The London Libertarian

The London Libertarian

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Commentary and debate on politics, economics and culture from a libertarian perspective. To Libertarian Alliance Website >


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Economics

EconomicsPosted by Jan Lester Thu, April 03, 2014 11:08:36

economics The Greek roots of this word refer to distribution within the household, yet economics has grown into an entire intellectual subject. It can broadly and usefully be explained as the *science of the allocation of *scarce *resources, in order to avoid *waste (by extreme contrast, the *Austrian School takes it to be a branch of praxeology: the a priori study of human action). Where economists give advice, then that is economics as technology rather than science. Economics is not particularly about *money, as is often thought. Neither is it restricted to being a *social science, as economic analysis is possible of any system that has to allocate scarce resources—biological, mechanical, even virtual—although this entry focuses on the social science aspects.

Of all the *academic subjects, this is the one—being the most relevant—that has done the most to explain how *private-property *anarchy is the best system for human *liberty and *welfare (although few economists give anarchy serious consideration, or are very clear about the theoretical and practical connections among *private property and liberty and welfare). *Truth tends to be revealed by serious, relevant study. Thus it is no coincidence that economists are far more likely than other *intellectuals to call themselves pro-*free-market (or that *sociologists, unless they use economic methodology, are generally far less likely), and this is despite economists usually being taught in, and often living off, the *corrupt, *tax-funded, *monopolized *university system.

To mention only a few broad points, discussed in other entries, that economics has explained (if not always to the satisfaction of all economists): how both sides gain from trade (whether as individuals or *countries); how specialization and the *division of labor increases productivity and real income; how the *market tends to *equality (which is usefully ‘disrupted’ only by *scarcities, including valuable innovations); how the market lowers *prices generally while conserving scarce *resources (including *natural resources); how market *supply and *demand is an *economically efficient, self-regulating, *anarchic order except insofar as it is damagingly disrupted by *political interference.

Economics is sometimes divided into microeconomics and macroeconomics. Microeconomics is about individual agents and firms on the small scale. Macroeconomics covers such large-scale phenomena as *balance of trade, *business cycles, the *economy, *inflation, and *unemployment. Insofar as macroeconomics attempts to do more than aggregate microeconomic phenomena, it is often about fallacious attempts to defend *state interferences with the *free market and other liberties. The assumptions and methods of small scale economics do not—contra John Maynard Keynes (1883-1946), for instance—appear to change into anything qualitatively different when large scale problems are examined.

Economics was once stigmatized as “the dismal science”, and it often still is—usually in ignorance of the expression’s true origin. When Thomas Carlyle (1795-1881) coined that expression (in “An Occasional discourse on the Negro Question” [1849]) he was objecting in particular to the economic arguments used for abolishing *slavery (and not, as is often thought, to the pessimism of the first edition [1798] of Thomas Malthus’s [1766-1834] An Essay on the Principle of Population). Moreover, insofar as economics is about determining how to achieve *economic efficiency for people, it would be far more accurate to call it ‘the cheerful science’. However, many top university courses on economics are now hopelessly perverted by mathematization in a forlorn attempt to attain a precision and intellectual rigor that emulates the natural sciences. Such ‘mathonomics’ is a disaster that obscures economic enlightenment. As Kenneth E. Boulding (1910-1993) put it: “Mathematics brought rigor to economics. Unfortunately, it also brought mortis.”

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