In our first ever Economics Society gathering at MCS we travelled through the human history plotting the events which contributed to the birth of Economics.

The three central questions that Maria addressed were:

1)       How did economics come about?

2)       Why do we need Economics?

3)       Is Economics a dismal science?

Man addressed the problem of survival in a society, managing a balance between his self-interest and cooperation from the society using the following ways:

• By organising his life around taboos and traditions. (An example being the Egyptian society, where sons followed the profession of their father)

• Tyranny which includes authoritarian rule and dictatorship – where the economy would be guided by one person or one think-tank

• The Free Market System – which can be formulated as “…allowing each individual do as they saw fit” (this form of organisation of society is the one that we witness today in several societies)

A guide to the development of the market system

Before the Market System

The concept of the market system and personal gain (profit) did not appear until the late Middle Ages and in fact was considered to be sinful until then as well as being prohibited by the Church. In those days merchants and traders who did manage to build their own empires – were usually regarded as outcasts by the society, whereas today we worship anyone who vaguely resembles Richard Branson. Let us explore how this change in attitudes came about.

The transition to a Market System

There was no single specific event which could be pin-pointed to. This transition could be plotted in terms of the following key events:

• The demise of feudalism – Feudalism was a system under which people (serfs) were granted protection and possession of land in exchange for services to the lord who held the land.

• The decline of people’s piousness and religious spirit under the impact of the Italian Renaissance

• The Age of Discovery and the Beginning of Trade

With increasing trade and several changes in beliefs and attitudes of people, Economics was coined. Every single aspect of our lives today (not only monetary) is guided by our conscious rational decisions. We want to understand what’s happening around us, with the same avidness as Copernicus wanted to understand the movement of the Celestial Spheres. This is the reason why we need economics.

Economics not only explains how and why individuals, households, organisations and economies interact with each other as they do but also helps to understand the impacts of these interactions on all economic agents. It is through economics that we can understand the world around us.

Is Economics a science?

Maria’s answer to this question was a mixed one with a “Yes” and a “No.” She claimed it was partly true because it requires an understanding of the way the world works – it is not something that can be done merely sitting on an armchair without any prior observation of how economic agents interact. However, this answer, Maria claimed, was only partly true because economics is essentially a non-experimental field. People are not atoms or robots whose actions can be defined using equations (although we can aspire that one day we would be able to do so).

Is Economics dismal?

The short answer that Maria gave was “Not really!”. One of the reasons, Maria acknowledged, that might be cited in favour of the view that economics is dismal is that economists hardly agree about anything when asked about their views on solving an economic problem (this being evident in current times of the Eurozone crisis). However, this is not completely true. Economists do agree when it comes to positive economic analysis but as they are humans they are bound to arrive at different opinions and propositions from their analysis. Instead of dismissing economics for this reason, we should instead embrace it for the existence of diverse opinions allows choice and the opportunity to learn from our mistakes.

The talk came to an end with a clear guide to the birth of economics and left the audience with a view of the nature and need for Economics. Thank you to all those who attended.

Please feel free to post any reviews or comments for this talk. Discussion on any of the themes discussed here would be welcomed.

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