What Is Economics?

by John Maher

Published by iUniverse.com
2001

Review by D. Bruce Johnstone

"This little book,"  writes John Maher, "is my response to the persistent difficulty of saying plainly what economics is and what it is not."

The continuing problems of inflation, income distribution, world monetary crises and the "social balance" between public and private sectors; the comparatively recent public visibility of economists in public service; and the widespread interest in economic education throughout the nation all demand some way of conveying the nature of the discipline to the student, teacher, and layman.

The book is, to date, by far the best response to this demand. The nature of a discipline is tricky stuff and economists have been notoriously unsuccessful in revealing their mystery. Maher's success may best be understood by looking to see where others have failed.

On one hand, economists have failed through oversimplification and overgeneralization. For example, economics is traditionally defined as "the study of the way a society allocates scarce resources among competing uses." This is a pithy statement, chock full of meaning to one who already knows what economics is all about. To the initiated, words such as "scarcity, resource, compete" and "allocate" are verbal symbols each of which represents an enormous accumulation of well-ordered knowledge and experience. To the uninitiated, however, such words, if they convey meaning at all, may convey only the limited and often distorted meanings associated with their non-economic usage.

The diagrammatic approach substitutes visual for some of the verbal symbolism. Boxes, circles, arrows and lines connect "the five goals" to the "four fundamental problems" and "the six indispensable institutions." Again, this approach yields a concise representation of economics. That which represents, summarizes or symbolizes, however, does not necessarily explain or teach. Like definitions, diagrams of the structure of economics are probably appreciated most by those who already know that structure.

On the other hand, "the nature of the discipline" may be obscured not by too little, but by too much information. Some economists have abandoned the attempt to convey any "essence" of the discipline to the uninitiated and have concentrated, instead, upon summarizing that with which economics deals. Economics is presented as the sum of the concepts, generalizations, topics, and issues which constitute the chapter headings in the standard principal texts. Economics as a discipline is thought to be understood when these constituent parts are understood. This approach is represented at its best in the report of the National Task Force on Economic Education which enumerated those things one was to know in order to be counted among the economically literate.

This approach, which substitutes a list of things economics deals with for a notion of what economics is, has perpetuated the misconception that economics cannot be validly taught without a chapter on foreign trade—and one on the stock market, the farm problem, labor unions, and comparative systems. Maher explicitly rejects the "sum of the parts" approach, pointing out that one can stand among the economically literate without knowing a thing about the balance of payments provided one understands the principles of specialization and division of labor and could, if pressed, apply them to geographic entities which utilize different monetary units.

If Maher had done no more than to question that list of topics which commonly passes for an economics course, he would have made a real contribution. The implications of this position are not, unfortunately, pursued in this book. My inference is that we have greatly underestimated the alternatives of the possible content in the economics course. Since many of the traditional topics are not fundamental to an essential structure, their usefulness must be in (1) their ability to illustrate, to "fix," or to generate the essential concepts and relationships of the discipline; and (2) their intrinsic relevance and importance as social problems. With such criteria, then, the high school course—or the college principles course—might use its educatioinal resurces more efficiently on topics such as income distribution, welfare principles, decision or game theory, corporate behavior, poverty, etc.

We still need a notion of what economics is—one which can be taught to the student, teacher, and layman without confusing the structure of the discipline with the traditional topics and elaborations of theory. Maher's approach is to take seriously that cynical definition of economics as "that which economists do."  Economics, he says, is a perspective—a way of looking at things, events, or processes with a particular set of questions, assumptions, and conceptual tools. This perspective cannot be explained; it can only be shown, and the greater part of What Is Economics? is devoted to illustrations of the "economic perspective" at work. In one delightful chapter Maher examines the provocative mystery of who pays for the "free" light bulbs formerly distributed by Detroit Edison. At the close of nearly every chapter, he posits a number of open-ended, "off-beat" questions along with answers which the author would venture plus those answers given by a poll of professional economists. These questions and answers give another, rather whimsical, yet insightful and very human, picture of the "economic perspective" at work.

The fourteen-page section on macroeconomics is a bit weak, and the section on accounting seems quite superfluous. I would like to have seen the author apply his perspective to the phenomenon of money which remains the greatest barrier to thinking economically. These, however, are very small faults of commission and omission. Dr. Maher has written a very good book—a must for every social studies educator, every student of economics, and every professional economist concerned with the teaching and learning of his discipline.

Copyright © D. Bruce Johnstone 2003