Explaining Economics

Academic disciplines are more than collections of scholars, faculty, classes and majors and graduate students. They are people bound together by like-minded questions and processes, pursuing shared ways of asking and answering difficult questions that can inform who we are and what we do as educated human beings. Sometimes, amid all the bashing of higher education, the tweet storms, viral videos and media-enhanced conflict, we forget to remind ourselves and each other that serious work is difficult work. It demands time, effort, and discipline – and that is at the heart of what it means to learn a “discipline.” Facts, figures, formulas and theories don’t simply emerge. They are the result of smart people digging in, challenging themselves and each other, all in the pursuit of knowledge and the possibility of making a positive difference in the world.

One might think that this might be obvious, but it is not – especially in an environment that valorizes the quick impression and gives ample oxygen and loud megaphones to the uniformed.

Jean Tirole, a brilliant and influential professor of economics, won the Nobel Prize in 2014 for his research on markets. The Prize brought with it public visibility, which started Tirole thinking: what have I done for the discipline of economics as a whole? He found himself asked a wide range of questions by the general public – good questions and strange ones, too – and that reinforced his realization that there is a great deal of misinformation and ignorance about economics. Drawing from a colleagues who noted that there tend to be three kinds of economics scholarship: Greek (which is mathematical and only of interest to a few others in the field), up and down (which concerns itself whether the economy will get better or worse), and airport (economics books one purchases at the airport when your flight is delayed), Tirole decided to write a book that would explain the discipline and why it matters. The result, Economics for the Common Good, is an outstanding book that does just that and, on the journey, accomplishes even more.

Tirole loves economics as a way of thinking and as a profession, but his love is not blind. He is well-aware of the discipline’s many shortcomings. In broad strokes he walks the reader through economics and society (why it’s difficult to understand, what it does, and what it can’t do), and then the economics profession (what economists do and how they do it). Tirole builds on this and investigates the institutional frameworks of the economy. He examines the state and what markets can and cannot do, emphasizing the importance of structure and governance for markets to function. It is an assertion that we should consider making again and again: the state needs the market and the market needs the state.

In the book’s lengthiest section, Tirole outlines some of the great macroeconomic challenges, including climate, labor, Europe and the EU, the value and danger of finance, and the financial crisis of 2008. He also takes a look at key industrial challenges, such as macroeconomic competition, the disruptions and opportunities of the new digital economy, and the relevance of innovation and intellectual property – all through an economist’s lens. He is fair, clear, and helpful throughout, highlighting the many ways that economic thinking, drawn on models, data and theory, can help to explain behavior.

Economics for the Common Good is a wise book, making systematic sense of a massive scope of inquiry. It is serious, lengthy, and still accessible. It is needed, too, for far too many do not understand the discipline. Economists cannot foretell the future and knowledge of the field will not necessarily lead to wealth. Intuition and feelings are not reliable ways of understanding the economy. Economic facts are stubborn, too, and they cannot be politicked away, either. There is strength in rigor.

My enthusiasm for academic inquiry is not widely shared. I get that. Nonetheless, I believe that this kind of book is super and ones like it would be helpful in other disciplines. They may not become best sellers, and some will skim the lengthier sections, but without them, cultural and intellectual terrain is ceded to the uninformed. Let’s continue our mission, building a more informed and educated society – for the common good.

David Potash

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