Modernist Economics

Economics is a product of the Enlightenment, emerging as a distinct field with the publication of Adam Smith's The Wealth of Nations in 1776. Although writing on the subject dates back at least to Aristotle, Smith's work redefined the discipline, rendering much of what had gone before obsolete. At the heart of Smith's analysis is the "invisible hand," the idea that individuals rationally pursue their economic self-interest and that, in a free market, this serves the general good. Subsequent economists refined, expanded, and to a degree modified this picture, but rational choice remains central to the discipline. Those who operated outside this framework, like Thorstein Veblen or John Kenneth Galbraith, earned reputations as eccentrics or cranks. Certainly, conventional economic theory offers a powerful intellectual framework that explains a great deal, but it is not the only way of looking at the world. The two greatest economists of the first half of the 20th century, John Maynard Keynes and Joseph Schumpeter, both recognized this and incorporated modernist elements into their theories.¹

The term modernism denotes not so much a fully fleshed-out ideology as a zeitgeist, a "spirit of the age." It developed at the end of the 19th century, became dominant with World War I, and went into eclipse in the 1970s, and it affected not only the arts but also philosophy and the social sciences. In part, modernism represented a reaction against Romanticism and the values of the Victorian era. Victorian thinkers had tremendous faith in progress and often based their ideas on stark dichotomies: good vs. evil, civilized vs. barbaric, masculine vs. feminine. These attitudes were common to groups as diverse as Social Darwinists and Marxist Socialists. Modernists saw the world as a far murkier place in which clear distinctions were rare and irrationality common. Traditions and conventional sensibilities—even civilization itself—were a veneer that obscured underlying realities. Modernists sought to scrape away the barnacles of civilization to reveal truth. Romantic novelists like Victor Hugo and Charles Dickens were, first and foremost, storytellers who explored and often critiqued their societies; a strong ethical sense informed their work. In contrast, modernist writers like Marcel Proust and James Joyce abandoned conventional narrative for the "stream of consciousness," which sought to replicate the actual workings of the mind. Their canvass was not so much society as the mind itself, which they pictured as chaotic. Romantic painters like Jean Auguste Ingres, William Turner, and Eugene Delacroix sought to portray places and events clearly, though they often used line and color inventively to this end. Modernist painters like Paul Cezanne and Pablo Picasso did not try to replicate how things and people looked but instead experimented with basic forms. The architects who built the Houses of Parliament in London, the Capitol in Washington, and the Pennsylvania and Grand Central Stations in New York looked to the past for inspiration—medieval cathedrals, Greek temples, Roman baths—though they used the latest materials and engineering techniques in construction. The great modernist architect Louis Sullivan declared that "form follows function," and Le Corbusier and Ludwig Mies van der Rohe designed buildings of steel, glass, and concrete largely devoid of ornamentation.

John Maynard Keynes

Comparable developments occurred in philosophy and the social sciences. Sigmund Freud, the great psychiatrist, was perhaps the quintessential modernist. He argued that the mind had a large, nonrational element—the subconscious—of which the conscious mind was only dimly aware. Many attitudes and actions reflected not conscious decisions, but subconscious drives. Whereas Victorians considered categories such as "rational" and "irrational" mutually exclusive, Freud argued that they coexisted within all people. Simply denying impulses such as lust or anger created neuroses. Freud did not reject reason. The object of psychoanalysis, the therapy he developed, was to identify subconscious drives and bring them under control. Yet success required that subjects come to terms with their irrational impulses.

Philosopher Friedrich Nietzsche made the "superman" the driving force in history. Such individuals upended accepted verities, forcing people to rethink their beliefs and assumptions, thereby moving humanity forward. Nietzsche did not deny progress, but he saw it...