Economics of Good and Evil was originally published in Czech in 2009. Since then, it has been translated into 22 languages and, following its publication in English in 2011, it achieved something close to ‘bestseller’ status and made its author, Tomas Sedlacek, famous. Well over a decade on, it is worth asking whether the book has passed the test of time and justified the hype to which it was subjected. Sadly, the answer is, probably not.

Sedlacek says that the purpose of the book is ‘to look for economic thought in ancient myths and, vice versa, to look for myths in today’s economics’ (page 4). He adds that he seeks to ask four questions: ‘Is there an economics of good and evil? Does it pay to be good, or does good exist outside the calculus of economics? Is selfishness innate to mankind? Can it be justified if it results in the common good?’ (page 7). However, the book in fact ranges far and wide over any number of issues that Sedlacek considers relevant to his enquiry, including the history of economic thought, ethics, epistemology, metaphysics and psychology. The first two-thirds comprise seven chapters focused on various strands of philosophy and religion to the extent that they are relevant to economic issues, starting with The Epic of Gilgamesh and ending with Adam Smith, and the issues discussed range from attitudes to work to the nature of truth.

Cutting through the detail, Sedlacek’s basic thesis is that the modern view that economics is ‘a mathematical-allocative science’ (page 4) is both an historical aberration and fundamentally wrong. He repeatedly reassures the reader that he is not opposed to mathematical economics in principle but he suggests that ‘contrary to what our text books say, economics is predominantly a normative field’ (page 6). In particular, he suggests that all economics is value laden and that we should be careful to examine the ‘many unexplained factors behind the scenes’ (page 275), a task which he refers to as ‘meta-economics’.

Although Sedlacek on occasion overstates his case, his basic argument is surely correct: if we are to confine economics to those matters that are purely descriptive and can be analysed by means of mathematical models, much of what is today termed economics would have to be redesignated; in fact, economists, whether overtly or implicitly consider goals and weigh desirable against undesirable consequences of actions, which necessarily requires the application of underlying values. Furthermore, even to be an accurate descriptive science, economics needs to have regard to matters, such as human psychology, that lie far beyond the precision of mathematics.

Sedlacek is likewise right in warning of the danger that the conclusions of economics may be implicit in hidden assumptions and, specifically, in challenging the concept of ‘utility’, suggesting that it is either tautologous (i.e. an assertion that people will maximise those things that they consider to be of worth) or wrong (i.e. an assertion that people only pursue purely economic goals).

He also challenges what he views as the modern obsession with economic growth, suggesting that ‘Material progress has become, in many ways, the secular religion and a major hope of our times’ (page 234). The danger of attacks of this kind is that they can easily lapse into a romanticism that ignores the enormous benefits of material progress. However, Sedlacek avoids this trap, recognising that ‘the pursuit of progress has enabled real progress’ (page 139). He suggests that ‘The solution we might seek is therefore not asceticism, but rather Sabbath economics’ (i.e. a more balanced approach that addresses a broad range of human wellbeing, page 244).

Sedlacek’s history based approach is helpful in relation to this. As he says, ‘History of thought helps us to get rid of the intellectual brainwashing of the age, to see through the intellectual fashion of the day, and to take a couple of steps back’ (page 4). Furthermore, some elements of his discussion of the relevant history are fascinating in their own right, including his discussion of the remarkable, sophisticated economic analysis of the Greek philosopher and general Xenophon, and his disentangling of the approaches of Mandeville and Smith, culminating in his suggestion that much modern economics is closer to Mandeville’s amoral views than to Smith’s moral philosophy. His analysis of different philosophical systems also allow him to pinpoint questions that are often not asked in the modern world (e.g. is it possible that, as the Bible implies, ethics can impact the economic cycle?).

There is thus much to commend in Economics of Good and Evil. However, the basic argument of the book is wrapped in a web of other material that distracts and confuses the reader and is in many respects, at least, highly contentious. A significant proportion of Sedlacek’s discussion of religious thought comes within this category, although it also contains a number of insightful comments.

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Some of these wrong or contentious statements are irrelevant to the main argument of the book (e.g. his suggestion that the concept of the ‘Kingdom of God’ is not to be found in the Old Testament – it is [see, for example, Psalm 45:6] – and his apparent belief that the Old Testament commands hatred for enemies – it does not) and some are simply silly misunderstandings (e.g. his apparent failure to recognise that the statement that ‘Almost all real numbers are irrational’ [page 285] is not a statement about the relationship of certain numbers to reason). However, some of the book’s other defects are more serious.

Sedlacek is prone to overstatement (e.g. ‘our modern economic theories based on rigorous modelling are nothing more than … meta narratives retold in different [mathematical?] language’, [page 5]) and he uses language loosely without clearly defining his meaning. In particular, he is imprecise in his use of the terms ‘good’ and ‘evil’ (a significant failing having regard to the title of the book!) and sometimes speaks in riddles (e.g. ‘Man is naturally unnatural and unnaturally natural. We’re more natural when we aren’t natural’ [page 324]; ‘If I’ve written about what we should abandon, the question of what to return to should come more easily. The answer appears to be as follows: Step down from Babylon’s ivory tower before the confusion of languages [no one understanding anyone or anything] is completed’ [page 328]). He is also guilty of significant leaps of logic, tends to assert things without careful argument and, most significantly of all, adopts highly contentious philosophical positions.

He admits that his approach is post-modern and this is very evident in his treatment of truth (e.g. ‘What is truth? What is the nature of truth? Does truth lend itself more readily to scientific enquiry or is truth more of a poetic issue?’ [page 299], and ‘Facts and “objective reality” are fuzzy’ [page 301]). He also suggests that reason and emotion are ‘two poles of the same continuum’ (page 312) and he adopts a thorough going nominalist metaphysical position (e.g. ‘Mathematics is a purely abstract creation of our minds – nothing more nothing less’ [page 292], and ‘the world itself does not contain [mathematical concepts] [as it contains no other abstractions]’ [page 310]). The overall result is that his philosophy proves to be lacking in firm foundations.

Sedlacek admits that ‘this is not a book of answers’ (page 330) and, in reality, all that he has done is to provide good reasons for treating economics as being something rather more than a positivistic mathematical exercise. He is right that the psychological, philosophical and ethical dimensions to economic questions need to be recognised. Human beings cannot be described in mathematical equations and values and ethics are critical to both the exercise of defining the kind of society that we want and seeking to establish it. However, this task does not require that we buy in to Sedlacek’s philosophical approach, which is in any event too vague to be useful.

‘Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street’ by Thomas Sedlacek was published in the English language in 2011 by Oxford University Press (ISBN: 978-0-19-932218-3). 331pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.