Economics 101: The Story of Economics

The BBC radio programme The Story of Economics provides a clear and simple introduction to the subject for a layman like me. I like it because it is presented by a non-economist (economists are part of the set of problems I’m trying to solve) and because it doesn’t try to present a black or white view.

The programme has three half-hour episodes, each dealing with a different perspective on the subject:

1. Gods: economics as a morality tale
2. Cogs: economics as a clockwork machine
3. Monsters: economics as a study of human behaviour.

Even at this entry level, economics splits into empirical (simple and mechanical Cogs augmented by more complex Monsters) where the purpose is to figure out the ‘scientific truth’ about how the economy works, and political (Gods) where the purpose is to promote and justify specific philosophical ideologies.

My objective is to understand the empirical aspects of economics. However, one of the problems is that it’s very difficult to disentangle the empirical and political aspects. The economy is a complex system where there are few black and white ‘provable’ rules. It is very difficult to run controlled experiments. As soon as an empirical economist makes a policy recommendation, it becomes almost impossible to distinguish the empirical economist from the politician.

Yet there are some economic outcomes, such as the collapse of a currency or a banking system, which are in no-one’s political interest. The fact that such catastrophic outcomes still occur, or threaten to occur, suggests to me that our empirical understanding is fairly limited.