What is Arnold Kling’s book ‘Specialization and Trade’ about? Read the book review and summary of Kling’s book on GreatBooks&Coffee !
Welcome on GreatBooks&Coffee. I’m a 30-something PhD and this is my book reviews blog. Happy reading!
Book Review & Summary:
‘Specialization and Trade, a Re-introduction to Economics’ – Arnold Kling.
Here we go, an interesting book to read! ‘Specialization and Trade’ by Arnold Kling is an insightful thought leadership book for those interested in learning more about economic theories and the way they do – or do not – apply in the real world. I’m a 30-something Ph.D, GreatBooks&Coffee is my books blog, and here is my book review, read on!
‘Specialization and Trade, a Re-introduction to Economics‘ is one of those books that gave me the idea of writing this books blog.
I bought the book because the economics of trade talk to me, they’re an important aspect of my job. Beyond my job, though, the topic is very relevant and the moment, especially considering all the criticism against globalization and trade negotiations around the world.
In other words? The book is spot on, but the topic is complex. While everyone talks about it, few know about it.
For instance? Well, you’ve heard of Adam Smith, right? What do his theories look like nowadays? There you go. Important, but complex. But important!
Anyway, let’s talk about the author!
Arnold Kling is an economist who happened to be part of the United States’ Federal Reserve from in the years 1980 and, generally speaking, is part of the libertarian movement. Kling is attached to two organisations. One is the ‘Cato Institute’ which is a public policy research foundation aimed at fostering debates on liberty and peace. Kling also makes part of the Libertarian School of Thought (libertarisnism.org) according to which liberty is the core political value of modern civilisations and works together with a complex system of values, including justice, prosperity, responsibility, as well as cooperation, toleration and peace.
In other words, the author is interesting because he has a very liberal perspective on things. Feel free to disagree and dislike it, that’s not the point. The point is to get the various arguments., and this exactly what my review an summary are about.
Let’s dig in. Keep reading.
What you get in this book review:
- An introduction to Arnold Kling’s book ‘Specialization and Trade’
- A book review which includes in-depth comments on the main themes, questions and conclusions.
- Insights to help you put the book in context.
- My take on the book and why it could be worth your time and money!
A brief book review, for starters…
‘Specialization and Trade, a Re-introduction to Economics’ by Arnold Kling is an insightful thought leadership book for those interested in learning more about economic theories and the way they do – or do not – apply in today’s world.
‘Specialization and Trade’ is a rather small book – exactly 200 pages – suitable for those of us interested in getting the big picture on how things work.
The book discusses specialization as an economic doctrine. It starts from Adam Smith’s economic theories of specialization and comments on how specialization has evolved over time, explaining the functioning of market economies by the same token.
The style is accessible despite the technicality of the subject matter. The author writes well and shares his thought in a clear and well-structured manner; however, the discussions contained in the book may at times be difficult to follow. Indeed, whilst Kling refrains from using complex formulas (there are a couple of them at the end of the book, that’s it) and uses a clear language as well as examples to guide the reader throughout the book, the book sometimes becomes technical. Hence, the least experimented readers are advised to approach the book with care.
Now. How about a more comprehensive book review?
Arnold Kling develops various arguments en marge of the arguments traditionally developed by mainstream economists.
The book begins with a quote of Adam Smith who, in contrast with self-sufficiency doctrines whereby every economic actor provides for his own subsistence, introduced the idea that specialization is the key to progress and economic development. The ability to exploit individual talents and specialties, indeed, allows moving forward by making the most of everyone. Hence, Kling elaborates on the idea that today’s world confirms Smith’s doctrine and argues that specialization and trade are the very reasons why modern societies have reached our current level of development.
In his opinion, however, mainstream economists propagate large misunderstandings and misconceptions as to the specialization mechanisms.
Traditionally, economists discuss what Smith called the ‘comparative advantages’ (which motivate specialization) in terms of production value (one specialized worker produces X or Y value) or in terms of scarcity and choice.
Kling, in contrast, finds that these factors fail to deliver. For instance, they do not take into account the complexity of urbanization, they fail to consider social evolution as a relevant variable and do not discuss modern trade factors, such as the idea that relying on foreign specialized workers nowadays is perceived as creating a threat to employment.
As a result, Kling’s book (as its title shows) can be described as an attempt to re-introduce economics into the modern world by focusing on specialization as we know it. In his words, “specialization is the most essential fact in economics” because “we enjoy goods and services that require hundreds of millions of workers all over the world”.
Yet, specialization also creates fluctuations because our societies need to adapt to innovation and to adjust to variables such as employment, economic activities, the impacts of global financial market evolutions, or the necessity to develop sustainable patterns when it comes to planning future production.
____ ____ ___
‘Specialization and Trade, a Re-introduction to Economics’ is made of nine chapters which discuss a variety of topics including the difficulty to create adequate frameworks for analyzing economic developments, the idea that price and profit should be considered as major determinants of our modern economy (in contrast with the traditional demand and offer paradigm), the opportunity for these factors to create more choices and political systems, the difficulties encountered in building a sustainable model, etc.
As usual on my GreatBooks&Coffee book reviews, I will only look at the first theme here but for more insights on the other themes please have a look at my book summary of ‘Specialization and Trade’ – which you can get down below for just $3,99 with your 20% member discount! Isn’t that beautiful?
The first important idea developed by Kling relates to the lack of robust economic models capable of legitimizing economic research and theories nowadays.
Here, Kling points to what he calls the difficulty of “filling the framework”. In more practical terms, Kling reviews the traditional laws of offer and demand and questions the currently used models, by emphasizing the inability of traditional economists to demonstrate what factors have an influence.
For him, the analysis methods traditionally relied upon by economists are biased and suffer from a tendency of economists to pick parameters depending on their needs, capabilities and biases while discarding those parameters they cannot assess or master even though they would have an impact.
Currently, he argues, economic research is therefore made of “many unverifiable assumptions” and, in a context characterized by many alternatives, thus leads to a variety of hardly conclusive theories. In reality, reference models should however be considered carefully because numerous influential factors are ignored due to the difficulty of integrating them in the data analysis.
Economic analysis does require elaborating robust frameworks of interpretation capable of testing theories and spotting anomalies whilst preventing the creation of economic dogma and fantasies. At the end of the day, that is to say, the classic methods appear partial, selective and lead to suggest that economics are not a form of science based on experiments as physics would.
Hence, Kling questions the very idea that economics are in fact a social science and suggests that it is important to elaborate a new and modern framework designed for interpreting modern trends and developments without generating irrational fantasies based on usual “unverifiable assumptions”.
This skepticism towards the economic science is further explored by looking at the complexity of mechanistic mathematical models.
This point is discussed in a part of the book named ‘Machine as Metaphor’ where Kling criticizes the idea that economic methodology currently treats markets and the economy as a whole, “as if they were simple machines” which behavior can be analyzed and anticipated through equations.
To him, however, this school of thought has important limits. The idea that “economic behaviors can be analyzed and predicted on the basis of mathematical equations” leaves the author skeptical because the models as they are currently established fail to show the complexity of our modern societies.
At best, mathematical models can help assessing but cannot guarantee that we are in reality making adequate choices.
‘Specialization and Trade, a Re-introduction to Economics’ re-introduces economics with a modern twist.
The book starts from Adam Smith, the famous economist, philosopher and author who created during the 18th century the basis of today’s economic model.
For Smith, the ability of someone to produce a specific good was an opportunity for someone else to make the most of his own speciality. In other words? Buy your shoes to a shoemaker and you will have time to focus on those things you are good at.
This connection between Adam Smith and Arnold Kling is very important because the role of specialization is – without surprise – the very core topic of ‘Specialization and Trade’.
Kling elaborates on the importance of the concept of specialization for modern economies, but his argument is that modern economic models need to be reviewed.
In particular, the cornerstone of his argumentation consists in questioning the tendency of today’s economists to propagate misunderstandings and biased misconceptions of economic realities. In sum, traditional economic models are unreliable.
He therefore proposes various ways to re-consider economic models by, in particular, complementing the traditional offer and demand approach with more variables such as prices and profits. An argument which as a matter of fact makes a lot of sense.
All in all, the book is a little technical – not a bedside table book, that’s for sure – but I find it is a good way of getting relevant arguments and food for thought these days. Especially considering the polemics surrounding trade and globalization… Besides, the discussion is overall interesting because it actually leads to non-economic discussions and touches rather political considerations too.
That’s it for now, but don’t stop here! The next step for you is to move on and learn something!
As always, I hope you enjoyed this book review! Please let me know what you think with the comment box down the page, especially if you read the book, if you feel like buying it, or if you read my summary!
Oh, and of course, make sure to join my GreatBooks&Coffee club to receive my next book reviews by email!
GreatBooks&Coffee. The book reviews blog. What else?
I am a thirty-something PhD and I read a lot. GreatBooks&Coffee is my books blog! Because nowadays most people never finish the books they buy, I am sharing my reading experiences to help you pick the right books you will want to read up to the last page!
Don’t just buy random books! Let me help you pick the right books!