[FoRK] Re: what the hell is economics, anyway?

Kelley kelley
Mon Jul 4 21:40:07 PDT 2005

At 10:33 PM 7/4/2005, Luis Villa wrote:
>As far as I can tell, anyone who can run a regression is now calling
>themselves an economist and their work economics, even if it has
>nothing to do with money, or economies. Surely this article is
>demographics, or epidemiology, not economics?


:) Markets and market behavior. Remember, the entire discipline of 
economics grew out of what was called "political economy" (which is usually 
used to label the marxists, now, because they address the polity). It grew 
out many events and debates, but a foundational debate was the question of 
value: if there is nothing stable on which to base value (god was dead, 
having been tossed aside as the ground of ultimate value when we threw off 
the chains of feudalism), then what is it based on?

Was it land? If not (and land, remember, was what formed the basis of the 
feudal economy), then what? Labor? What determines the value of an hour of 

If it's a market, how can that work? It was pretty terrifying and it 
propelled the fore-founders and founders of economics to set forth various 
theories of the source of value. Adam Smith had his answer -- but he was 
also famous for writing a huge tome on morality and drew on a philosophical 
anthropology of human nature: we are driven to truck, barter, and exchange 
because we want to be recognized by our fellows (and not just because we 
want to make a buck). David Ricardo had another -- the "labor theory of 
value." Value is determined by the hours of labor to produce a product. 
This was strange stuff back then! Marx rejected what we call "classical 
economics" (like Smith's and Ricardo's) and set about writing _Das Kapital_ 
in order to show how various theories of value were wrong. (On many 
accounts, he failed at that task, but wrote a pretty fascinating sociology 
of capitalism and capitalists of his era.)

So, economists are concerned with markets. Not just money and not just 
economies in the conventional sense. Gary Becker of the Chicago school won 
the Bank of Sweden Prize in Economic Sciences (in Memory of Alfred Nobel) 
because he extended the rational choice theory of human behavior into so 
many fields -- such as the family and crime. The rest of the triumverate 
includes Milton Friedman and George Stigler who writes a lot of intro text 

Steve Levitt (of Freakonomics) is an heir to the Chicago School legacy and 
you can see from his bestseller, he's doing stuff you say belongs to other 
disciplines. As a sociologist of the economy, *harumph*, sometimes I get 
territorial myself. But really, what are the disciplines? I personally 
enjoy people who are well-read, deilletants,  and mix it up a little. Not 
that I think much of Levitt, actually. Then there is John--More Guns, Less 
Crime--Lott's infamous argument that the more guns there are, the less 
crime. Since been debunked all over the place if I'm remembering rightly.

The entire Chicago School of Economics (Richard Posner of Microsoft court 
case fame is part of the clan) is hell-bent on explaining human behavior 
according to rational choice economics. E.g., they look at adoption 
markets. Levitt, of Freakonomics above and John Donohue (Standford)argued 
that the decrease in the crime rate could be explained by legalized 
abortion. More poor or not-ready-to-have-a-family-parents had abortions, so 
fewer children were born to become delinquents and criminals.

SCIAM had a good overview of the whole "Why did the crime rate decrease" 
debate not long ago. If I get a chance, I'll scan it.

Anyway, Amartya Sen is pretty famous in policy circles -- at least he was 
at my grad school, which pumped out public policy wonks. He worked on 
social choice theory, the legacy of the economist Kenneth Arrow who 
actually became famous with a piece on voting. Sen argued that famine 
wasn't the result of the lack of food, but was the result of political 
policy choices that created built-in inequalities in the distribution of food.

Sen also argued that, while we have a right to vote, it does us little good 
unless we have the capability -- which can be all kinds of things such as 
having the time off to go vote, education, interest, etc. Things that are 
all common sense to us, but it takes an academic to write 400 pages tomes 
on this stuff. Which isn't fair, really, because they are dealing with all 
of this at a more abstract level and I've really reduced this in order to 
quickly tap out an answer.

Which will explain horrendous typhos and dropped words.



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