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Economics: A Very Short Introduction Paperback – Feb 15 2007
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`The primer I have enjoyed most... the one I would recommend to a friend who wanted to learn how economists think about the world right now...' www.economicprincipals.com
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Definitely five stars.
If you want a textbook, get something else...
The strengths of this book are: it avoids the trap of doing a developed-world only description, it really allows you to appreciate how economists think, it ties economic concepts to concepts from other disciplines. It can get technical sometimes for the least mathematical readership, but still a must read.
Chapter 5 alone justifies buying the book (Science and technology as institutions).
"A little learning is a dangerous thing"; and a "very short introduction" does not have to be easy. Dasgupta's book is not written "for dummies" and it does not present its subject in the manner of an introductory textbook. Instead, Dasgupta offers the lay reader an example of how economists define problems and issues and try to solve them. In other words, the book offers the reader an example of how to "think like an economist". This gives the book a dense character. Dasgupta develops his own way of approaching and his position of questions of economics, neither of which might be fully shared by all members of his profession.
At the outset, Dasgupta makes two broad worth noting. First, he ties in economics with politics and, especially with ethics. Unlike some scientists who might try to minimize ethical, philosophical questions, Dasgupta is quite clear that ethical commitments are a driving force behind economics and politics. The second point involves Dasgupta's approach to economic questions. He rejects a historical, "narrative" approach because of the difficulty of supporting one proposed "narrative" over another. Dasgupta's approach is heavily analytical and quantitative, relying on mathematical modeling, statistics, and game theory. He tries to identify and weigh the factors involved in economic growth.
The material is daunting, but Dasgupta presents it well, if briefly. He enlivens his account by telling a story. Dasgupta introduces the reader to two fictitious girls, , Becky, 10, who lives with her parents in the American Midwest and Desta, 10, who lives with her family in a village in tropical southwest Ethiopia. Becky's father is a successful attorney in a law firm while Desta's father is a subsistence farmer on a small plot. The family is heavily involved in the farming. Becky's family is prosperous, and she has dreams of excelling in school and becoming a doctor. Desta lives at subsistence level. She knows she will marry at a young age at the behest of her parents and be expected to continue in essentially the same harsh life in which she was raised.
Dasgupta tries to show why the circumstances in which Becky and Desta find themselves differ so markedly. He writes: "Economics in great measure tries to uncover the processes that influence how people's lives come to be what they are. The discipline also tries to identify ways to influence these processes so as to improve the prospects of those who are hugely constrained in what they can be and do. The former activity involves finding explanations, while the latter tries to identify policy prescriptions. Economists also make forecasts of what the conditions of economic life are going to be; but if the predictions are to be taken seriously, they have to be built on an understanding of the processes that shape people's lives; which is why the attempt to explain takes precedence over forecasting."
Dasgupta examines the economic factors that shape Becky's and Desta's lives in a series of chapters that include local, national, and international considerations. He begins with the concept of "trust" in economic activities between people which he develops using game theory modeling. In subsequent chapters, he considers communities, markets and households, trying to develop and explain factors common to both the United States and the Ethiopian village. He presents an important chapter on science and technology and on the institutional structures which allow their development. The book becomes broader in scope and probably more controversial in the latter chapters as Dasgupta describes hidden environmental costs, human capital, and natural resources such as air, water, and the ocean fishery in ways that the author claims are not usually followed by other economists. He discusses inequities in the distribution of wealth between the two countries he considers in addition to growing disparities between rich and poor in the United States and other developed nations. He also tries to tie economics in to politics and to the structure of government, based on the virtues of democracy and majority rule.
The book shows an economist thinking and practicing his discipline in a way a lay reader can, with effort, understand rather than offering an overview. The book helped me understand how an economist works. Dasgupta helped me see different ways of thinking about important matters, which is a worthwhile accomplishment and the goal of a "very short introduction".
The professional reaction to this commercial popularity has not been one of uniform gratitude. One must assume a certain amount of jealousy towards the fame and fortune of the lucky first movers. Yet there is also a feeling that some of the best-sellers have trivialised economics, titillating the reader with sex and drugs while neglecting the more important insights of the discipline.
Nobody could accuse Partha Dasgupta of deepening this rut. In this Very Short Introduction, he has taken as his theme the original mystery of economics: the nature and causes of the wealth of nations. And he motivates the study not with unadorned GDP statistics but by comparing the lives of two young girls: Becky, who lives in an affluent American suburb, and Desta, the daughter of Ethiopian farmers. Why do two children, born so much alike, live such different lives?
The question is compelling, and presents an opportunity to explore many branches of economics, in a concrete and relevant way. Unfortunately, Dasgupta does not use it consistently. While there are many references to `Desta's world' and `Becky's world', these are too often brief appendages to abstract discussions of agents A, B and C and factors X, Y and Z. At times one could be reading a textbook, except there are no problem sets, fewer graphs, and the pictures are in black and white.
This is a great pity, because there is a deep, coherent and insightful argument at the core of the book. One might begin with the proposition: wealth depends on the division of labour, and the division of labour is limited by the extent of the market. But the extent of the market is not limited only by transport and taxes. It is limited also by trust: by the rules and expectations that allow cooperation for mutual gain between people who do not know each other. And these rules and expectations, particularly the expectations, are hard to build but easy to destroy. If prospects for the future become less bright, even for trivial or fallacious reasons, the balance may tip from cooperation to conflict very quickly.
This has become a cliché in Yugoslavia, Rwanda and Iraq: political uncertainty resurrects dormant divisions and peaceful neighbours become killers. Less dramatically, such calculations restrict the number of people any individual can trust and trade with. The `community' is a natural boundary: a group which people are born into, with no easy exit, makes the penalties for cheating higher and more certain.
Yet on their own, such communities have their limits. They are small, so they limit the division of labour.Their members face the same risks, so insurance is difficult. And saving and investment opportunities are more limited.
Markets can overcome these problems by allowing much larger numbers of people to cooperate. But these large numbers cannot rely on personal ties, so establishing the necessary trust is much more difficult. This may not be a problem with some goods -- Desta's father sells grain on the local market without any problems -- but insurance, credit and employment are a different matter. Man may have a natural propensity to truck, barter and exchange, but not for banking or wage labour.
While trust, and its implications for communities, markets, households and firms, is the key content of the book, other subjects are considered: the history of economic growth, science and technology, sustainability and democratic decision-making. There is little to argue with in these chapters, but they are abstract and ad hoc, and not linked to the rest of the book.
The Very Short Introduction series is advertised as being for `anyone wanting a stimulating and accessible way into a new subject'. Stimulating, yes. Accessible? I am not so sure. Popular economics is supposedly aimed at the whole literate population, or at least the university-educated, newspaper-reading part of it. Dasgupta seems to equate this with his fellow Cambridge professors and their brightest students. And it is a shame, because the intellectual content of the book, combined with the Becky/Desta device, had the potential for a truly great and accessible introduction to economics.
-Originally published in Agenda 14(3), 2007.