I’ve been on a few coffee dates recently, and not for the first time, have encountered some individuals who are so disinterested in economics that it borders on the performative. If I bring up my own dilettantish enthusiasm for the subject (as I sometimes unwisely do), their sudden shift in attitude suggests that admitting to even the slightest interest in econ is akin to committing social suicide, like recounting a pattern of sexual infidelity or Republican voting, and indeed, that I’d be better off confessing my sins to a priest.
This is crazy to me, because I think economics is Objectively Interesting—at least, if you’re also interested in how human society works and how we could make things better. And, as far as I could tell, my dates were interested in those things—they certainly weren’t all-around ignoramuses at least. If they were die-hard artists, concerned only with the aesthetics, but not the ethics or mechanics of life, I might understand their aversion to something as in-the-weeds as econ. But it’s often the most politically-interested people I meet who have this negative mental association.
And on some level I get it—economists are a weird bunch. Historically, practitioners have been uniformly male and overwhelmingly white (the same applied to every scientific field at one time or another, but econ departments are disturbingly sticky in this regard), and many famous, now-dead economists had the naughty habit of using complicated math to pass off their subjective opinions as objective facts. The latter half of the 20th century is largely responsible for this god-awful reputation, during which popular economic thought in the US and UK was dominated—and gatekept—by fiscally conservative professors and policy makers.
But I don’t think these Brooklyn yuppies are disgusted by words like “supply and demand” because they believe the Chicago School of Economics has been secretly reanimated as an ascendant political force [but seriously, fuck the Chicago School]. I get the impression that they’ve never given much thought to what economics is in the first place. It’s just a dirty word. Their aesthetic distaste runs so deep that edification is impossible; they wouldn’t touch it with a 10-foot pole. This self-imposed ignorance leads to some foolish assumptions, like the surprisingly common the belief that economics and finance are the same thing. So let’s make like Wikipedia.org and do some disambiguation:
Economics ≠ Finance; Finance ⊂ Economics
Economics is extremely broad. Econ is a social science, concerned with how individuals, businesses, governments, and states allocate their resources. Not just money—all resources. Labor, land, housing, water, spaghetti, time, timeshares, TIME Magazines, Lenovo ThinkPads, root canals—anything that could be considered a resource falls under the umbrella of economics.
Finance is (comparatively) quite specific. It’s about how money is managed, particularly in terms of saving, lending, & investing. It’s essentially a teeny tiny subset of econ, where the only resource you’re concerned with is dolla bills (and euros, and yen, and … you get the idea).
Economics is not inherently capitalist. Capitalism is just one kind of economic system. Communism would be another (Karl Marx was literally an economist). Communists need economics, as do anarchists, and even libertarians. All humans need resources to live, so their governments (or committees/businesses, in the anarchist/libertarian cases respectively) must understand the needs of their constituents, lest they accidentally commit a Murderous Misallocation of Resources.
Finance is not inherently capitalist either… but capitalist economies tend to emphasize finance more than others. This is, I think, why those of us who are skeptical—if not outright disdainful—of capitalism also usually view finance with suspicion. Money is the purest abstraction of capital, so a system where capital is the central operating principle, and primary source power, will tend to become more financialized over time. “Financialization” is a fancy word for when financial markets, institutions, and elites start to accrue more importance and influence in a society. In case you haven’t guessed: I think it’s quite bad.
Given that economics is the study of “everything to do with resources”, while not inherently capitalist, it is inherently political. A huge amount of the work of politics (and civic life generally) boils down to resource allocation—more for these folks, less for those folks. As such, I don’t think you can have reasoned political views without a rudimentary understanding of the economic reality we’re living in. “Reasoned” is the key word here—politics without economics is just vibes and groupthink. Those are of course hugely powerful forces, but failing to understand economic reality before crafting governmental policy (or when rebuilding society post-revolution) can have horrific consequences. Or, to use some Econ 101 vocab, “negative externalities”.
Take, for example, the Murderous Misallocations of Resources I hinted at before.1 There have been several instances over the last century alone in which governments have misread the economic tea leaves so badly that they inadvertently killed or displaced millions of people. Let’s look at a few:
Hyperinflation in the Weimar Republic (1921-1923)
After World War I, the Allies demanded that Germany pay astronomical war reparations. To foot the bill, the Weimar Republic said “fuck it, we bail”, and started printing money like there was no tomorrow. This led to hyperinflation—the value of money plummeted, so Germans’ savings were wiped out, and the economy was obliterated, worsening the already-bad social unrest and political instability of the postwar era. Enter: The Motherfucking Nazis. Importantly, the economic error here wasn’t committed by the Germans’ part, but by the Allies. There was no other conceivable way (that I’ve heard of) for Germany to pay the steep reparations demanded of them. Many prominent Allied economists (e.g. Keynes) saw this coming from a mile away, and warned their governments during the negotiations at Versailles that if they didn’t go easier on the Germans, they would all be back in the trenches in a few decades at most.
You’ll never guess what happened next!
The Great Leap Forward in China (1958-1962)
Initiated by Mao Zedong, the Great Leap Forward was meant to rapidly transform China from an agrarian to an industrialized economy. Spoilers: It Did Not Go Well! Mao’s policies underestimated the complexity of both agricultural production and industrial development, leading to widespread inefficiencies and resource misallocation. The ensuing famine killed 15-45 million fucking people and holy shit I guess economics is kind of important!!!!
Famine and hyperinflation are a big theme in many of the worst “misallocations” of the 20th and 21st centuries. Stalin killed millions (not even counting the intentional murders) by way of grain procurement and forced agricultural collectivization. In just the last two decades, hyperinflation in Zimbabwe and Venezuela forced millions to flee both countries. Resources matter!
If we don’t want our governments to repeat the mistakes of Mao & Stalin, we need to agitate for economically sound political changes. Or, if you prefer revolution to reform: economically sound revolution! This doesn’t mean trying to financialize our society even further (personally I’d like to see the opposite), it means understanding our resources and how to use them equitably and efficiently—or at the very least, not murderously.
How do we allocate access to healthcare, and housing, and suffrage? (Universally.) How do we allocate fossil fuels, and the right to burn them. (Sparingly.) If we are going to burn fossil fuels, how do we deal with negative externalities like air pollution? (In all likelihood, not well.) These are political questions AND economic questions. Given the state of the world we’ve inherited, finance may even be a part of the solution to these issues, not just the problem. For example, carbon taxes and “cap and trade” systems are two financial interventions that could help us reduce greenhouse emissions (though on their own they would not go nearly far enough). Biden’s “Inflation Reduction Act”—arguably the single most significant policy passed by any world government to address climate change—is really just a huge pile of creative financing programs. (It literally had to be—that’s how they passed it with only 50 votes in the senate.)
Economics is a mode of understanding, and a critical one for informing political thought and action. If you want to be politically aware beyond the level of vibes and groupthink, you need a basic economic framework to avoid advocating for counterproductive policies. If, on the other hand, you don’t give a damn about politics… that’s fine! But we probably shouldn’t hang out.
TL;DR: Economics is objectively sick, and if you disagree we shouldn’t date. [Remember: the secret to being happy is convincing yourself (& your friends) that it’s actually Cool and Important to be exactly the way you already are.]
Footnotes
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Don’t use this phrase around actual economists. It’s not a real thing. I made it up. ↩