Handout 10: Economic Ideas
Economic ideas have an impact on public policy. Economic theories are related to economic practice.
The techniques used in economic analysis have developed over the past few decades - there have been theoretical advances and advances in statistical methods.
What are the processes of the modern economy?
In micro-economics we are concerned with the behaviour of the individual within the economy.
After the second world war there has been an icrease in government involvement in the economy in many countries. Eric Roll (1953) believes that this has been the result of the theoretical ideas that have been expounded. I believe that it is because of the avaiability of the means to affect policy. During the war years certain powers have been relinquished to the state as part of the war effort that just have not been given up by those in power.
So yes, there has been an increase in the State's role (not responsibility) for the welfare of the individual. Roll also believes that there has been a general acceptance of the view (what he calls a fact) that the state has a considerable responsibility for the general level of economic activity and employment. This view are now being challeged after the 2007 meltdown and subsequent attempts by governments to get out of the debt that they have gotten their economies into as a result of the economic and social policies that they have implemented over the past 50 years.
The legacy of Marx and Keynes has had a devastating effect on Western and World economies and it may be useful to 'explore the way in which the great thinkers have viewed similar problems'.
Economics is a practical subject.
Thinking about economics have contributed substantially to the general stream of human thought (Roll, p12)
ECONOMICS
The purpose of the field of study (according to Roll, p19)is "to establish the principles upon which the present economic system works" - no - it is to establish the principles upon which a desired economic system should be based. Both these approaches I guess are legitimate fields within Economics - one being descriptive and the other being prescriptive. This second alternative view does however introduce an additional complication - that of "what is desired?" and in defining that it would exclude some principles - for example if one would say that a desired economic system should maximise the total utility obtained in a society, would the killing of a dictator (without or without due process), if that led to the improved lives of most, be warranted? The enslavement of a small part of society for the betterment of the larger part - would that be warranted?
To answer both of the above questions - how the system works, and what would be the best system, does presuppose that we have defined what the system is. In doing this I am sure that we will already run into differences based on ones underlying views and assumptions.
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