Portal:Economics

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Introduction

Economics (/ˌɛkəˈnɒmɪks, ˌiːkə-/) is a social science that studies the production, distribution, and consumption of goods and services.

Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses what is viewed as basic elements within economies, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses economies as systems where production, distribution, consumption, savings, and investment expenditure interact; and the factors of production affecting them, such as: labour, capital, land, and enterprise, inflation, economic growth, and public policies that impact these elements. It also seeks to analyse and describe the global economy. (Full article...)

Selected general articles

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  Supply-side economics is a macroeconomic theory postulating that economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics theory, consumers will benefit from greater supply of goods and services at lower prices, and employment will increase. Supply-side fiscal policies are designed to increase aggregate supply, as opposed to aggregate demand, thereby expanding output and employment while lowering prices. Such policies are of several general varieties:

  1. Investments in human capital, such as education, healthcare, and encouraging the transfer of technologies and business processes, to improve productivity (output per worker). Encouraging globalized free trade via containerization is a major recent example.
  2. Tax reduction, to provide incentives to work, invest and take risks. Lowering income tax rates and eliminating or lowering tariffs are examples of such policies.
  3. Investments in new capital equipment and research and development (R&D), to further improve productivity. Allowing businesses to depreciate capital equipment more rapidly (e.g., over one year as opposed to 10) gives them an immediate financial incentive to invest in such equipment.
  4. Reduction in government regulations, to encourage business formation and expansion.

  
  
  A basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue. The Laffer curve suggests that when the tax level is too high, lowering tax rates will boost government revenue through higher economic growth, though the level at which rates are deemed "too high" is disputed. Critics also argue that several large tax cuts in the United States over the last 40 years have not increased revenue. (Full article...)
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  Friedrich von Wieser (German: [ˈviːzɐ]; 10 July 1851 – 22 July 1926) was an early (so-called "first generation") economist of the Austrian School of economics. Born in Vienna, the son of Privy Councillor Leopold von Wieser, a high official in the war ministry, he first trained in sociology and law. In 1872, the year he took his degree, he encountered Austrian-school founder Carl Menger's Grundsätze and switched his interest to economic theory. Wieser held posts at the universities of Vienna and Prague until succeeding Menger in Vienna in 1903, where along with his brother-in-law Eugen von Böhm-Bawerk he shaped the next generation of Austrian economists including Ludwig von Mises, Friedrich Hayek and Joseph Schumpeter in the late 1890s and early 20th century. He was the Austrian Minister of Commerce from August 30, 1917, to November 11, 1918.
  
  Wieser is renowned for two main works, Natural Value, which carefully details the alternative-cost doctrine and the theory of imputation; and his Social Economics (1914), an ambitious attempt to apply it to the real world. His explanation of marginal utility theory was decisive, at least terminologically. It was his term Grenznutzen (building on von Thünen's Grenzkosten) that developed into the standard term "marginal utility", not William Stanley Jevons's "final degree of utility" or Menger's "value". His use of the modifier "natural" indicates that he regarded value as a "natural category" that would pertain to any society, no matter what institutions of property had been established. (Full article...)
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  New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics.
  
  Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. However, the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions. (Full article...)
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  Economic democracy (sometimes called a democratic economy) is a socioeconomic philosophy that proposes to shift ownership and decision-making power from corporate shareholders and corporate managers (such as a board of directors) to a larger group of public stakeholders that includes workers, consumers, suppliers, communities and the broader public. No single definition or approach encompasses economic democracy, but most proponents claim that modern property relations externalize costs, subordinate the general well-being to private profit and deny the polity a democratic voice in economic policy decisions. In addition to these moral concerns, economic democracy makes practical claims, such as that it can compensate for capitalism's inherent effective demand gap.
  
  Proponents of economic democracy generally argue that modern capitalism periodically results in economic crises, characterized by deficiency of effective demand; as society is unable to earn enough income to purchase its own production output. Corporate monopoly of common resources typically creates artificial scarcity, resulting in socio-economic imbalances that restrict workers from access to economic opportunity and diminish consumer purchasing power. Economic democracy has been proposed as a component of larger socioeconomic ideologies, as a stand-alone theory and as a variety of reform agendas. For example, as a means to securing full economic rights, it opens a path to full political rights, defined as including the former. Both market and non-market theories of economic democracy have been proposed. As a reform agenda, supporting theories and real-world examples can include decentralization, democratic cooperatives, public banking, fair trade and the regionalization of food production and currency. (Full article...)
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  Walras in 1862 (age 27)

  
  Marie-Esprit-Léon Walras (French: [valʁas]; 16 December 1834 – 5 January 1910) was a French mathematical economist and Georgist. He formulated the marginal theory of value (independently of William Stanley Jevons and Carl Menger) and pioneered the development of general equilibrium theory. Walras is best known for his book Éléments d'économie politique pure, a work that has contributed greatly to the mathematization of economics through the concept of general equilibrium. The definition of the role of the entrepreneur found in it was also taken up and amplified by Joseph Schumpeter.
  
  For Walras, exchanges only take place after a Walrasian tâtonnement (French for "trial and error"), guided by the auctioneer, has made it possible to reach market equilibrium. It was the general equilibrium obtained from a single hypothesis, rarity, that led Joseph Schumpeter to consider him "the greatest of all economists". The notion of general equilibrium was very quickly adopted by major economists such as Vilfredo Pareto, Knut Wicksell and Gustav Cassel. John Hicks and Paul Samuelson used the Walrasian contribution in the elaboration of the neoclassical synthesis. For their part, Kenneth Arrow and Gérard Debreu, from the perspective of a logician and a mathematician, determined the conditions necessary for equilibrium. (Full article...)
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  Arthur Cecil Pigou (/ˈpiːɡuː/; 18 November 1877 – 7 March 1959) was an English economist. As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chairs of economics around the world. His work covered various fields of economics, particularly welfare economics, but also included business cycle theory, unemployment, public finance, index numbers, and measurement of national output. His reputation was affected adversely by influential economic writers who used his work as the basis on which to define their own opposing views. He reluctantly served on several public committees, including the Cunliffe Committee and the 1919 Royal Commission on income tax. (Full article...)
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  Possible portrait of Mandeville

  
  Bernard Mandeville, or Bernard de Mandeville (/ˈmændəˌvɪl/; 15 November 1670 – 21 January 1733), was an Anglo-Dutch philosopher, political economist, satirist, writer and physician. Born in Rotterdam, he lived most of his life in England and used English for most of his published works. He became famous for The Fable of the Bees. (Full article...)
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  Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian economists tend to accept the concept of the economy prima facie. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other; in many cases Marxian analysis is used to complement, or to supplement, other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage, rather than being synonymous: They share a semantic field, while also allowing both connotative and denotative differences. An example of this can be found in the works of Soviet economists like Lev Gatovsky, who sought to apply Marxist economic theory to the objectives, needs, and political conditions of the socialist construction in the Soviet Union, contributing to the development of Soviet political economy.
  
  Marxian economics concerns itself variously with the analysis of crisis in capitalism, the role and distribution of the surplus product and surplus value in various types of economic systems, the nature and origin of economic value, the impact of class and class struggle on economic and political processes, and the process of economic evolution. (Full article...)
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  Slogan in Bhutan about gross national happiness in Thimphu's School of Traditional Arts.

  
  Buddhist economics is a spiritual and philosophical approach to the study of economics. It examines the psychology of the human mind and the emotions that direct economic activity, in particular concepts such as anxiety, aspirations and self-actualization principles. In the view of its proponents, Buddhist economics aims to clear the confusion about what is harmful and what is beneficial in the range of human activities involving the production and consumption of goods and services, ultimately trying to make human beings ethically mature. The ideology's stated purpose is to "find a middle way between a purely mundane society and an immobile, conventional society."
  
  The most fundamental feature of Buddhist economics is seeing "people interdependent with one another and with Nature." (Full article...)
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  The neoclassical synthesis (NCS), or neoclassical–Keynesian synthesis is an academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936) with neoclassical economics.
  
  The neoclassical synthesis is a macroeconomic theory that emerged in the mid-20th century, combining the ideas of neoclassical economics with Keynesian economics. The synthesis was an attempt to reconcile the apparent differences between the two schools of thought and create a more comprehensive theory of macroeconomics. (Full article...)
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  Kuznets in 1971

  
  Simon Smith Kuznets (/ˈkʌznɛts/ KUZ-nets; Russian: Семён Абра́мович Кузне́ц, IPA: [sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲets]; April 30, 1901 – July 8, 1985) was a Russian-born American economist and statistician who received the 1971 Nobel Memorial Prize in Economic Sciences "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development."
  
  Kuznets made a decisive contribution to the transformation of economics into an empirical science and to the formation of quantitative economic history. Kuznets pioneered the concept of gross domestic product, which seeks to capture all economic production in a state by a single measure. (Full article...)
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  William Stanley Jevons FRS (/ˈdʒɛvənz/; 1 September 1835 – 13 August 1882) was an English economist and logician.
  
  Irving Fisher described Jevons's book A General Mathematical Theory of Political Economy (1862) as the start of the mathematical method in economics. It made the case that economics, as a science concerned with quantities, is necessarily mathematical. In so doing, it expounded upon the "final" (marginal) utility theory of value. Jevons' work, along with similar discoveries made by Carl Menger in Vienna (1871) and by Léon Walras in Switzerland (1874), marked the opening of a new period in the history of economic thought. Jevons's contribution to the marginal revolution in economics in the late 19th century established his reputation as a leading political economist and logician of the time. (Full article...)
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  Carl Menger von Wolfensgrün, founder of the Austrian school

  
  Carl Menger von Wolfensgrün (/ˈmɛŋɡər/; German: [ˈmɛŋɐ]; 28 February 1840 – 26 February 1921) was an Austrian economist who contributed to the marginal theory of value. Menger is considered the founder of the Austrian school of economics.
  
  In building his marginalist approach, Menger rejected many established views of classical economics. He directly disputed the view of the "German school" that economic theory could be derived from history. Departing from the cost-of-production theory of value—the prevailing theory of Adam Smith, David Ricardo, and Karl Marx—Menger's subjective theory of value emphasized role of mutual agreement in deriving prices. Although he had few readers outside Vienna until late in his career, disciples including Eugen von Böhm-Bawerk and Friedrich von Wieser brought his theories into wider readership. Friedrich Hayek wrote that the Austrian school's "fundamental ideas belong fully and wholly to Carl Menger." (Full article...)
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  Critique of political economy or simply the first critique of economy is a form of social critique that rejects the conventional ways of distributing resources. The critique also rejects what its advocates believe are unrealistic axioms, flawed historical assumptions, and taking conventional economic mechanisms as a given
  or as transhistorical (true for all human societies for all time). The critique asserts the conventional economy is merely one of many types of historically specific ways to distribute resources, which emerged along with modernity (post-Renaissance Western society).
  
  Critics of political economy do not necessarily aim to create their own theories regarding how to administer economies. Critics of economy commonly view "the economy" as a bundle of concepts and societal and normative practices, rather than being the result of any self-evident economic laws. Hence, they also tend to consider the views which are commonplace within the field of economics as faulty, or simply as pseudoscience. (Full article...)
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  Keynesian economics (/ˈkeɪnziən/ KAYN-zee-ən; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. It is influenced by a host of factors that sometimes behave erratically and impact production, employment, and inflation.
  
  Keynesian economists generally argue that aggregate demand is volatile and unstable and that, consequently, a market economy often experiences inefficient macroeconomic outcomes, including recessions when demand is too low and inflation when demand is too high. Further, they argue that these economic fluctuations can be mitigated by economic policy responses coordinated between a government and their central bank. In particular, fiscal policy actions taken by the government and monetary policy actions taken by the central bank, can help stabilize economic output, inflation, and unemployment over the business cycle. Keynesian economists generally advocate a regulated market economy – predominantly private sector, but with an active role for government intervention during recessions and depressions. (Full article...)
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  Piero Sraffa FBA (5 August 1898 – 3 September 1983) was an influential Italian political economist who served as lecturer of economics at the University of Cambridge. His book Production of Commodities by Means of Commodities is taken as founding the neo-Ricardian school of economics. (Full article...)
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  Microeconomics analyzes the market mechanisms that enable buyers and sellers to establish relative prices among goods and services. Shown is a marketplace in Delhi.

  
  
  Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the economy as a whole, which is studied in macroeconomics.
  
  One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses. Microeconomics shows conditions under which free markets lead to desirable allocations. It also analyzes market failure, where markets fail to produce efficient results. (Full article...)
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  Marx in 1875

  
  Karl Marx (German: [ˈkaʁl ˈmaʁks]; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet The Communist Manifesto (written with Friedrich Engels), and his three-volume Das Kapital (1867–1894), a critique of classical political economy which employs his theory of historical materialism in an analysis of capitalism, in the culmination of his life's work. Marx's ideas and their subsequent development, collectively known as Marxism, have had enormous influence.
  
  Born in Trier in the Kingdom of Prussia, Marx studied at the universities of Bonn and Berlin, and received a doctorate in philosophy from the University of Jena in 1841. A Young Hegelian, he was influenced by the philosophy of Georg Wilhelm Friedrich Hegel, and both critiqued and developed Hegel's ideas in works such as The German Ideology (written 1846) and the Grundrisse (written 1857–1858). While in Paris, Marx wrote his Economic and Philosophic Manuscripts of 1844 and met Engels, who became his closest friend and collaborator. After moving to Brussels in 1845, they were active in the Communist League, and in 1848 they wrote The Communist Manifesto, which expresses Marx's ideas and lays out a programme for revolution. Marx was expelled from Belgium and Germany, and in 1849 moved to London, where he wrote The Eighteenth Brumaire of Louis Bonaparte (1852) and Das Kapital. From 1864, Marx was involved in the International Workingmen's Association (First International), in which he fought the influence of anarchists led by Mikhail Bakunin. In his Critique of the Gotha Programme (1875), Marx wrote on revolution, the state and the transition to communism. He died stateless in 1883 and was buried in Highgate Cemetery. (Full article...)
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  In the history of economic thought, ancient economic thought refers to the ideas from people before the Middle Ages.
  
  Economics in the classical age is defined in the modern analysis as a factor of ethics and politics, only becoming an object of study as a separate discipline during the 18th century. (Full article...)
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  This is a list of important publications in economics, organized by field.
  
  Some basic reasons why a particular publication might be regarded as important:

  • Topic creator – A publication that created a new topic
  • Breakthrough – A publication that changed scientific knowledge significantly
  • Influence – A publication which has significantly influenced the world or has had a massive impact on the teaching of economics.

  (Full article...)
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  Krugman in 2023

  
  Paul Robin Krugman (/ˈkrʊɡmən/ ^ⓘ KRUUG-mən; born February 28, 1953) is an American New Keynesian economist who is the Distinguished Professor of Economics at the Graduate Center of the City University of New York. He was a columnist for The New York Times from 2000 to 2024. In 2008, Krugman was the sole winner of the Nobel Memorial Prize in Economic Sciences for his contributions to new trade theory and new economic geography. The Prize Committee cited Krugman's work explaining the patterns of international trade and the geographic distribution of economic activity, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.
  
  Krugman was previously a professor of economics at MIT, and, later, at Princeton University which he retired from in June 2015, holding the title of professor emeritus there ever since. He also holds the title of Centennial Professor at the London School of Economics. Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world. He is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises. (Full article...)
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  Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the other. Its name and core elements trace back to a 1919 American Economic Review article by Walton H. Hamilton. Institutional economics emphasizes a broader study of institutions and views markets as a result of the complex interaction of these various institutions (e.g. individuals, firms, states, social norms). The earlier tradition continues today as a leading heterodox approach to economics.
  
  "Traditional" institutionalism rejects the reduction of institutions to simply tastes, technology, and nature (see naturalistic fallacy). Tastes, along with expectations of the future, habits, and motivations, not only determine the nature of institutions but are limited and shaped by them. If people live and work in institutions on a regular basis, it shapes their world views. Fundamentally, this traditional institutionalism (and its modern counterpart institutionalist political economy) emphasizes the legal foundations of an economy (see John R. Commons) and the evolutionary, habituated, and volitional processes by which institutions are erected and then changed (see John Dewey, Thorstein Veblen, and Daniel Bromley). Institutional economics focuses on learning, bounded rationality, and evolution (rather than assuming stable preferences, rationality and equilibrium). It was a central part of American economics in the first part of the 20th century, including such famous but diverse economists as Thorstein Veblen, Wesley Mitchell, and John R. Commons. Some institutionalists see Karl Marx as belonging to the institutionalist tradition, because he described capitalism as a historically bounded social system; other institutionalist economists disagree with Marx's definition of capitalism, instead seeing defining features such as markets, money and the private ownership of production as indeed evolving over time, but as a result of the purposive actions of individuals. (Full article...)
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  Knut Wicksell, Swedish economist. Important source of inspiration for John Maynard Keynes and the Stockholm School.

  
  The Stockholm School (Swedish: Stockholmsskolan) is a school of economic thought. It refers to a loosely organized group of Swedish economists that worked together, in Stockholm, Sweden primarily in the 1930s.
  
  The Stockholm School had—like John Maynard Keynes—come to the same conclusions in macroeconomics and the theories of demand and supply. Like Keynes, they were inspired by the works of Knut Wicksell, a Swedish economist active in the early years of the twentieth century. (Full article...)
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  In macroeconomics, chartalism is the theory of money that money originated historically with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt, and that fiat currency has value in exchange because of sovereign power to levy taxes on economic activity payable in the currency they issue. (Full article...)
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  Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).
  
  A fundamental aspect of the subject is design of experiments. Experiments may be conducted in the field or in laboratory settings, whether of individual or group behavior. (Full article...)

Did you know...

• ... that in the 1916 Declaration of Sainte-Adresse Britain, France and Russia committed to securing the political and economic independence of Belgium after the First World War?
• ... that the petunia carnage of 2017 led to worldwide economic losses?
• ... that a banker was named the prime minister of Equatorial Guinea after his predecessor resigned during an economic crisis?
• ... that people are robbing Lebanese banks to get their own money back?
• ... that scientists from the Institutum Divi Thomae raised silkworms at Saint Gregory Seminary during World War II as a form of economic warfare against Japan?
• ... that Elizabeth Wilkins chose to work at the Federal Trade Commission on the hope that the agency is now positioned to address economic injustice?

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Selected images

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  A map showing the main trade routes for goods within late medieval Europe (from Economics)
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  Pollution can be a simple example of market failure; if costs of production are not borne by producers but are by the environment, accident victims or others, then prices are distorted.
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  A basic illustration of a business cycle (from Economics)
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  John Maynard Keynes, a key economics theorist (from Economics)
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  The publication of Adam Smith's The Wealth of Nations in 1776 is considered to be the first formalisation of economic thought.
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  The U.S. unemployment rate from 1990 to 2022 (from Economics)
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  The Marxist critique of political economy comes from the work of German philosopher Karl Marx.
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  An environmental scientist sampling water
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  The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase in demand from D₁ to D₂ and the resulting increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
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  A 1638 painting of a French seaport during the heyday of mercantilism
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  An example production–possibility frontier with illustrative points marked (from Economics)
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  São Paulo Stock Exchange in Brazil, an electronic trading network that brings together buyers and sellers through an electronic trading platform
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  Economists study trade, production, and consumption decisions, including those that occur in a traditional marketplace
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  List of countries by gross domestic product (PPP) per capita in April 2022 (from Economics)

In the news

25 April 2025 – German economic crisis

The German government cuts its economic growth forecast to zero, with the Deutsche Bundesbank estimating a future recession. Minister of Economic Affairs Robert Habeck accuses U.S. President Donald Trump's Liberation Day tariffs of being the primary reason for Germany's continued economic crisis. (DW)

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