Review of “The Hesitant Hand: Taming Self-Interest in the History of Economic Ideas”

develop this theme. Chapter 1, “Adam Smith and His Ancestors” follows the standard
history of thought approach; it begins with a discussion of Plato and Aristotle’s views,
the Scholastic’s views, the physiocrats and mercantilist view and then discusses Adam
Smith’s views. Medema points out that Smith was not a doctrinaire advocate of laissez-
faire, and that while Smith had an inherent suspicion of the ability of government to
manage economic affairs properly, he also saw a role for government. Medema writes
“Smith considered the link between private and social interests practical and imperfect,
but he was also of the mind that self-interest, properly channeled, tended to engender
positive results, rather than negative ones, and that government interference with its
operations in the economic sphere would generally lead to inferior results.” (25)

Chapter 2, “Mill, Sidgwick and the Evolution of the Theory of Market Failure”
looks at the development of classical thinking on laissez faire and policy and how it
evolved after Adam Smith. He discusses Bentham’s utilitarianism, along with that of Mill
and Sidgwick, pointing out that reformist nature of economic thinking of the time.
Medema writes “On the whole, however, classical political economy evidences a
relatively pragmatic view of the economic role of government, one borne of the
utilitarianism that underlay the approach of many of the classical writers.” (30) He quotes
J.E. Cairnes’s that “the maxim of laissez-faire.. .has no scientific basis whatever.” (31)
He then proceeds to provide a nice discussion of Mill and Sidgwick’s views, presenting
Sidgwick as the transition figure between Classical and neoclassical views that developed
in the writings of Marshall and Pigou.

Chapter 3, entitled “Marginalizing the Market” looks at the evolution of the
textbook Pigovian tradition that developed from Marshall. In it Medema points out that

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