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Thursday, May 26, 2011

Economics comes in all shapes and sizes...

          Off the top of our heads, anyone of us can name a dozen philosophers, a score of scientists, and a gross of politicians.  But when asked to name a handful of famous economists, most people come up empty.

          I feel like our disinterest in economists and economics has much to do with how little is understood about economics on the popular stage: what is its history, who are the major players and are we even certain as to what, exactly, economics is? 

          In an effort to peak your interest, flesh out the subject, make it relevant and give some background and context, here's a few major fields and names you should know. 
Financial Economists – These guys study how wealth is created, transacted, grown and destroyed.  It’s important to note they are ultimately interested in wealth and not money (wealth being things with real value, like education, health or security, and money being just a facilitator in transacting and securing wealth).  Financial economists figure out how to make intangible advantages (like equity or certainty in an asset) into tangible holdings, trade those holdings with someone you’ve never met on the other side of the world, and then transforming it all back to its original form.  It’s about what money actually represents rather than about money itself.
Agricultural/Environmental Economists – Minute by minute, mankind's population increases exponentially, but our natural resources have failed to keep up with our explosive growth.  How do you provide for our infinitely expanding population when the staples of survival are so finite?  Who has “too much,” who has “too little,” and how should we define “the right amount”? 
There’s two surefire ways to starve to death: work the land too much, until your fields are barren, or don’t work them enough and come up short on food.  Agricultural and environmental economists try to find for us that vital balance. 
Behavioral Economists – We are all endowed with a certain amount of “social capital,” a friendly hello, a favor owed or a promise to honor and cherish til death do us part.  We utilize these social assets to facilitate an economy based entirely in the exchange of human interactions, expectations, considerations and judgments.  No single human exists completely isolated from all others, and behavioral economists study the way we manage and administer these connections, as an individual or a societal whole.

Nueroeconomists – Only a few years old, the field of nueroeconomics has just started to get interesting.  Nueroeconomics represents a change in the way we look at individuals as they navigate the economy, not really a change in the way we view the economy itself.  Traditionally, economist assumed you and me to be examples of “homo economicus” or “the rationalizing man,” an animal that can objectively and logically manage its own existence.  Homo sapiens figured out that they needed steady supplies of food for survival, but it was homo economicus that realized developing agriculture was a better way of getting fed than just wandering around the countryside hoping to stumble upon ripe produce. 
Nueroeconomists have rejected (at least to some extent) the existence of homo economicus, insisting instead that many of our daily actions are in reality constantly influenced by our reptilian brains and subconscious minds, and that we sometimes need to outwit ourselves to accomplish the goals we want to achieve.

A few other names I’d like to mention include:

Hernando de Soto - Development economists study the dynamics of growth, how and why it happens, and what actions can kick start it.  There have been scores and scores of them over time – and most have hailed from the developed world.  Born in Peru, raised bouncing back and forth between South America and Switzerland, de Soto is a rare development economist FROM the developing world.  He did a lot to reshape economic thinking in Latin America as Alberto Fujimori’s number one economic advisor, and his ideas continue to spread throughout the rest of the developing world to this day. 
Also of note, he may be one of the only living economists who at one point was the target of assassination plots.
See also:  Interview Part 1 
                 Interview Part 2 

Paul Samuelson - He literally wrote the book on economics.  The first American to ever win the Nobel Prize in economics, Samuelson's textbook “Economics,” first published in 1948, was used as THE principle economics textbook for much of the 50s and 60s.  An entire generation of economists was trained using that book as their starting point; it was the place from which all economics students learned their 101 basics.  And that book hits everything, micro, macro, economic history...Chairman of the Federal Reserve Ben Bernanke keeps a copy of it at his office, just to have around. 

Karl Marx – Marx is probably the most popularly known (and contentious) economist of all time.  That’s why it always seemed odd to me that at most universities, you can take a class on Marx in every humanities department except Economics.  Around the turn of the century, academic economics underwent a sea change, shifting from something based in philosophy to something based in mathematics.  Precious little of Marx’s work was able to survive this shift.  Of what was left, much of it simply didn’t withstand the test of time; his forecasts never panned out exactly as predicted. 
However, I do think he’s an incredibly interesting thinker.  He was one of the first to ever realize that industrialization would reshape not just the realities of commerce, but also the structures of societies and governments, and for that alone he’s worth recognizing.

David Ricardo - a Portuguese Jew who came to Britain by way of Holland, who ultimately ended up a member of parliament (not without eloping with an English Quaker woman first!), Ricardo was one of the more colorful economists of the early 1800s.  Ricardo had little formal schooling, but still managed to distinguish himself as the leading trade theorist of his time and by his late 30s was regularly publishing essays on taxation and trade.  Virtually all international trade theory up to now has basically been a variation or augmentation of Ricardo's concept of “comparative advantage.”

Adam Smith - Smith is often identified as the world's first major economist.  This is particularly strange, given that he wasn’t an economist.  Smith never took or taught an economics class in his life.  He was actually a professor of philosophy, and in his time was best known for his treatises on ethics and morals. But it was his writings on trade policy, management and administration that laid the foundation for what would later become economics (remember, econ as its own discipline is a relatively new phenomenon.  The world renowned London School of Economics’ degree program didn’t even begin until 1902, and the first Nobel Prize in economics wasn’t established until 1968).  I like to think of Smith as a "protoeconomist."

Paul Krugman – A current economics professor at Princeton and a prolific writer, Nobel laureate Paul Krugman is a very prominent macroeconomist, who has gained mainstream notoriety by moonlighting as a political commentator.  You see him on TV a lot, and he is a regular columnist to the NYT.

          Ok, I have to stop myself or I’ll go on forever.  I encourage you to get online and do a bit of researching.  Find an economist or an economic field that interests you personally.  Modern economics is becoming rapidly specialized, and I grantee that there is something out there to seize your interest and passion enough that you can finally start to develop that love for economics you’ve always wanted. 

          You just have to start looking.

(Did you find, or do you already have a favorite person or school in economics?  Please let us know in the comments below!)

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