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Quoted, Not Read
When it comes to famous economists who are oft quoted but rarely read, Adam Smith jumps to the top of the list. Despite being widely considered as the father of modern economics, few people actually bother to read Smith's opus, The Wealth of Nations or its sister piece, The Theory of Moral Sentiments (including me: my copies rest largely undisturbed on the bookshelf). But this has not stopped the Scottish political economist from being quoted, mis-quoted, and generally used as a handy historical cudgel with which to beat one's ideological opponents. For example, Smith's metaphor of 'the invisible hand' is regularly used to support arguments for unconditional free markets, whereas Smith himself held a much more nuanced view. This abuse has led to, among other things, professor Gavin Kennedy devoting an entire blog to defending Adam Smith's "Lost Legacy".

Hello there
Not far behind Smith on this list you will find John Maynard Keynes. Certainly among the most famous economists of the 20th century, Keynes has had a huge impact on the policies adopted by governments in the Western world from the 1930s onward. Not only did his writings change the economic discourse, but he was also heavily involved in shaping and negotiating the Bretton Woods system that defined post-WWII international economic affairs. For all that, however, few people bother to actually read any of his writings.

This is unfortunate, for several reasons. First, it ruins the quality of the debate over economic policy. You will often find that people will argue for or against a "Keynesian" approach to dealing with the financial crisis based on a crude caricature of what that actually means. (Usually: "governments should spend lots of money" vs. "no they shouldn't").

It certainly doesn't help that an influential school of post-war economic thought calling itself "Keynesian" was a perversion of his writings. By the mid-1970s, the evident policy failures of the "Keynesians" swung the pendulum of influence towards the monetarist school of thought that begat Alan Greenspan and friends. Now, Alan Greenspan (and the rest of the world) has discovered that this ideology is flawed and the pendulum is swinging back in the other direction - at least a little. What better time to bin the caricatures and have a real debate?

Second, it's unfortunate because people are missing out on some great insight into human nature and its role in shaping political economy. Rather than being a purely mathematical sort, Keynes was a student of history, psychology, philosophy, politics and economics all rolled in together. It's therefore my impression that he developed his theories based upon what he saw around him - including the Great Depression - rather than vice versa. As a result, when you actually get around to reading what he wrote, you're left thinking: "Hey, that sounds just about right."

But don't take my word for it: I will point you to two pieces written recently by folks who "discovered" John Maynard Keynes by actually reading his flippin' book:

• The first example is by Richard Posner, a conservative lawyer, judge, lecturer and prolific writer. In his article last fall entitled "How I Became A Keynesian," Posner explains that, after reading The General Theory, he was surprised to discover that "[Keynes] is the best guide we have to the crisis."

Ah! you protest: Posner's piece is but another second-hand rehashing of Keynes' book. Doesn't that go against your advice to read the orig? Right you are, but I know that most of you are not going to bother so I offer a second-best option:

• Try reading The Epicurean Dealmaker's January piece on "Conventional Wisdom." This is a long-ish article, but if you skim further down you will find Keynes' views on financial markets and investors* quoted at length. For this anonymous blogger, Keynes' description of investor behaviour is absolutely bang on. Presumably he would know: he tells us that he is a veteran player of 20+ years in the mergers & acquisitions game on Wall Street.

Just to be clear, Keynes' views were far from perfect and his writings should be read with a critical eye. Nevertheless, some of his insights into human behaviour and political economy are just as true today as they were in the 1930s. And if you, like me, are still in the process of trying to figure out Just What The Hell Is Wrong With Our Financial System, Keynes is as good a place to start as any.

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*Keynes' The General Theory was not primarily about financial markets, but rather uncertainty and its impact on savings & the economy as a whole. I think.