Posts
- We went over again our two working definitions of economics. You should refer to this post for these definitions.
- I think most of you grasped the importance of the distinction between these two definition. If you are curious, here are links to more info on Allan Gruchy and Lionel Robbins.
- We also spent time dealing with Robert Hielbroner's introduction through Chapter 2 of his, Economics Explained:
- we learned that markets and market society have not always existed
- there are some preconditions to markets society:
- private property
- the "commodification" of things that precapitalist societies would NEVER have thought of as commodities, e.g. land, labor and capital
- the emergence of capitalism was truly revolutionary; albeit a slow one.
- capitalism let the technology genie out of the bottle. Even Karl Marx and Friedrich Engels, two of the most vehement anti-capitalists to ever grace the world with their presence, recognized that capitalism brought forth a set of forces that promoted the rapid development of new technologies that transform our production landscapes.
And this last one is set apart from the outline above because of its singular importance to this course: prior to capitalism economic life was relatively stable. Why is this?
The central objective of this course will be to develop an answer to this question in terms of the notion of a monetary production economy.
Capitalism, as a monetary system of production, is always and everywhere dedicated towards accumulating more and more money. Money is the engine of this system. The end of production is never consumption, although it would seem fitting to think so and is often the convenient side effect. Rather, the end of production in this system is to realize monetary gains. We also call this pecuniary gains. If the business person believes that production will not yield the monetary gains he or she needs or desires, he or she is not obliged to engage in production. It's that simple. But, since the goods and services that constitute the basis of our material well-being are a by-product of this production process under capitalism, this means that there is no guarantee that they will be forthcoming. In a monetary production economy there is always the alternative of hoarding money in liquid form, or purchasing financial assets that yield a rate of return in lieu of actually producing something. That's the source of economic instability and it can emerge naturally from within the system.
Think about that for awhile. This will be a recurring them throughout the course. Other themes some directly and indirectly related to this include:
- recessions
- business cycles
- interest rates
- full employment
- economic growth
- price stability
- money
- fiscal policy
- monetary policy
- financial panics / crises
- inequality
