AI Reveals Unfinished Business of Economics' Marginal Revolution
This op-ed by Joakim Book analyzes Tyler Cowen’s new book, The Marginal Revolution: Rise and Decline, and the Pending AI Revolution. It argues that modern artificial intelligence highlights the unresolved tensions within the historical Marginal Revolution in economics. While Carl Menger, William Stanley Jevons, and Léon Walras independently discovered subjective value in the 1870s, the discipline subsequently drifted toward Jevons’s quantitative, statistical approach rather than Menger’s theoretical focus on human action. This shift led to a numbers-first enterprise characterized by physics envy and data obsession, often lacking foundational theory. Cowen suggests that Jevons’s emphasis on measurement contained the seeds of this transformation. Interestingly, Cowen released an AI companion to his book, which attributes the dominance of the quantitative strand to its compatibility with averageism and statistical methods. The article contends that without a proper understanding of human action beneath the statistics, economics fails to adequately address uncertainty and entrepreneurial imagination. Ultimately, the piece posits that today's AI developments expose the limitations of the credibility revolution and revive the relevance of the Austrian school's subjective value theory, suggesting that the marginal revolution's business remains unfinished.
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AI Reveals Unfinished Business of Economics' Marginal Revolution
This op-ed by Joakim Book analyzes Tyler Cowen’s new book, The Marginal Revolution: Rise and Decline, and the Pending AI Revolution. It argues that modern artificial intelligence highlights the unresolved tensions within the historical Marginal Revolution in economics. While Carl Menger, William Stanley Jevons, and Léon Walras independently discovered subjective value in the 1870s, the discipline subsequently drifted toward Jevons’s quantitative, statistical approach rather than Menger’s theoretical focus on human action. This shift led to a numbers-first enterprise characterized by physics envy and data obsession, often lacking foundational theory. Cowen suggests that Jevons’s emphasis on measurement contained the seeds of this transformation. Interestingly, Cowen released an AI companion to his book, which attributes the dominance of the quantitative strand to its compatibility with averageism and statistical methods. The article contends that without a proper understanding of human action beneath the statistics, economics fails to adequately address uncertainty and entrepreneurial imagination. Ultimately, the piece posits that today's AI developments expose the limitations of the credibility revolution and revive the relevance of the Austrian school's subjective value theory, suggesting that the marginal revolution's business remains unfinished.
Eurasia Review