A term derived from a Greek word signifying the art of household management, extended by analogy to pertain to ‘‘macroeconomic’’ studies of the management of the industry and finances of nations, while retaining a ‘‘microeconomic’’ dimension whose central focus in societies that use money is on the determination of prices. Economics is sometimes called ‘‘the dismal science’’, in spite of the capacity of economic issues to arouse powerful individual and political passions and the fact that economic issues play a central role in *Utopian fiction from Thomas More’s Utopia (1516) on. According to St. Paul’s first epistle to Timothy, ‘‘the love of money is the root of all evil’’—although Jesus had been happy to use it as a metaphor in the parable of the talents—and it therefore became the central subject matter of much literature. Although conventional strategies of story closure often rank economic rewards second to romantic ones, there is near-universal agreement to the proposition that they work best in combination. Money was one of the earliest and most significant of all technological innovations, facilitating the avoidance of problems of equivalence involved in barter by establishing an external scale in which exchange values are manifest as prices, and payments are made in the form of coins or promissory notes. The use of pieces of metal as tokens of Exchange probably originated in the third millennium b.c., but the officially certified standardisation of coinage first became widespread in the seventh century b.c., early coins often being made of the gold/silver mixture called ‘‘electrum’’. Coins designed for counting rather than weighing immediately became vulnerable to ‘‘clipping’’—the consequent preferential use of lighter coins being reflected in Gresham’s law, ‘‘bad Money drives out good’’—and gave rise to the dubious art of forgery. Paper money, first introduced in China in the eighth century and widely adopted in Europe in the late eighteenth century, played a discreet but significant role in facilitating the industrial revolution.
Money is a unique technology, in that it involves the deliberate incarnation of an idea, sustained by social convention; although coins may have a substantial ‘‘objective’’ value by virtue of the metal they contain, bank notes have virtually none, and yet their perceived value makes them far more useful and desirable than objects whose value is crudely utilitarian. Money is essential to the economic organisation of all but the simplest societies; the development of accounting systems to keep track of it was a major force in the development of *writing. On the other hand, its confusing effect on traditional conventions of personal obligation is frequently reflected in religious suspicion, which has been particularly relevant to the charging of interest on loans.
The foundations of modern economic theory were laid down in the eighteenth century by the French ‘‘Physiocrats’’ and their English equivalents. The latter included Bernard de Mandeville, who formulated his ideas in the ironic poem The Grumbling Hive; or, Knaves Turn’d Honest (1705), which became the headpiece of The Fable of the Bees; or Private Vices, Publick Benefits (1714; second part, 1729); the literary form seemed appropriate because of the seeming ethical paradoxicality of the basic thesis that the net result of individuals independently seeking to maximise their own advantage in trade is the collective enrichment of their whole society. Mandeville’s fable inspired a reply in the Baron de Montesquieu’s fable of the troglodytes in Lettres persanes (1721), and Mandeville was represented unsympathetically as Lysicles in George Berkeley’s dialogue Alciphron; or, The Minute Philosopher (1732). His argument is also echoed in John Gay’s The Beggar’s Opera (1728) in the philosophy of the roguish Peachum.
The condemnation of Mandeville’s ideas as blasphemous in Simon Tyssot de Patot’s Voyages et aventures de Jacques Masse´ (ca. 1715) was intended ironically, but Claude Helvetius’ De l’esprit (1758; trans. as Essays on the Mind )—which argued that self-interest is the mainspring of mental and moral activity—actually was condemned by the Paris parlement and burned by the hangman. Even so, that notion became the foundation stone of economic theory, taken up by Adam Smith in his landmark analysis of The Wealth of Nations (1776), where its effects were likened to that of an ‘‘invisible hand’’. National governments had previously taken it for granted that national prosperity depended on the margin by which exports exceeded imports, and had thus imposed heavy excise duties on imports; Smith’s argument that free trade would work to the benefit of the whole community of nations implied that all market regulation ought to be abandoned; this proposition became one of the most powerful transformative ideas of the modern era, although it remained an item of fervent political controversy into the twentyfirst century.
The principal difficulty with the production of public benefits (that is, general economic growth) by the invisible hand of the market was that it seemed to be a temporary process, because competition was always forcing the price of goods down towards the cost of their production (the ‘‘law of diminishing returns’’). David Ricardo refined Smith’s arguments in Principles of Political Economy and Taxation (1817), partly by means of integrating into his economic model the ideas of Robert Malthus regarding the impossibility of sustaining economic growth purely by *population growth and the exploitation of new resources. One of the earliest and most sustained exercises in the popularisation of science employing both nonfictional and fictional instruments was undertaken by Harriet Martineau in order to demonstrate the principles of the new science, in such Works as Illustrations of Political Economy (1832) and Illustrations of Taxation (1834).
Ricardo’s analysis, further refined by John Stuart Mill’s Principles of Political Economy (1848) became the lynchpin of governmental economic policy in Britain, while Smith’s version remained more influential in the United States, whose population and natural resources had much greater scope for expansion and exploitation. The difficulties encountered by the ‘‘mature’’ economies of Europe exploded in a series of political upheavals in the year that Mill published his Principles, assisting the emergence of an alternative economic model proposed by Karl *Marx. From then on, economic theory became a political and philosophical battleground on which countless intellectual and actual armies carried forward increasingly bitter and bloody conflicts.
The extension of this battleground into the field of literature was most obvious in the field of Utopian satire, where moral and political arguments frequently overshadowed arguments derived from economic theory. David Stirrat’s A Treatise on Political Economy… in the form of a romaunt (1824) is an exceptional didactic vision of the future of socioeconomic classes, but the discourses of Utopian fiction were more elaborately influenced by economic theory in the late nineteenth century, in such works as Cyrus Elder’s Dream of a Free-Trade Paradise (1872), Theodore Hertzka’s Freiland (1890; trans. as Freeland), Adeline Knapp’s One Thousand Dollars a Day: Studies in Practical Economics (1894), King Gillette’s The Human Drift (1894), and Lebbeus Rogers’ The Kite Trust: A Romance of Wealth (1900). Numerous American works in this vein showed the influence of Henry George’s Progress and Poverty (1879), which concentrated on the role of land ownership and management rather than the entrepreneurial production of goods, advocating the nationalisation of all land and the replacement of all other forms of taxation by rents charged to its various users.
The commercial success of George’s book helped pave the way for Edward Bellamy’s Looking Backward, 2000–1887 (1888) to become a huge best-seller. George’s single tax system is adopted—but subsequently modified—by citizens of the free asteroid Henrygeorgia in the anonymous Man Abroad (1886), and is imposed temporarily by reformers in Thomas McGrady’s Beyond the Black Ocean (1901) and James B. Alexander’s The Lunarian Professor (1909). Anna Bowman’s The Republic of the Future (1887) is an anti-Georgian tract. In Ingersoll Lockwood’s 1900; or, The Last President (1896) George becomes postmaster general when William Jennings Bryan wins the 1896 presidential election, and the country goes to rack and ruin in consequence. Georgian socialist analyses were not overtaken in the United States by Marxist ones until the mid-twentieth century, having exercised a strong influence on the distinctive American socialist tradition carried forward by Eugene Debs. Economic arguments deployed by socialist writers of British scientific romance, such as the one set out by M. P. Shiel in The Lord of the Sea (1901), were as likely to be derived from George as from Marx and Engels.
In terms of economic theory rather than political implication, what Smith, Ricardo, and Marx had in common was arguably more significant than their differences, in that all three accepted the labour theory of value—the notion that the price of an item was ultimately dependent on its cost of production, and hence on the labour invested in its manufacture. The growing awareness that prices were more heavily dependent on the subjective evaluations of buyers than the objective costs of sellers encouraged skeptical reflections on the amazing vagaries of subjective value, as illustrated by such notorious historical episodes as Holland’s ‘‘tulipomania’’ and the scandal of the ‘‘South Sea Bubble’’, the later being satirised in Samuel Brunt’s A Voyage to Cacklogallinia (1727). The replacement of the objective theory of value by a subjective one led to the development at the end of the nineteenth century of ‘‘marginal utility theory’’, but the attempt to refine ‘‘supply-side’’ economics with theories of demand proved very difficult because of the essential mercuriality of demand, which was subject to such strange phenomena as ‘‘fashion’’. As the twentieth century progressed, the economies of developed countries became increasingly focused on ‘‘luxury goods’’ that were enormously sensitive to the vagaries of demand, and hence to the pressures of advertisement, whose representations in speculative fiction—including Villiers de l’Isle Adam’s ‘‘L’affichage ce´leste’’ (1873; trans. as ‘‘Celestial Advertising’’), Skelton Kuppord’s A Fortune from the Sky (1903), and George Allan England’s ‘‘A Message from the Moon: The Story of a Great Coup’’ (1907)—became increasingly antipathetic. Such responses to the alleged crudity of advertising techniques were, however, a trifle disingenuous; fiction became increasingly significant as a celebrant of the idea and trappings of luxury, not only generating and amplifying an exacting status envy but peddling the notion that such rewards were within reach of anyone prepared to make the most of golden opportunity and native ability.
The best-selling American writer of the 1890s was the dime novelist Horatio Alger, whose ‘‘rags to riches’’ stories equated poetic justice with material acquisition and founded one of the most prolific traditions of twentieth-century popular fiction. Adam Smith’s championship of the virtue of free trade was undermined towards the end of the nineteenth century by increasing anxieties about the tendency of competing corporations to fuse into monopolies or to form cartels. This tendency became an important focus of preventive regulations, and stimulated such fearful anticipations as Jack London’s The Iron Heel (1907), J. C. Haig’s In the Grip of the Trusts (1909), and George Allan England’s The Air Trust (1915). The problems involved in regulating money supply by metallic standards also came under scrutiny in such works as Edgar Allan Poe’s ‘‘Von Kempelen and His Discovery’’ (1849), Henry Richardson Chamberlain’s 6000 Tons of Gold (1894), and Garrett P. Serviss’ The Moon Metal (1900). The notion of wrecking the world financial system by destroying its base was presented in an enthusiastic light by such socialist writers as Jules Lermina in To Ho le tueur d’or (1905; trans. as To-Ho the Gold-Slayer) and England in The Golden Blight (1912). Frank O’Rourke’s satire Instant Gold (1964) updated the notion. The tradition of Utopias based in economic theory continued in the mid-twentieth century in such Works as Robert Ardrey’s World’s Beginning (1944), Henry Hazlitt’s The Great Idea (1951; aka Time Will Run Back), and Ayn Rand’s fervently propagandistic Atlas Shrugged (1957). Notable twentieth-century satires on economic theory included Upton Sinclair’s The Millennium (1914; book, 1924), in which the economic phases of social development are rapidly reenacted by a small company of survivors in the wake of a disaster, and Archibald Marshall’s Upsidonia (1915), which describes a society in which fundamental self-interest is overwhelmed by the pressure of social disdain.
Economic theory had little impact on early pulp science fiction, although an exotic exchange system is featured in Stanton A. Coblentz’s The Blue Barbarians (1931). It was imported into John W. *Campbell’s Astounding Science Fiction by Robert A. *Heinlein, extrapolating notions he had developed during his brief involvement with Upton Sinclair’s EPIC (‘‘End Poverty in California’’) campaign. In ‘‘The Roads Must Roll’’ (1940) a transport strike is called in the name of ‘‘Functionalism’’—the proposition that the greatest economic rewards should go to the workers whose jobs are most vital to a society’s infrastructure. ‘‘Let There Be Light…’’ (1940, by Lyle Monroe) discusses the economic logic of the suppression of innovation by power groups heavily invested in existing technologies. ‘‘Logic of Empire’’ (1941) includes similar discussions of the economics of slavery. ‘‘The Man Who Sold the Moon’’ (1950) describes the financing of a pioneering Moon voyage—an issue taken up by numerous subsequent Space Age fantasies, including Alexis Gilliland’s ‘‘The Man Who Funded the Moon’’ (1989). Heinlein’s economic theorising was comprehensively updated in The Moon Is a Harsh Mistress (1966), which helped to popularise the acronym TANSTAAFL (‘‘There Ain’t No Such Thing as a Free Lunch’’); the precedents he set were enthusiastically followed up by numerous exponents of libertarian science fiction. Notable science-fictional contes philosophiques exploring the consequences of economic theory include Henry Kuttner’s ‘‘The Iron Standard’’ (1943; initially by-lined Lewis Padgett), in which human castaways disrupt the economy of an alien culture, and Poul Anderson’s ‘‘The Helping Hand’’ (1950), which offers a scathing analysis of the economics of ‘‘foreign aid’’. The economics of *colonisation, which had provided a major bone of contention in British political economy throughout the nineteenth century, were extrapolated on a galactic stage by Anderson’s Polesotechnic League series, including the novelettes collected as Trader to the Stars (1964), which feature Nicholas van Rijn, the ingenious manager of the Solar Spice and Liquors Company. The principal provider of economics-based science fiction to Campbell’s magazine in the 1960s was Mack Reynolds, whose parents were socialist activists and whose ideas were strongly influenced by Eugene Debs; his work ranged from low-key contes philosophiques such as ‘‘Subversive’’ (1962) to flamboyant accounts of economic subversion on a planetary scale such as ‘‘Ultima Thule’’ (1961; exp. as Planetary Agent X, 1965). ‘‘Adaptation’’ (1961; exp. as The Rival Rigelians 1967) describes an experiment in which spacefarers divide a planet’s nations between themselves in order to compare the relative efficacy power of free enterprise and Marxist planning as forces of social evolution. Reynolds went on to write a substantial series of Utopian novels updating the ideas of Edward Bellamy, beginning with Looking Backward, from the Year 2000 (1973) and Equality in the Year 2000 (1977). This work was produced against the background of a slow revolution in political economy brought about by recognition of the power and responsibility of governments to exercise a certain amount of control over demand, as analysed by John Maynard Keynes. The application of sophisticated mathematical analysis to the rapidly growing stock of historical and contemporary economic data—which came in quantified form, thanks to the ubiquity of money as an exchange mechanism—resulted in a dramatic complication of economic analyses, engendering a massive proliferation of ‘‘economic indicators’’. Increasing precision of analysis could not compensate, however, for the fundamental mercurialness of demand, which continued to limit the explanatory power of economic analyses. The practical application of economic theory was also undermined by the fact that any predictions issued by economists immediately affected the behavior of the people involved in the marketplace, altering the situation whose analysis had produced the prediction: a classic instance of the paradox of prophecy whose effects became increasingly obvious. This inability to anticipate the future of economic systems worked to the disadvantage of the public image of economists, who came to be seen as inept dogmatists continually outflanked by the unexpected, but it had considerable dramatic value for writers constructing plots, especially contes cruels celebrating the irony of fate.
The seeming perversities of economic theory were satirically extrapolated in science fiction by Frederik Pohl in such stories as ‘‘The Midas Plague’’ (1954), in which the efficiency of mechanical production results in citizens being afflicted with ever-more-burdensome consumption quotas to maintain economic growth, and ‘‘The Tunnel Under the World’’ (1955), which extrapolated the newly fashionable practice of market research to a new extreme. Pohl imported such concerns into two of the novels he wrote in collaboration with C. M. Kornbluth: The Space Merchants (1953), in which the economy of the United States is driven to extremes of conspicuous consumption and the advertising industry has become the principal instrument of government; and Gladiator-at-Law (1955), in which the stock market reigns supreme, strategically manipulated by monopolistic corporations run by the ultimate decadent capitalists.
The necessity of stoking up demand to maintain economic growth was further extrapolated in Robert Sheckley’s ‘‘Cost of Living’’ (1952) and Louis Charbonneau’s The Sentinel Stars (1963), in which the inheritance of wealth is replaced by the inheritance of ever-escalating family debt, and Damon Knight’s Hell’s Pavement (1955, aka Analogue Men). Knight’s ‘‘A for Anything’’ (1957; exp. as The People Maker) explored the socioeconomic consequences of the instant disruption of the monetary Exchange mechanism by the invention of a matter-duplicator, and makes an interesting contrast with other stories on an identical theme, including George O. Smith’s ‘‘Pandora’s Millions’’ (1945) and Ralph Williams’ ‘‘Business as Usual, During Alterations’’ (1958). The potential economic consequences of alien contact are explored in a number of stories by Clifford D. Simak, including The Visitors (1980). In D. C. Poyer’s Stepfather Bank (1987), the dictatorial rule of a World Bank is secured by its ability to lure dissenters into debt. Almost all science fiction stories of this kind have a sarcastic edge, considerably sharpened in such satires as Christopher Anvil’s ‘‘Compound Interest’’ (1967), Lee Killough’s ‘‘Caveat Emptor’’ (1970), Joseph H. Delaney’s ‘‘My Brother’s Keeper’’ (1982), and Hayford Peirce’s series featuring an ‘‘ethical stockbroker’’, which includes ‘‘The Boxie Rebellion’’ (1979; incorporated into Jonathan White, Stockbroker in Orbit, 2001). Economists using futurological scenarios to dramatise their ideas, as in the anonymous Report from Iron Mountain on the Possibility and Desirability of Peace (Dial Press, 1967) and Paul Erdman’s The Crash of ’79 (1977), were readily infected by the tendency to sarcasm. The economic problems of Third World development became an increasingly important concern of global economists in the last quarter of the twentieth century, reflected in such literary works as Bruce Sterling’s ‘‘Green Days in Brunei’’ (1985) and Islands in the Net (1988). The vulnerability of money held in *cyberspace to fraudulent manipulation also became a considerable concern, reflected in such speculative fictions as L. E. Modesitt Jr.’s ‘‘The Great American Economy’’ (1973).