I thought I had lost my Ec 10 notebook (introduction to economics) but I found it! I would never in a million years have taken the course, but it was one of the only standard required courses in my Social Studies concentration. I checked the current department requirements, and it remains that way, even though the theorists in Social Studies 10, the sophomore departmental seminar, now include women and people of color. Since Social Studies is about fundamental theories of how the modern world functions, a good year long introduction to economics makes sense. This would be a pretty non-math-intensive version though.
I think this was the only course I took in my four years with a true “celebrity” professor. Martin Feldstein had taken some time off from Harvard to chair President Reagan’s Council of Economics Advisors, and he wasted no time in the first lecture identifying the Federal budget deficit as a primary economic issue of the time. (He wouldn’t do most of the lecturing – the set up was that people from throughout the department would teach about their specialty.) He said that really the primary importance of studying economics was to be able to read the newspaper, and generally to function in economic society.
Professor Feldstein laid out some interesting premises early on. One was a distinction between positive and normative economics – describing the economic workings of the world vs. recommending policies. Economists’ work could inform those policies, primarily by assessing the benefits and costs to society at large of different policy choices in the real world. He stated that most economists in the mainstream would agree that redistribution of wealth was not economically valuable, a normative statement that he posited had scholarship to back up. He noted that economists were rigorous analysts of data even though pretty much all the data were from observation in the world, rather than designed studies in the lab – so in that sense economics is very much like and quite unlike the other social sciences as scholarly disciplines.
My section leader was Dave Corbett, and he told us in the first meeting that he was a socialist who disagreed with Professor Feldstein and the textbook that neoclassical economics was a value-free picture of the real world. He mapped out three views of society vis-à-vis economics: a traditional worldview interpreting based on faith and tradition, the neoclassical framework looking at the actions of self-interested individuals, and the socialist framing focusing on power and class. Neoclassical economics, in Dave’s view, is one description but not necessarily the only one, and no series of statements generated by positive economics can justify any particular normative vision of society. He hoped to teach us how to see with the neoclassical lens while also pointing out where something might need to be added to the picture.
The first sessions here paralleled the exploration of Adam Smith’s writings in Social Studies 10. In Ec 10, the lecture emphasized how mercantilism focused on the accumulation of wealth and in particular gold by the crown, which required a trade surplus. But this had the effect of depressing social prosperity overall; I think because unequal exchange between nations depressed international demand. Mercantilist economics could not “see” this. Partly this error emerged from extrapolating wrongly in a direct way from the motives and needs of the individual to those of society. This highlights just what Adam Smith did find a way to “see”, and how daring it was for him to posit a theory of optimal social benefit that had no arbiter on top or no guiding ruler.
In a similar vein, another lecture looked at communist China as a comparison with free market economies, since this is the only way to study the relative social benefits of both types. The command economy could in the short term increase capacity in certain important sectors of industry or agriculture, and that benefit was real, but really only for the short term because there were always unintended consequences elsewhere that more than negated these benefits. The benefits tended to be concentrated – for certain populations and I guess the rulers – but the negatives tended to be spread out. So by the 1970s and 1980s, already China was experimenting with pockets of market-based industries.
All of this tracked the basic tools of microeconomic analysis – supply and demand curves and the factors that shape or shift them, social benefit and dead weight loss, etc. I still retain that apparatus. One thing I forgot was the concept of normal vs. inferior goods – an inferior good being something for which demand increases as income decreases. An example would be potatoes during the Great Depression, and I think the idea here is linked to “substitution goods” though I don’t have that spelled out in my notes.
I see something too in the early notes about the impact of tariffs, which in a perfectly competitive market would be inefficient but the analysis differs at least within a society if all the producers are foreign and the country or countries affected are small, so that the tariff does not affect the world price. In which case, the tariff might be beneficial within the taxing nation if the consumers do not pay the entire cost of the tariff and/or the government collects enough revenue, such that the sum of both these factors outweighs what would otherwise be the dead weight loss (I think) or the foregone social benefit compared to the prior equilibrium.
I did and do find these basic concepts of analysis useful. I think I do use ideas of marginal cost/benefit, opportunity costs, externalities, public goods, and benefit curves and how they shift even in the nonmaterial realm where I mostly function.
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