Economics
Economics is a social science that studies society's allocation of scarce resources to meet desires and wants. Economics therefore starts from the premise that recources are in limited supply and that it is necessary to choose between competing alternatives. Economics is "positive" when it attempts to explain the consequences of different choices and "normative" when it prescribes a certain route of action. Aspects receiving particular attention in economics are trade, resource allocation and competition.
Areas of study in economics
In the early 20th century, Economics emerged from the broader, less mathematically inclined tradition of political economy. The principal areas of study in Economics are:
- Microeconomics, which deals with the behaviour and interaction of individual agents and firms
- Macroeconomics, which examines aggregate phenomenona within a given state or region, modelling the relationships between measurable economic parameters such as the level of income in an economy, the volume of total employment, and the flow of investment. Attempts to join these two branches or to refute the distinction between them have been important motivators in much of recent economic thought.
- Development Economics, which investigates the history and changes of economic activity and organization over a period of time, as well as their relation to other activities and institutions.
- Econometrics, the applied use of quantitative analysis to economic problems
Within these four major divisions there are specialized areas of study that try to answer questions on a broad spectrum of human economic activity, including public finance, international trade, labor economics, industrial organization, game theory, economic geography, political economy, public choice, economic history, evolutionary economics and Agricultural economics.
There has been an increasing trend for ideas from economics to be applied in wider contexts. There is an economic aspect to almost any topic one can think of - Education, Religion, Politics, Employment, Transport, Defense, the Environment, etc.
Branches of Economics and Their Related Subjects
Political economy - economics in the context of political science. The most prevalent political economy is loosely called capitalism and organizes the field as follows:
Macroeconomic International -- Macroeconomic Theory -- Monetary economics -- Monetarism--Gresham's law -- Inflation -- IS/LM model -- Recession -- Depression
Microeconomic Labor economics -- Environmental economics or Resource economics --Industrial economics -- Microeconomic Theory -- Public Finance-- -- Welfare economics-- market forms -- Factors of production -- Financial economics -- Connectivity -- Network effect
Mathematical Econometrics -- Game Theory
Selected Topics History of Economic Thought -- Economic history -- Environmental economics-- capitalism -- communism -- economists -- Nobel prize in economic sciences Comparative Economic Systems -- Developmental economics
Schools of thought in economics
There are a number of competing approaches to the study of economics:
- Neoclassical economics forms the basis of most mainstream economics; it is for example dominant in textbooks in the USA. The analysis is based upon the interaction of economic agents (producers and consumers) who act rationally according to stable preferences, often in an environment with perfect competition.
- Keynesian economics, which focuses on macroeconomic issues, and explains levels unemployment and the business cycle as being caused by aggregate demand.
Many economists use a combination of Neoclassical and Keynesian ideas. This combination of ideas, sometimes known as the Neoclassical synthesis, was particularly dominant in western teaching and public policy in the years following World War 2.
Other schools of thought associated with Neoclassical economics:
- Monetarism, which holds that there is a very strong link between the money supply and inflation.
- New classical economics, which emphasises the idea of rational expectations.
Other schools of thought associated with Keynesian economics include:
- New Keynesian economics, which focuses on modelling imperfect markets as an alternative to markets with perfect competition emphasised in neoclasiccal economics.
- Post Keynesian economics, which regards regards neoclassical economics as fundamentally flawed and develops a radically different analysis.
Further alternative schools of economic thought include:
- Marxist economics, based on the writings of Karl Marx , and various modern variants such as Marxian and Post Marxist economics.
- The Austrian school
- green economists, a diverse, complex, and loose group of theories associated with feminism, postmodernism, and the ecology movement.
- Natural Capitalism, which applies neo-classical theory very directly to energy and material conservation, narrowly applying the green critique without challenging mainstream political economy to eliminate "dirty subsidies" and "professional standards" which create unnecessary waste.
- Classical economics, which is associated with economists such as Adam Smith, David Ricardo and John Stuart Mill in the 19th Century, but is still taught and practiced very widely and serves as foundation or straw man to most of the more recent schools above.
Fundamentals of Economics
Economics is the study of the allocation of scarce resources. It is a social science that seeks to analyze and describe the production, distribution, and consumption of wealth.
Because humans uniquely engage in complex trade, economics is distinct from biology or ecology which study the instinctual behaviors of "how other animals make a living" - Lynn Margulis.
Economics begins with the study of market societies, and its most detailed and precise work has dealt with the institutions belonging to them. Modern economics tends to discuss earlier forms of social organization chiefly in terms of their transition to societies based on the exchange of commodities. (There has been some debate over whether economic models apply to hunter-gatherer bands and horticultural societies. "Formalists" have argued that the answer is yes, and "substantivists" and others have argued no. Some, like Marcel Mauss and George Bataille, have argued that research in non-market socieities makes possible and requires a general revision of Western economic theory.)
One of the guiding ideas in Economics is scarcity. Economists claim that almost everything is scarce; that there are too few resources to satisfy all of humanity; and that this situation is natural. It's not only the poor who feel deprived; even those better well-off seem to want more. It is the economist's job to evaluate the choices that exist for the use of those resources and choose those which maximise societal welfare.
A more modern aspect of Economics is the concept of incentives, which guide the choices made by economic agents.
The areas of investigation in Economics overlap with other social sciences like Political science, but Economics focuses on relations between buyer and seller or within markets for those actors. The study of how political relations affect economics is political economy, which is generally concerned with measurement and valuation relationships between factors of production, as enforced or imposed by a political regime.
The earliest economic theories were closely tied to the theological debates of the Scholastics, and to various theories of the state. During the Enlightenment, the French physiocrats and such luminaries as Richard Cantillon and Anne Robert Jacques Turgot were among the first to consider economics in and of itself. They were soon overshadowed by Adam Smith's [[An Inquiry into the Nature And Causes of the Wealth of Nations]], published in 1776. Today it is customary to consider Smith the founder of economic theory - and his classical economics to be the beginnings of formal economic study.
What are our priorities for writing in this area? To help develop a list of the most basic topics in Economics, please see Economics basic topics.
*one general concern - the above simply seems to assume the classical political economy due to Smith, Ricardo, Mill and structures the entire field from its perspective - that of capitalism. Fair enough, as it's the most prevalent model, and I added a line to make it clear that the "branches of economics" are those recognized by modern capitalist theorists - however this is nowhere near NPOV as a whole, and needs the same neutralizing treatment factors of production or capitalism got.