Theme 1: What is economics? - Article + Reading Questions
Samuelson 1980: Economics - Introduction
Political economy ‘Queen of Social Sciences’ – oldest of the arts, newest of the sciences
As a scholarly discipline, economics is just two centuries old.
Adam smith: Wealth of Nations 1776 founding father of the social science or discipline of
economics
Karl Marx: Das Kapital 1887 critique on capitalism
John Maynard Keynes: The General Theory of Employment, Interest and Money 1936 new
ideas about economics
There are many different definitions of ‘economics’. However, most definitions are too limited.
Economists today agree on a general definition like: “Economics is the study of how people and
society end up choosing, with or without the use of money, to employ scarce productive resources
that could have alternative uses – to produce various commodities and distribute them for
consumption, now or in the future, among various persons and groups in society. Economics analyzes
the costs and benefits of improving patterns of resource use.”
GNP/GDP (Gross National/Domestic Product): measures the total of all goods and services produced
in a nation. Materialistic concentration on the quantity of economic goods Quantity at the
expense of quality of life? Correct the measure of GNP so that it becomes more of a measure of
what people will consider to be true Net Economic Welfare more realistic measure
Every national issue mentioned requires economic understanding to make progress in dealing with it.
People who have never made a systematic study of economics are handicapped in even thinking
about national issues Necessity of economics
Economics a subject that can combine the attractive features of both the humanities and the
sciences multidisciplinary science Economics borders on other important academic disciplines
Many social sciences’ studies overlap those of economics
Main task of modern political economy is to describe; to analyse and explain; to correlate the
behaviour of production, unemployment, prices, and similar phenomena because of the
complexity of human and social behaviour, we cannot hope to attain the precision of the physical
sciences we cannot perform controlled experiments we must be content largely to ‘observe’
How we perceive the observed facts depends on the theoretical spectacles we wear
As a social science, economics cannot be as precise as the natural sciences, because no controlled
experiments can be performed observation is important.
A new scientific truth does not triumph by convincing its opponents and making them see the light,
but rather because its opponents eventually die, and a new generation grows up that is familiar with
it.
Every theory distorts reality in that it oversimplifies But if it is good theory, what is left out is
outweighed by the beam of light and understanding thrown over the diverse facts Theory and
observation, deduction and induction, will not be in conflict
Fallacy of Composition a fallacy (= denkfout) in which what is true for a part is, on that account
alone, alleged to be also necessarily true for the whole what seems to be true for individuals is not
always true for society as a whole and vice versa
Reading Questions:
Samuelson 1980: Economics - Introduction
Political economy ‘Queen of Social Sciences’ – oldest of the arts, newest of the sciences
As a scholarly discipline, economics is just two centuries old.
Adam smith: Wealth of Nations 1776 founding father of the social science or discipline of
economics
Karl Marx: Das Kapital 1887 critique on capitalism
John Maynard Keynes: The General Theory of Employment, Interest and Money 1936 new
ideas about economics
There are many different definitions of ‘economics’. However, most definitions are too limited.
Economists today agree on a general definition like: “Economics is the study of how people and
society end up choosing, with or without the use of money, to employ scarce productive resources
that could have alternative uses – to produce various commodities and distribute them for
consumption, now or in the future, among various persons and groups in society. Economics analyzes
the costs and benefits of improving patterns of resource use.”
GNP/GDP (Gross National/Domestic Product): measures the total of all goods and services produced
in a nation. Materialistic concentration on the quantity of economic goods Quantity at the
expense of quality of life? Correct the measure of GNP so that it becomes more of a measure of
what people will consider to be true Net Economic Welfare more realistic measure
Every national issue mentioned requires economic understanding to make progress in dealing with it.
People who have never made a systematic study of economics are handicapped in even thinking
about national issues Necessity of economics
Economics a subject that can combine the attractive features of both the humanities and the
sciences multidisciplinary science Economics borders on other important academic disciplines
Many social sciences’ studies overlap those of economics
Main task of modern political economy is to describe; to analyse and explain; to correlate the
behaviour of production, unemployment, prices, and similar phenomena because of the
complexity of human and social behaviour, we cannot hope to attain the precision of the physical
sciences we cannot perform controlled experiments we must be content largely to ‘observe’
How we perceive the observed facts depends on the theoretical spectacles we wear
As a social science, economics cannot be as precise as the natural sciences, because no controlled
experiments can be performed observation is important.
A new scientific truth does not triumph by convincing its opponents and making them see the light,
but rather because its opponents eventually die, and a new generation grows up that is familiar with
it.
Every theory distorts reality in that it oversimplifies But if it is good theory, what is left out is
outweighed by the beam of light and understanding thrown over the diverse facts Theory and
observation, deduction and induction, will not be in conflict
Fallacy of Composition a fallacy (= denkfout) in which what is true for a part is, on that account
alone, alleged to be also necessarily true for the whole what seems to be true for individuals is not
always true for society as a whole and vice versa
Reading Questions:
