courage in the management of AIER, resisting multiple attempts by government to shut down our work. Even aside from Harwood, this book makes for a fantastic guide to the history of economic ideas, suitable for any classroom or any educated layperson who wants to understand more about the driving forces of history and the central importance of markets. 

Making a reader like this – taking tens of thousands of pages and boiling them down for publication in a single volume – is much harder than it may look. Special thanks to Phil Magness for assembling all this material, to Alexander Gleason for his careful editing, and to the entire staff of AIER for its constant dedication to the mission of this great institution. 

Edward Peter Stringham

Edward Peter Stringham is President of the American Institute for Economic Research,  Davis Professor of Economic Organizations and Innovation at Trinity College, and editor of the Journal of Private Enterprise. He is editor of two books and author of more than seventy journal articles, book chapters, and policy studies. His work has been discussed in 15 of the top 20 newspapers in the United States and on more than 100 broadcast stations including MTV. Stringham is a frequent guest on BBC World, Bloomberg Television, CNBC, and Fox, and Rise Global ranks Stringham as one of the top 100 most influential economists in the world. He earned his B.A. from College of the Holy Cross in 1997, his Ph.D. from George Mason University in 2002 , and first published with the American Institute for Economic Research in 2003. His book, Private Governance: Creating Order in Economic and Social Life, is published by Oxford University Press

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