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Adam Smith needs revision.
—Russell Crowe as John Nash, A Beautiful Mind
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And what you do not know is the only thing you know.
—T. S. Eliot, 1943
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From the time of Adam Smith's Wealth of Nations in 1776, one recurrent theme of economic analysis has been the remarkable degree of coherence among the vast numbers of individual and seemingly separate decisions about the buying and selling of commodities. In everyday, normal experience, there is something of a balance between the amounts of goods and services that some individuals want to supply and the amounts that other, differerent individuals want to sell [sic]. Would-be buyers ordinarily count correctly on being able to carry out their intentions, and would-be sellers do not ordinarily find themselves producing great amounts of goods that they cannot sell. This experience of balance is indeed so widespread that it raises no intellectual disquiet among laymen; they take it so much for granted that they are not disposed to understand the mechanism by which it occurs.
—Kenneth Arrow, 1973
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I would add one word for any student beginning economic study who may be discouraged by the severity of the effort which the study, as he will find it exemplified here, seems to require of him. The complicated analyses which economists endeavour to carry through are not mere gymnastic. They are instruments for the bettering of human life. The misery and squalor that surround us, the injurious luxury of some wealthy families, the terrible uncertainty overshadowing many families of the poor—these are evils too plain to be ignored. By the knowledge that our science seeks it is possible that they may be restrained. Out of the darkness light! To search for it is the task, to find it perhaps the prize, which the “dismal science of Political Economy” offers to those who face its discipline.
—Arthur C. Pigou, 1932
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Economics is what economists do.
—Jacob Viner, 1952
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It is an odd theory that may not some day and somewhere find a role; for every answer one can find a correct question.
—George Stigler, 1952
- Since class on Monday was cancelled, we will make up 30 Minutes on Wednesday.
- Homework for Fri Mar 6: Do problems 1-3 of the two-sector problems. These should be quick, so you can have more time to fret about Marco's exam. But for Monday Mar 9, in honor of my and my wife's 46th anniversary, do problem 4, and do it well.
- Homework for Wed Feb 25: Look at the Ricardian Trade homework set. Parts a) through d) will have been covered through class. Write them up to make sure you understand them, and then work on parts e) though g).
- Homework for Fri 13 Feb & Wed Feb 18: i) Do the Linear Economic Models problem set for Friday. For Wed in class do problem 1 of Ricardian Rent.
- Homework for Fri 30 Jan: Problems on convex sets and Linear Programming
- Here are two things I'd like you to do before the first class.
- Please click on the syllabus link to your left. At the beginning of the "Introduction" section are links to a short story by Borges and an excerpt from an essay by Jean Baudrillard.
- Find out who these two people are.
- Read the story and the essay fragment, and be prepared to discuss them in class. Notice, btw, that 40% of your grade is participation.
- Please write and send to me a short essay on
causation . What does the word "cause" mean to you? Please email your response to me by the evening of Monday, 20 January. Only pdf's, please.
