A (Very) Brief Introduction
The word economics comes from the Greek word, oikonomia, for managing the resources of a family to keep them fed, clothed and sheltered, i.e., how to run a household. The modern subject of economics (originally called political economy) originated in 18th century Europe in response to the enormous social changes brought on by the agricultural and industrial revolutions. Its concern, then as now, was to understand how societies deal with the questions raised by the fact that resources are scarce but people's wants are limitless. Today, economics is valued as providing students with a basis in the reasoning method of the social sciences, and as a means to understand some of the complex phenomena in the world. Along with the other social sciences (sociology, psychology and political science), economics seeks to develop theories about certain aspects of human experience—in the case of economics that is the material welfare of humankind. In addition, economics seeks to apply theories to real-world situations, and then use these theories to formulate policies about how best to solve some of the problems that our communities and the world face.
How to Think Like an Economist
At its best, economics offers students a unique perspective on human experience, and a set of analytical tools that can better help them understand the world around them. My students in Year 2 will have already heard me talk about the 'invisible hand' as a metaphor for how individuals in following their own self-interest can advance the overall well-being of society through promoting the efficient use of resources. For example, if I follow my self-interest by buying a particular good or service from the supplier who provides it most cheaply, I save money; the supplier makes money and is rewarded for her efficient use of inputs; and the planet's limited resources are used in the most effective way possible.
There is an old joke that one can never meet a one-armed economist because economists are very fond of adding "on the other hand" to every theory that they postulate. So what about the effect of self-interest on resources held in common by all the community? The famous example comes from sheep farmers grazing their livestock on a piece of land, the use of which is available to all. By following their own self-interest, the farmers will let their sheep graze on the land as much as possible. In fact, they will allow their sheep to graze until the resource is totally depleted. This is the rational thing to do! An individual farmer would never do this if she owned the piece of land herself. As a farmer, she would know the importance of letting the piece of land 'rest' and regenerate. The answer, therefore, that economics provides to this 'tragedy of the commons' is to privatize the land. Self-interest in the context of freely functioning markets preserves resources while self-interest in the context of communal assets wastes resources.
Being Successful at Economics: Read, Read, Read
Tony Blair, one of the longest serving Prime Ministers of Great Britain, was once asked what he thought the first priority for a government should be. He responded, "Education, education, education." If you want to achieve excellent results in economics, the answer is easy: read, read, read!
But not all reading strategies are appropriate. You cannot read an economics textbook the same way you read the TV Guide! When you read your economics textbook, you must have an approximate idea about what you are looking to learn before you start reading. It is not possible to look for something unless you have some idea what it is that you are looking for! Use the reading guides that I distribute in our classes, and check our course syllabus and, in particular, the performance objectives that are posted at the back of the room. These will guide through the textbook to the essential information. However, reading is not enough. When we turn the page, the majority of what we have read leaves our memory, unless we are actively involved in learning the information that we have been reading. And what is the most effective way of retaining information? Take notes. You will have heard me talk a lot about notetaking in our classes, and you will hear a lot more! Notetaking completes your reading work. It is the means by which what you have read becomes part of your knowledge. No two people take notes in exactly the same way, and nor should they. Finally, ask questions about what you have read.
A simple formula for success in your economics course: R-T-A.
R- Read
T- Take notes
A- Ask questions
All the great contributions to the subject of economics have come at times of significant social change, and this is an amazing time to be a student and teacher of economics in China. Economics is one way through which you as students can gain an understanding of the profound transformations going on all around you, and it can prepare you for your intellectual future, wherever that journey may take you. Bon voyage!