Professor Zhang turned to Austria in his later period, which can be clearly felt in the textbook.
Adam Smith believes that economics is "a science to study the growth and distribution of national wealth", and the most effective distribution mechanism is the invisible hand of the market, so economics is largely a science to study the operation of the market.
In 1930s, lionel robbins put forward that "economics is a science to study how to allocate scarce resources effectively", which is still the most popular definition. However, this definition is too static and narrow to be included in many fields, such as the discovery and innovation of new resources, which is not a problem of resource allocation.
There are also some schools that claim to define economics as "the science that studies how rational people make decisions", while the Austrian school claims that "economics is the science that studies the actions of purposeful people".
Professor Zhang believes that all the above definitions are limited, and he prefers to define economics as "the study of how human beings cooperate".
There is a suspicion of imitating Man Kun here.
1, human behavior has a purpose.
The basic viewpoint of Austrian school.
Only individuals can make decisions.
Only individuals can make decisions, and the collective can't think or act. The basic viewpoint of Austrian school.
There is no free lunch in the world.
Friedman said that if economics is summarized in only one sentence, it is this sentence. Opportunity cost.
4. People always make choices on the edge.
We never compare all meals with all movies, but compare the next meal with a movie. For enterprises, the average cost of serving all customers is different from the new cost of serving the next customer.
5. Free exchange is mutually beneficial.
Most of the free exchange in the market economy is not equivalent. Only when there are differences in the subjective evaluation of a commodity will a transaction occur, and once a transaction occurs, both parties will create value. Trade between countries is essentially a personal transaction.
6. Division of labor is the source of progress.
The expansion of the market promotes the refinement of the division of labor, and the refinement of dividends brings technological progress and innovation, which in turn promotes the development of the economy, and so on, in a virtuous circle.
7. The result is more important than the motivation.
Everyone is selfish, and the result may be altruism. Governments often do bad things with good intentions. For the same purpose, we can always think about whether there are alternatives with lower cost.
8. Free competition is good.
"Self-interest" can lead to "beneficial journey", provided that there is free competition.
9. The system is stronger than people.
System can restrain human nature and change people's behavior. The most important systems are property right system and individual freedom.
10, things change, entrepreneurs are important.
The world is full of uncertainty and cannot be predicted accurately. It is precisely because those entrepreneurs who are good at judging the future and are willing to take risks have discovered the unsatisfied market and created various new technologies and products that the economic progress in the past 200 years has become possible.
Marshall is a master of economics, majoring in mathematics. He has his own unique views on the application of mathematics in economics. He pointed out: "Mathematics training is useful because mathematics can clearly express some general relations and some short processes of economic reasoning through extremely concise and accurate language. Although this can indeed be expressed in everyday language, it will not have the same clear outline. "
Mathematics was originally a tool for economic research, but now economics is in danger of becoming a slave to mathematics. There is a trend that all economic problems are set to be mathematically manageable, and if they cannot be dealt with mathematically, they will be avoided. Adam Smith's important theories such as division of labor and economies of scale have long been abandoned by many economists, leaving only equilibrium and resource allocation, because there is no way to deal with division of labor and technological progress in mathematics. Entrepreneur is the most important coordinator and driving force of market economy, but it can't be seen in mainstream economics because there is no way to model entrepreneurs' decisions with mathematics.
Paul krugman once warned that in the past 100 years, "economics has been moving in the direction of least resistance to mathematics".
Although people began to think about economic problems thousands of years ago, as a discipline, economics has only a history of more than 200 years.
The publication of Adam Smith's The Wealth of Nations is generally regarded as the beginning of economics breaking away from moral philosophy and becoming an independent discipline.
After Smith, Ricardo and his followers became representatives of classical economics. Compared with Smith, Ricardo school has two important changes: one is to shift the main focus of economics from dynamic economic growth to static income distribution; The second is to replace Smith's empirical argument with a more formal exposition.
By the time of John Mill, the whole system of classical economics was so complete that Mill even declared in his book Principles of Political Economy that the future economic theory would only make slight progress. But what he didn't expect was that economics at this time had actually reached the eve of great changes.
The first major change in modern economics was the "marginal revolution". In this ideological revolution, the marginal value theory advocated by economists such as Meng Le, jevons and Walras replaced the labor theory of value believed by classical economics and became a new paradigm of economic research. Subsequently, Marshall, a British economist, built a complete economic analysis system on the basis of marginalism, which is the so-called "neoclassical economics". Until today, neoclassical economics is still the mainstream of modern economics.
The second major change in modern economics is the Keynesian Revolution. From Ricardo to Marshall, economics mainly looked at various economic problems from a micro perspective, while relatively ignoring the operation of macroeconomics. In the book General Theory of Employment, Interest and Money, Keynes put forward a set of framework for analyzing macroeconomic problems. Since then, the whole economics has been divided into microeconomics and macroeconomics.
In recent decades, microeconomics and macroeconomics have made great progress and many schools have been born. For example, the rise of game theory and information economics has had a great impact on the overall structure of economics.
"Scientific Whig Doctrine" holds that science is always progressing, and today's theory is better than yesterday's, and tomorrow's theory is better than today's. This is not correct.
For example, as early as 2300 BC, the ancient Greek astronomer Aristak proposed the "Heliocentrism" in which the earth revolves around the sun, but his theory was not accepted. Ptolemaic system's "geocentric theory" dominated human thought for more than 800 years. It was not until 1543 that Copernicus published "On the Operation of Celestial Bodies" that "Heliocentrism" was established. Here "geocentric theory" was put forward later than "Heliocentrism", but it is wrong, while "Heliocentrism" is correct although it is ancient.
In economics, there are more cases where the new theory is not as correct as the old one. For example, Ricardo shifted the focus of economics from development to distribution, actually giving up many correct things in Smith's economic theory; Keynes made economics have no "micro-foundation", in fact, he gave up the correct understanding in classical economics.
What is worrying is that the phenomenon of denying the correct old theory with the wrong new theory is particularly serious today. On the one hand, because the current economics relies too much on mathematics, many economists abandon many valuable things in traditional economics in order to pursue the rigor of mathematics. For example, Smith's exposition of the market process and Schumpeter's Entrepreneur are rarely discussed because they are difficult to deal with mathematically. On the other hand, out of the need to safeguard vested interests, some people deliberately adhere to the wrong new theory. For example, Keynes's macroeconomic theory has been proved to have great problems, but because it can provide theoretical support for government intervention in the economy, it has a bigger market among decision makers than the more correct free economic theory.
Based on the above reasons, in the learning process of economics, we should not only read the latest literature and learn the latest theories, but also return to the classics and Adam Smith in time to dig out some insights forgotten by history. As ronald coase pointed out: "Compared with Adam Smith, our analysis is more and more complicated, but we have not shown more incisive views on the operation of the economic system. Moreover, in some respects, our method is not as good as Adam Smith's. "
The operation of the market is not a static equilibrium, but a dynamic process, and the market process is the result of entrepreneurial activities. An entrepreneur is a person who provides products and services to make a profit. Unlike ordinary workers, entrepreneurs earn surplus income, not contract income. In order to obtain residual income, they need to bear the uncertainty of the market.
There are two main functions of entrepreneurs: one is to find imbalances, and the other is to create imbalances.
The so-called search for imbalance is to find potential profit opportunities between different regions, between different times and in the factor market, and use them to achieve arbitrage. The so-called creation imbalance means breaking the original market equilibrium and realizing a new equilibrium with the help of innovation.
The success of entrepreneurs is the result of the interaction between internal quality and external environment. From the internal quality, successful entrepreneurs need to have the desire for success, the vigilance of profit opportunities, the ability to judge the future and the courage to take risks. From the external environment, entrepreneurs need to have a sound property rights protection system and stable policy expectations.
The government's industrial policy can not only replace entrepreneurs, but also interfere with their judgment.
1. Replace complete rationality with bounded rationality.
In modern mainstream economics, "rationality" has always been a basic assumption, and people have always been assumed to be able to make accurate judgments based on their own rationality. But this is obviously wrong. The human brain is very limited in knowledge processing ability and memory, so it can only show limited rationality.
2. Replace the method of physical balance with the method of biological evolution.
Modern economics takes the paradigm of physics as the model, in which many concepts such as static and equilibrium are used. This makes it difficult for us to analyze the interaction between people, and it is also difficult to dynamically sort out the driving forces of economic development. Therefore, it may be a feasible way to guide the development of economics to replace the concept of balance in physics with the idea of evolution in biology.
3. More empirical and experimental analysis methods are used.
As mentioned earlier, after Ricardo, economics began to pay more attention to formal deduction, while paying less and less attention to real phenomena. In fact, economics is a science closely related to reality. To discover new problems and put forward new theories, we need to know more about reality. This requires us to do more empirical research and provide more empirical support for theoretical development. At the same time, computer and information technology also enable economists to simulate real economic problems in the laboratory, which provides a new path for economic research.
4. The revival of Austrian school economics.
More than a hundred years ago, the Austrian school was a part of mainstream economics and made great contributions to it. However, due to its unique methodology (especially the rejection of mathematicization) and excessive fighting spirit, it was gradually marginalized in modern times. However, there are many things in Austrian school economics that are worth absorbing and learning from modern economics. For example, the Austrian school's exposition of market process, entrepreneurs, economic cycle and other issues is more in line with the real world. In the future, economists should actively explore the valuable things in the Austrian school's economic theory to make up for the shortcomings of mainstream economics.
Economics may be defined as the science of interests, but as david hume, the British enlightenment thinker and economist, pointed out more than 200 years ago, although people are dominated by interests, interests themselves and all human affairs are dominated by ideas. Ideas affect people's behavior because rational people must find justified reasons for their decisions, and whether a behavior is justified or not is related to the ideas people hold.
Keynes once famously said:
The thoughts of economists and political scientists, whether correct or not, are more powerful than generally believed. In fact, the world is ruled by them. Pragmatists think that they are not influenced by any theory, but in fact they are often caught by a late economist.
Similarly, Keynes's opponent Mises also specially emphasized the importance of ideas and concepts. He pointed out:
Everything a person does is the result of the theory, knowledge, creed and mentality that dominate his thoughts. In the history of mankind, nothing is real or substantial except thoughts.
The two opponents hold the same view on the importance of ideas, which is the best interpretation of the role of ideas.
Economics is very important because it can change people's ideas.
China's economists' main contribution to our society or mankind in the past 30 years is to make China people accept the concept of market economy put forward by Adam Smith more than 200 years ago, and make us in China believe that free competition, free prices, private property rights and entrepreneurship are indispensable for any economic progress. This has promoted our reform and made China's economy develop rapidly.