Economics ≠ Capitalism

This is a repost of an article I wrote for The Odyssey published 3/27/16, original here

I’m majoring in economics, and at my small liberal arts college I’ve noticed that the study of economics is often seen negatively by other students. I want to look at why this is, try to dispel some misconceptions, and argue that economics needs to be engaged with if people want to create change in society.

I’ve noticed it subtly, and when asked about it, my friends seem aware and freely admit that they don’t like economics. Associations such as sellout, neo-liberal, corporate, money for money’s sake, these kinds of things. Let’s be clear, I never feel under attack for my academic interest, nobody is outright demonizing me or the discipline, but there are subtle associations made. There is also sometimes a sense that economics is too daunting for non-economics students to understand, arguably this creates a knowledge/confidence gradient that entrenches these negative associations.

Capitalism ≠ economics. Economics is very simply the study of how goods and services are bought, sold and used. If that currently largely takes place under a paradigm of “free markets” and private corporations, then obviously economists are going to study capitalist systems. Whether mercantile, feudal, colonial, nationalist, socialist, or capitalist, economic systems have been responsible for benefits but also serious atrocities. Often these negative side effects, inequality, corruption, exploitation, arise when a system like capitalism works specifically as designed. Other students, particularly in social sciences, learn about the negative sides of free-market capitalism and come to associate economics with a support of capitalism in its current state. Let’s be clear, economists have plenty of problems with our current economic system, but that means its behavior needs to be understood if meaningful improvements are to be made. To this end I wish principles of economics classes talked more about the failures of capitalism as well as the efficiency.

Economics shouldn’t be intimidating. Remember that it is a social science, although it tries to be objective it is up for debate and is more of a way of analyzing societal systems than a set of infallible laws. If someone in conversation says “well I took an economics class once, and raising the minimum wage will be bad/good”, that does not have the authority of “I took a biology class once, and animal cells don’t have chloroplasts”. Ask for explanations, offer up opinions, you can understand it. If people don’t engage with economic thinking in new ways it risks those in discipline simply reinforcing current economic systems. Knowing how to think like an economist is one of the greatest tools to argue for positive systems change and substantiate it. Don’t take it from me, take it from people you may not associate with economics:

Karl Marx:

Marx was a major economist and his ideas continue to add greatly to economic thought. His “Das Kapital” is the reason capital is abbreviated with a K in equations! No one disagrees, marxist-leninist planned economies failed spectacularly, but Marx’s defined the concepts such as the crisis of ownership that continues to drive inequality today. His idea of creative destruction is even more true today as technological change constantly changes economy (think of what Uber is doing to traditional taxis). Marx inspired many workers movements to create institutions such as labor unions, the minimum wage, and the weekend, all regular topics in economics classrooms.

Bernie Sanders:

Hillary Clinton also argues for progressive change, but Senator Sanders advocates reform of the financial system structurally. Sanders cares immensely about economics, because that is how effective policies are designed and evaluated. Wallstreet agrees with Sanders that breaking up big banks will reduce the economy’s vulnerability to future crashes. Asher Adelman, the inspiration for Gordon Gecko, agrees that the wealth redistribution Bernie is argueing for would stimulate economic growth. You cannot change a system for the better if you do not understand how it works. To that end, there is a big field of alternative “heterodox” economics that could be taught more in undergraduate classrooms.

If you can understand what Uruguayan President José Mujica is saying in this clip, you can do economics (start at 1:18), thanks for reading: