The Economy’s 3 Essential Ingredients

Material Resources

There’s a tendency to identify the economy with what we do with our money and that’s understandable because money is easily counted. We know how much of it there is, and we know who has what to some extent. You can actually create mathematical formulas and economists have done a great deal of good service by doing mathematical study of how people use their money. But to some extent, it’s a little like looking for your car keys under the street lamp because the light is better there even though you dropped them down the street. A focus on what can be easily counted, measured, and mathematically analyzed can distract us from realities that are just as important but are not so easily counted. We might even think the model we develop for looking at things that are easily counted can then be mapped onto everything else and become a master metaphor.

In the 1970s, a prominent economist shocked the world by publishing a scholarly article in which he analyzed decisions about marriage choices in terms of a competitive market for attractive mates—as if people were competing for marriage partners the way Coke and Pepsi compete for customers. It’s a deeply shocking article. It’s not wrong for economists to think about things other than money. It’s important for economists to think about things other than money, but they shouldn’t transfer the system for thinking about money as the master metaphor for thinking about everything.

Economics

Economics

Greg Forster

This book draws on the legacy of the Christian tradition to introduce readers to the study of economics, challenging them to carefully apply biblically rooted economic values. Part of the Reclaiming the Christian Intellectual Tradition series.

Time

Economists are looking at things that people have to make trade-off decisions on. That includes money, but it also includes all of your material resources like your home, your car, the ham and cheese in your refrigerator, the coins in your pocket, and the business cards that you hand out at conferences. Every tiny little thing is a limited resource.

But it also includes much more than that. It includes our time. One very good friend of mine who’s an economist says, “Time is my favorite resource because it’s the great equalizer. It’s the only resource that Bill Gates doesn’t have any more of than I do.” We all have twenty four hours in a day. A wealthy person can hire people to do things for him but he can’t actually buy additional minutes in his day. How you spend your time is a scarce resource.

There’s a wonderful line in C. S. Lewis’s Mere Christianity in which he’s instructing people in how to pray who are new to it. One of the things he says is when you begin to pray and you think What would I be doing right now if I really were God’s child, if I spoke to God as my father and really meant it because I really was his son or daughter? You might realize that instead of saying your prayers, you should go downstairs and help your spouse wash the dishes. Well okay, go do it then! Time spent praying is time not spent helping your spouse wash up the dishes. These are economic decisions.

It’s important for economists to think about things other than money, but they shouldn’t transfer the system for thinking about money as the master metaphor for thinking about everything.

Relationships

We also manage our relationships with other people. This is a little harder to get your head around, but think about your capital with other people. You have a limited amount of ability to ask other people to do things for you. You have a limited amount of ability to endorse things and have that endorsement carry weight.

For example, when a celebrity endorses a product, they’re adding some weight to that, but if they endorse too many products, people begin to roll their eyes and it no longer means anything. So celebrities actually carefully measure how many products they’re going to endorse and how they’re going to do it so as not to take away the value of that endorsement. Now celebrities monetizing their endorsement may not be a very elevating spectacle, but you and I do the same kind of thing when we say to a friend, “You really need to read this book. This book will change your life. You you should really check it out.” We’re spending capital with a person when we do that.

So in a sense, almost everything you do—even down to your prayer—involves economic decision-making because it involves your material resources, your time, and your relationships with other people. This is why there’s a tendency to have economics creep into every area of life and become the only frame we use to think about things. I think it’s important not to let economics be the only frame in which we think about things. At the same time, there’s no area of life where it’s irrelevant, there’s no area of life where economic decision making is not one of the elements that’s going on.

Greg Forster is the author of Economics: A Student’s Guide.



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