How is the economy generally perceived?
- solid, tangible, measurable
- machine that operates according to scientific laws and principles
- economy as a living organism? (healthy, robust)
In reality the economy, according to David Korten, is…
Our global economy is out of control and performing contrary to basic principles of market economics
During colonial times,
Division of labour was mainly based on gender.
Specialization
Each task is carried out by a different person, providing higher quality services and better efficiency
Key assumptions made by economists that geographers denaturalize:
Rationality
Private Property
Quantification
Submerged Activity
Activity in the economy that is not recorded or counted, activities that are unquantifiable.
(deemed non-economic, non-productive)
Economy used to mean
“household economy”
The “invisible hand”
The idea that the economy has the ability to stabilize itself.
- Instead of people regulating or orchestrating it, we should let the economy be. The nature of supply and demand creates this natural equilibrium.
Arguments against invisible hand
Capitalism is not based on the invisible hand but the invisible fist….. (structural violence)
Capitalism is the most ruthless selfish opportunistic, greedy, calculating plunderers applying the most heartless measures in the cold blooded pursuit of corporate interests and wealth accumulation, will produce the best results for all of us… through something called the invisible hand.
Economists borrowed _____ from ___ sciences
Concepts from physical sciences
Economic terms borrowed from physical sciences
utility equilibrium stability elasticity market mechanism frictional force of distance
“Homo economicus “
Idea that everyone acts and makes decisions rationally.
- Concept in neo-classical economic theory
- People behave in a similar rational, consistent manner to maximize their own economic rewards or utility
- Humans as rational, calculating, narrowly self-interested actors (rational choice theory)
- doesn’t consider what about values, ethics, culture, ideology, altruism, status, cooperation, trust, tradition, emotion…?
The theory of economics is built on ____
rational choice theory
Keynesian economics
- (1940s-1970s)
- Adopted during the era of the ‘welfare state’, after the great depression
- fundamental departure from classical economic idealogy
- Government should be responsible for maintaining and stimulating economic growth
- Idea that market economies don’t self correct because prices and wages take time to adjust
John Maynard Keynes developped…
developed theory of management of the national economy (1936)
- saw that classical economic models did not seem of great use in the great depression
Welfare State
a system whereby the government undertakes to protect the health and well-being of its citizens, especially those in financial or social need, by means of grants, pensions, and other benefits.
Examples of economic growth being bad:
Alberta Tar Sands
Palm Oil Production in South East Asia
Things that affect labour market participation:
Personality
Positionally
Perfect competition
The idea that there is one supplier and one origin of demand.
Why is a situation of perfect competition difficult or impossible to find?
- There can be many demanders and or less suppliers and vice versa.
- There can be government that limits the suppliers of something. (i.e. Healthcare in the states)
- Depending on where you are, how many suppliers there area, this affects the price.
- A fair price is not always the result.
- Assumes that markets are always fair
Scale
Area over which phenomena exists
Gross Domestic Product
total market value of all goods and services produced annually in an economy.
GDP: Consumption expenditure \+ Investment expenditure \+ Government expenditure \+ Net exports
Consumption expenditure
The total amount spent by individuals in a given year.
Investment expenditure
The total amount invested by businesses in future productive capacity
