Economics as Religion: From Samuelson to Chicago and Beyond (review)

Robert Nelson's Economics as Religion is both exciting and frustrating. It is an exciting book in that it raises an important question and reviews a wealth of economic literature, providing a wonderful overview of recent economic thought by a seasoned observer. Nelson's knowledge of the literature, especially the new work in institutional economics, is superb, and his interpretations sensible. It is a frustrating book because it pushes to extremes the analogy of economics as religion, and, in doing so, makes connections that, to me, seem tenuous at best. Is there a connection between economics and religion? Obviously. Is economics only religion? Obviously not.

The book, a follow-up to Nelson's previous book, Reaching for Heaven on Earth: The Theological Meaning of Economics (in which he argued that the economics profession is the priesthood of a powerful secular religion), consists of an introduction, eleven chapters organized into five parts, and a brief conclusion. In the introduction, “The Market Paradox,” Nelson summarizes the market-paradox argument that is central to the core argument of the book—that the market requires individuals to be self-seeking in their pursuit of profit, but at the same time to be selfless in following social and legal rules necessary for the market to operate. Nelson argues that the tension between these two requirements of markets places economists, and any supporters of markets, in the role of advocating both selfless behavior—their priestly role—and self-interest—their economic role.

Of these two roles he sees the priestly one as the most important, arguing that “economists played their most important role in American society in the twentieth century as theologians and preachers of a religion” (8). He believes that in that role they justify the necessary cultural foundations needed to allow competitive markets to work. Their justification of these cultural foundations makes them “a priestly class religiously dedicated to protecting the market system against political rent seeking and various other potentially destructive forms of individual opportunism” (11–12). “Rather than being value-neutral technicians, members of economic schools since Adam Smith have been the most influential priests of the modern age” (20). Understanding this priestly role is important for understanding current policy, since there is a current crisis of social legitimacy and a “wide loss of faith today in the redeeming benefits of economic progress itself” (12).

The five parts of the book develop the above ideas in regard to particular groups of writers. Part 1, “The Laws of Economics as the New Word of God,” examines the values of the American progressive movement at the end of the nineteenth century and early twentieth century. In it he argues that the progressive movement forms the core religion of economics.

Paul Samuelson's Economics is the focus of part 2, which is titled “Theological Messages of Samuelson's Economics.” Nelson discusses how Samuelson's famous textbook adapted the “progressive gospel of efficiency” to the intellectual climate of the United States in the post–World War II era. He argues that Samuelson's text promoted and reflected a value system of rationally directed progress that dominated American society from the end of World War II into the 1960s.

Part 3, “The Gods of Chicago,” argues that in the 1960s the University of Chicago replaced Samuelson and the Cambridge (Mass.) theocracy as the focal point for American economics. The Chicago approach showed a much greater skepticism of the main tenets of the progressive agenda, but, at least in the case of Friedman, accepted the central progressive goal of efficiency. He argues that Chicago economists should be seen as protestant reformers of a Catholic progressive orthodoxy espoused by Samuelson. It is Chicago's victory that presents the problem for modern economics and modern society. Chicago's skepticism about the possibility of beneficial government action, and society's acceptance...