It is also completely disconnected from Ricardo's theoretical contributions to political economy, including the best then available formulation of the labor theory of value and his work in international tea theory, such as formulating the so-called law of comparative advantage.
Knowledge of the latter, insofar as it is true, might help in currency speculation, but unlike Keynes, another economist-financier whom we left off our list, my research didn't show whether Ricardo was a currency speculator. His big score seems to have been betting against the French before Waterloo and buying big in British government bonds. And causality of making money through currency speculation, if Ricardo did it, and understanding, in Ricardo's case, formulating, the law of comparative advantage, runs in reverse. To make bets on currency rates based on comparative advantage you have to understand the supposed law and know what the comparative advantages of nations in fact are.
We also forgot another important political economist with practical business knowledge, John Stuart Mill, who was a home country administrator for the British East India Company. J.S. Mill was not a political economist quite at the level of the greats like Ricardo, Marx, or Keynes, but he was an important contributor to the field and his Political Economy was pretty much the standard treatise on the subject during the second half of the 19th century, before political economy was superseded by Jevons, Walras, and Marshall and their marginalist revolution, the ancestor of today's neoclassical economics. But I don't know any reason to think that Mill's business experience gave him much insight into economic theory.
There may be a few other cases of economist-business people. And today you have a number of people who work in reverse, developing economic, particularly financial mathematical models in the academy and then making and losing fortunes with them after going private, like th founders of Long Term Capital Management, the failure of which was important scandal prior to the current crisis.
In sum, I think a combination of my explanation and CB's help account for the error in Hayek's statement that business experience (which he seems have quite lacked) is necessary or useful in economic theory. As CB says, business people generally have to focus on their private interests fairly intensely, leaving little time or energy for economic theory, this was apparently less true before the 20th century. Ricardo, Mill, Engels, among others who worked in both areas, we're able to be highly successful in both. As I said, business success requires a different skill set from academic theory. Some psychological research I could give you the sources for indicates that the most successful businesspeople are of just slightly more than average intelligence as measured by IQ, and that about 90% of the difference between more and less successful people in business today is due to "emotional intelligence,' people skills. you need them to prosper in the academy too, but they don't help you with insight into the economy.
Sent from my iPad
On Aug 28, 2012, at 9:03 AM, c b <cb31450 at gmail.com> wrote:
> "Casting my mind back I can't think of of of the great economists who
> had any such experience in business."
>
> ^^^^^
> CB: Businessmen are concerned very strictly with their personal ,
> private interests. Economists must be focused on the "macro" or all or
> most of those private concerns.
>
> Thus, Romney's private experience at making money at Bain does not
> translate to knowledge of how a President might impact the whole
> market's millions of private companies' performances.
>
> "The President as chief economist" implies more centralized planning
> than actually exists, less we would have a significant degree of
> socialism. The assumption underlying "it's the economy, stupid"
> analysis of voters' psychology, would mean that masses of American
> think that we are largely socialist with the President and Congress,
> and Fed controlling the economy as a whole, which is to say
> centralized control. Say it ain't so, Yankee Doodle Dandy.
>
> ^^^^^^^^
>
> There are a few: David Ricardo comes to mind, as does Engels, who gave
> us volumes 2 and 3 of Marx's Capital. In Engels' case, his business
> experience was relevant in the sense that he provided Maex with
> knowledge about what was going on in modern industry. However, I think
> we would have to agree that was quite an exceptional case.
>
> Jim Farmelant http://independent.academia.edu/JimFarmelant
> http://www.foxymath.com Learn or Review Basic Math
>
> ---------- Original Message ---------- From: andie_nachgeborenen
> <andie_nachgeborenen at yahoo.com> To: "lbo-talk at lbo-talk.org"
> <lbo-talk at lbo-talk.org> Subject: Re: [lbo-talk] Intellectual
> property rights, free trade, and free markets Date: Sun, 26 Aug 2012
> 20:48:30 -0500
>
> Yeah, I don't think that Hayek or Mises spent a day In business, and I
> don't think there is any reason to think that people who have business
> experience are better economic theorists that those who haven't.
> Casting my mind back I can't think of of of the great economists who
> had any such experience in business.
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk