Will the real Robinson Crusoe please stand up?

It is difficult to think of a literary narrative, other than Robinson Crusoe, that economists have so enthusiastically appropriated as part of their cultural heritage. The image of Robinson, shipwrecked, alone, and forced to decide how to use his finite resources, has become almost emblematic in the teaching of the problem of choice in economics. But does Robinson Crusoe still have anything to offer economics students in a post-crash world?

It would seem not. When economics teaching came under a barrage of criticism after the financial crash in 2008, the problem was that the basic theories being used in the classroom were as far removed from the messiness of CDOs (collateralized debt obligation), asset bubbles, and bank leverage as Robinson is to any human interaction. The purity of Robinson’s choice problem, abstracted from the complications of other people, governments, or wider cultural contexts, was matched by the stripped-down workhorse models of economics that had been taught to students across the globe for many decades. Both Crusoe and first year university economics seem equally outdated for a 21^st century economist.

But then it became clear that Robinson was far more resourceful than we had allowed and what we were looking for in a new literary text was already there in abundance in Defoe’s narrative. The problem was simply to recast and reclaim Robinson into a role that was far closer to his real circumstances than the bit-part lonesome character he has usually assumed in the works of Jevons, Torrens, and many economics textbooks.

For it turns out that Robinson was never really that alone. After his shipwreck he is petrified at the sight of a footprint in the mud. He now restricts his movements to a very small part of the island and his actions are severely and materially impacted by the mere possibility of other people, who do in fact eventually arrive. Robinson is no longer in Jevons’ pristine world of pure choice but inhabits a more complex environment, perhaps that of Adam Smith whose impartial spectator delimits one’s behaviour even when no-one else is around, or maybe that of John Nash whose actors cannot avoid second-guessing how others might respond.

Moreover, Robinson arrives on the island because he fancies himself as a slave trader but he encounters a severe storm before he is able to procure any slaves. Seen in this context, his abortive journey might be deemed a success because he does eventually acquire a slave, Friday, who he puts to work. Robinson’s welfare is therefore the result of a choice he makes not in isolation, but in the historical context of an extreme power relationship in which he is the ultimate claimant to the product of Friday’s labour, a result related to  the guns he rescued from the shipwreck. This distribution of welfare is destined to change, however, as others arrive on the island and the simple power relationship with one other inhabitant cannot be easily replicated with many.

Previously, Robinson had been a successful gold merchant and owner of a sugar plantation in Brazil, activities through which he honed his skills in managing and incentivising his workers’ efforts. He will use these considerable management skills to motivate and organise a small productive community among the new arrivals on his island, and we will see how the economy’s performance, and the welfare of its citizens, respond to his organisation of labour and the rules of conduct he is able to implement in this new peopled world.

Can one really understand Robinson Crusoe without seeing him in the context of his history, institutions like slavery, his considerable human capitals, his skill at implementing rules, organising, motivating and monitoring his workers both before and on the island? And is it fair to say that when economists settled on Robinson Crusoe as the emblematic text for the teaching of economics, they had landed on just the right part of the literary heritage, but for the wrong reasons?

Featured image credit: Books in black by Pixabay. Public domain via Pexels.