The economy is more than money. Centuries of thinkers have defined and redefined the ways we navigate the resources of our world. Here are five nonfinancial things the economy is definitely about, as explained by Robbie Mochrie in a new book, How to Think Like an Economist: Great Economists Who Shaped the World and What They Can Teach Us.
The economy is virtue, desire, and restraint
“How can a merchant enter the kingdom of heaven?” Mochrie asks. Thomas Aquinas’ answer, he notes, might be this consideration of virtue and responsibility: “Do not exploit the needs of others, but do not sacrifice your own.”
Adam Smith, Mochrie writes, attributes how we act to a different desire, that we are motivated by what others think of us. In Mochrie’s words, “our concern about the promotion of our reputations would enable us to act virtuously.”
The economy is well-being
The economy affects the well-being of all participants. Take, for example, the ever-present conversation on working conditions. Historically, “John Stuart Mill and Karl Marx were both deeply critical of the way in which the Industrial Revolution of the early nineteenth century mostly benefited factory owners, rather than their workers. Alfred Marshall continued the tradition that economics should enable an improvement in the conditions of the working class,” Mochrie writes.
The economy is people, as resources and resource managers
Mochrie explains: “Economics is then the structured study of people, as resource managers, and the system within which they manage them.” And “thinking like an economist simply means engaging in reflection on the challenges of managing resources.”
This piece of the economy has also been used to attempt to explain conditions of scarcity and abundance. Esther Duflo, Mochrie writes, “has argued that poverty does not simply mean a lack of money, but rather a limited ability to command economic resources.”
The economy is information
Where we find it, that we find it, what we do with it. “In modern economics, information is perhaps the most important resource which we must manage, and many of the most important differences among economists have been about how to manage it,” Mochrie writes.
The economy is agreement
We must and are (mostly) willing to work together. Political scientist Elinor Ostrom’s significant contribution to economists is perhaps this, Mochrie writes, “that she found that most people are willing to work together.”
Mochrie adds philosophical support to this notion of agreement: “Plato’s idealism allowed him to see … that a coin was not just a lump of metal, but a token, whose value was determined by agreement among its users. He pointed to the fact that money which circulated in one city would be worthless in others, just as it would be very difficult to use Russian banknotes in a shop in the USA today.”
