ECON.2010: Economics I (Microeconomics)
This course in the basics of microeconomics starts from the proposition that the most important economic phenomenon that needs to be understood in the economy is the availability of productive employment. In sharp contrast, the textbooks that are generally used in introductory microeconomics courses start from the proposition that the most important economic phenomenon that needs to be understood is how individuals allocate the money available to them between Product A and Product B (coconuts and fish are the “real-world” examples given in one textbook with which I am familiar). But to allocate money to alternative uses, or indeed to any uses, people need to have money, and for most people access to money depends on having a job (or in the case of children, their parents having jobs). Both the quantity and stability of employment income to which you have access depend on the quality of the job or jobs that you are able to secure.
In a job, one contributes to the production of goods and services that the society values and for which the society is willing to pay you an income. Therefore, rather than begin the microeconomics course with a theory of the consumption of goods and services, as has been the case in standard microeconomics courses for the past 70 years, we need to begin the study of economics with a theory of the production of goods and services.
Productive employment does not just appear. It results from investments in productive capabilities made by households, governments, and businesses – or what I call “the investment triad”. The processes through which, working together, allocation decisions by the investment triad generate productivity constitute the microeconomic core of the economy. It is generally said that we live in a “market economy.” Note, however, that governments, families, and businesses are all organizations, not markets. Well-developed markets in labor, capital, and products are outcomes of the development of the economy, not causes. Although the prevailing ideology is that we live in a “market economy”, we have to study organizations – people working together in household families, government agencies, and business enterprises as well as civil society organizations—as the foundation for understanding how a so-called market economy actually operates and performs. Indeed, as we shall see in this course, once well-developed markets in labor, capital, and products emerge, society must regulate the operation of these markets if we want the operation of the economy to result in stable and equitable economic growth, or what I call “sustainable prosperity”.
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