All Blog PostsHow economic theories shape almost every aspect of your life.
Have you ever thought what your life would be like if you were born at another time, or in another place? Have you ever asked yourself “Why am I me and not someone else?” If you’re reading this blog your one of the lucky few to live on earth. Even in this modern computer age, vast majority of people on earth are poor, uneducated, and no matter how hard they work they will never enjoy the daily comforts that you do.
So why are some societies so rich, and others so poor?
Defunct Economists
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. – John Maynard Keynes (defunct economist)
You think you are in charge of your life, responsible for what you have and who you are, but the truth is that almost everything you have and are in this world is the result of the economic theory[s] subscribed to and practiced by the leaders of the world.
What you have
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Take a look at your life. Take a look at what you have – your computer, your car, your clothes. Who made these things? And why is it that some people in the world have so much while others have nothing? Modern economic wisdom says that “we have what we deserve” – do you really believe this?
The truth is that every material possession you have was made by someone other than you. By what magnificent force do we all get up each and every day and work on stuff that only other people need? – Economics
Who you are
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Take a look at who you are. Are you a teacher, a fast food server, a banker, a professional athlete, an artist or a musician? Most people define themselves by their occupation. Imagine Michael Jordan without a sports industry or Elvis without the music industry….
So what is it that decides how many people will be farmers, how many people will build homes, how many people can be athletes, and how many people sit at home doing nothing while there is still so much work to be done. - That’s right… Economics
The Power of an Economic Theory – an Example
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In the 1980s, China, previously a 3rd world country, decided to change its economic system from a mainly communist system (an economic theory championed by Karl Marx where prices and commerce were decided by the government) to a capitalist based system (an economic theory championed by many including Adam Smith where prices and commerce are decided by the free market).
Since that time thousands of factories sprang to life out of nothing. Hundreds of millions of people who once scraped out meager existences farming for themselves and their families now produced goods and services that were traded across the world. The livings standards of BILLIONS of people were raised up dramatically in the span of just a single generation. People in China now have more than they’ve ever had, and are more than they ever were. China has gone from being a country of poor, uneducated farmers, to a country of novelists, wedding planners, engineers, entrepreneurs, athletes, and rock stars.
All of this, because a handful of government bureaucrats saw that their system wasn’t working , and so decided to try a different economic theory…
Modern Economics
The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behaviour and religion. – John Maynard Keynes (1945)
If you think I’m here to tell you that the free market and capitalism are the end all and be all of economic theory then you’re wrong. Like all theories, free-market capitalism is imperfect – it causes pollution and rewards greed, it causes us to manufacture food for cows while people starve, and it gives more and more to people who have too much at the expense people who have nothing. Worst of all, it degrades our environment and causes us to turn trillions of pounds of natural resources per year into trash.
A simple question
My question is this – If a newly adopted economic theory could change the lives billions of Chinese for the better - is there, or will there ever be another even better theory – that will one day change all of our lives in ways we can’t yet imagine?
Stay tuned…
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Hmm.. interesting way to think about things. I guess if the founding fathers had chosen a different economic system our lives could be quite different today.
[...] of it is grounded in economic theory because “theoretically” the more that you offer to the world in terms of services the more you [...]