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Library Communiveristy Open Learning Course The Economy and Us: week 1 Overview A brief history of economic thought … and some influential figures Some useful definitions; economics in its context. Debunking: competition, efficiency and economic growth

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Library Communiveristy Open Learning Course The Economy and Us: week 1 Overview

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Library communiveristy open learning course the economy and us week 1 overview

Library Communiveristy

Open Learning Course

The Economy and Us: week 1

Overview

A brief history of economic thought … and some influential figures

Some useful definitions; economics in its context.

Debunking: competition, efficiency and economic growth

Well-being and human needs – your chance to write the manifesto!


Library communiveristy open learning course the economy and us week 1 overview

Adam Smith: 1723- 1790

“By pursuing his [the individual’s] own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

An Enquiry into the Nature and Causes of the Wealth of Nations, 1776


Library communiveristy open learning course the economy and us week 1 overview

John Maynard Keynes: 1883 - 1946

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

The General Theory of Employment, Interest and Money, 1935


Library communiveristy open learning course the economy and us week 1 overview

John Kenneth Galbraith: 1908 - 2006

“ … the hallmark of the conventional wisdom is acceptability.

… In some measure, the articulation of the conventional wisdom is a religious rite. It is an act of affirmation like reading aloud from the Scriptures or going to church. The business executive listening to a luncheon address on the virtues of free enterprise is already persuaded, and so are his fellow listeners, and all are secure in their convictions.”

The Affluent Society, 1998


Library communiveristy open learning course the economy and us week 1 overview

E F Schumacher: 1911- 1977

“An attitude to life which seeks fulfillment in the single-minded pursuit of wealth - in short, materialism - does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited.”

Small is Beautiful, 1973


Library communiveristy open learning course the economy and us week 1 overview

Milton Friedman: 1912-2006

“There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Capitalism and Freedom, 1962


Library communiveristy open learning course the economy and us week 1 overview

Julie Nelson

  • Here's the basic argument:

  • The idea that economic systems are inanimate machines operating according to amoral laws is a belief, not a fact.

  • This belief has harmful effects—for life on the planet, for human society, and for you in particular.

  • Understanding that economies are vital, living, human-made, and shaped by our ethical choices can help to improve our decisions—both individually and as a society.

  • Economics for Humans, 2006


Library communiveristy open learning course the economy and us week 1 overview

Manfred Max-Neef: 1932-

“…It is particularly dramatic that the way economics is being taught - not just in the North or South - everywhere, is extremely narrow and limited. … what is being taught is just neo-classical economics …

There is nothing else.”


Some definitions of economics i

Some definitions of ‘economics’ I

  • Alfred Marshall: “Political Economy or Economics is a study of mankind in the ordinary business of life …” [Principles of Economics, 1890]

  • Lionel Robbins: “… economics is the study of how society allocates scarce resources, which have alternative uses”. [Essay on the Nature and Significance of Economic Science, 1935]


Some definitions of economics ii

Some definitions of ‘economics’ - II

  • J M Keynes: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking …”

  • Manfred Max-Neef reminds us that Aristotle’s Politics presents oikonomia(the Greek word from which the economics is derivedas: ‘the art of living and living well’.


Some words we shall use

Some words we shall use

  • ‘Paradigm’: The ‘framework’ through which policy is made and success is judged

  • The ‘neo-classical’ economic paradigm:

    • In a few words,

      • individualistic consumers, seeking to ‘maximise utility’ in a ‘perfectly competitive market’.

      • Economic growth is the ‘engine’, and is assumed, without question, to be a ‘good thing’.

      • Assumption that ‘private’ consumption is preferable to ‘public spending’.


Library communiveristy open learning course the economy and us week 1 overview

Economy, society and the environment: the conventional view


Library communiveristy open learning course the economy and us week 1 overview

Economy, society and the environment:

a better view?


Debunking competition

Debunking: ‘competition’

  • A theoretician’s paradise … and a way to impress your listeners and readers?

    • ‘Perfect competition’: most textbooks spend around 30 (or more) pages presenting this and its consequences

      BUT

    • It’s a bit of an empty box in real life!


For the benefits to be achieved

For the ‘benefits’ to be achieved …

  • There are some conditions which must prevail

    • All participants - producers and consumers – must have equal and adequate access to information about prices and quality in ‘the market

    • There must be no inequality of market power among and between buyers and sellers.

    • There must be no ‘externalities’ – costs which are borne by others who are not ‘party’ to the transaction

  • ALL – and others – are required!


Some adverse outcomes of competition

Some adverse outcomes of ‘competition’

  • The ‘race to the bottom’

    • ‘competition’ – in the present economy – can lead to widespread distress, poor quality, ill-treatment of people and animals

  • Duplication of services

    • National services – such as post – can be degraded by ‘fake’ competition (‘cherry picking’)


Debunking efficiency

Debunking: ‘efficiency’

  • Sounds good – but from whose point of view?

  • Conventional wisdom dodges the hard questions by using monetary costs as the measuring rod.

    • It might – from a particular point of view – be ‘efficient’ for a manufacturer to move production to a country where ‘labour costs’ are lower.

    • But externalities appear: the cost of the decision falls on the community now deprived of an important component of economic activity.


Library communiveristy open learning course the economy and us week 1 overview

Economic growth –

something more to debunk??

Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.

The Economics of the Coming Spaceship Earth, 1966

Kenneth E Boulding, 1910 - 1993


Here s a few reasons to question growth as an end in itself

Here’s a few reasons to question growth as an end in itself

  • Desirable and undesirable ‘outputs’

  • The distribution of benefits is uncertain

  • Our needs are more than measured economic growth delivers

  • Resource depletion

  • Waste

  • Lifestyle imbalance

  • Greenhouse gas emissions

  • Personal debt


Caution

Caution!!!

  • The terms and ideas have someuses in the ‘real world’.

  • They can be apartof the means to deliver some desirable outcomes – but we have to clearer what these outcomes should be

  • Effort is needed to identify

    • all outcomes (desirable and undesirable)

    • an ethical standpoint.


So what should the main objective of economic policy be

So … what should the main objective of economic policy be?

Meeting human needs while respecting environmental limits:

  • The ‘well-being’ economy?

  • The ‘green’ economy?

  • …?

    Your chance … to have your say!!


Library communiveristy open learning course the economy and us week 1 overview

Back to Max-Neef …

Fundamental human needs


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