Economics #1

Economics is about resources.

Economics is about how things are produced, who produces them, who owns them, and who controls how they are distributed.

Economics is about the ways people exchange things.

Economics is about the value people give to things.

Economics is not a science like chemistry or physics.

Economics is more like history or sociology, because it focuses on human behavior and how systems created by humans operate.

Economics is a relatively recent field of knowledge and uses a modern vocabulary.

Economics is not really about discovering “eternal laws” or “the nature of things.”

I do not think it is very important for people to try and understand the specifics of particular economic theories or systems without first understanding this basic truth: things have not always been this way. Many economists or people supporting a particular economic system (like capitalism or socialism) will try to establish reasons why the system they support is “natural,” “better,” or “fundamental.” 

A healthier way to start thinking about economics is to acknowledge that there are many different ways that humans produce and distribute resources. While the system of capitalism we live with may currently dominate the world, there are still economic systems that function very differently. This is easy to understand if you consider the difference between how a giant corporation like Amazon does business and how you exchange goods or services with family members. 

Be suspicious of any discussion of economics that does not mention politics. Often when someone is interested in promoting a certain economic system, they will not confront the challenges to or contradictions within that system. They may also try to persuade others that a certain economic system exists because it “emerged naturally” in the course of human existence. This is about as meaningful as saying everything “emerged naturally,” because, well, here it is!

Primarily because so much discussion of economics dishonestly leaves out how politics and even cultural or social forces affect economic activities, I do not like to just talk of “economics.” I prefer the term “political economy,” which I will discuss in a future post.