Monday, 26 December 2011

ECONOMICS: PRINCIPLES AND PRACTICE (Standish et al) and STRATEGY SAFARI (Mintzberg et al)


I have a new job, and I read these books in preparation. They are text books from my cousin's MBA at the University of Cape Town.

The ECONOMICS book was essentially a first year university text book, and I found it very interesting. Our old friend the global recession meant that the sections on economic fixes was particularly illuminating. Here basically are the two options to get a market going: increase demand, or increase supply.

Keynesians think the best idea is to increase demand; that is, to give people more money, so that they will buy more stuff. This you will recognise as the New Deal approach – spend money building roads, and so on, so there are more jobs, and thus more consumers have more money to spend. Classical economists take the view that it is a better idea to increase supply; that is, to free up businesses to succeed, thus creating more products and more jobs.

I was struck by how very theoretical both approaches were, and, for a field so full of numbers, how little quantatative evidence there seemed to be for either side.

3 comments:

  1. It is not true that classical economists support supply side economics. Supply side theory proved itself dead after Regan, and no serious economist has, to my observation, seriously argued otherwise. It seems its the politicians that have pushed supply side theory, but there is no evidence in the field to suggest that it actually works.

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  2. Based on my in-depth knowledge (ie. one entry level text book), I would say that classical economists do support supply side economics, and it's neo-classical economists that have refined on this.

    Also it seems there is no evidence in the field that strongly shows either approach will definitely work in any situation . . .

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  3. Wow, a heavy book, I'm glad you liked it. Been so long since the university days I feel like I should be reading something like this to brush up myself!

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