What Is Economics Essay
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Quoting Michael Yates, “The subject matter of economics is the production and distribution of output…” (Yates, 2003). So what does this say to me? Simplifying, this says to me that Economics is a way of explaining the world. With studies dating as far back as Aristotle’s interest in the various forms of state, how can one ever fully understand the complexities of economic thought and how could one definition ever sum up the entirety of what economists endeavour to understand? Meikle, Scott, 1995) The study of economics attempts to understand and to explain how and why the wealth of the world is produced, distributed, and consumed.
It examines everything from global and local markets, class structures and wealth distribution, the role of government and politicians, supply and demand of products and services, the division of labour, and countless other factors that affect how and why the productions systems of the world economy function the way they do. Arguably, one of the most influential factors in defining the subject matter of economics is the division of labour.
By influential I am not stating that I am of the opinion that the current distribution of labour it is positive factor to our current economic climate, just that it is an influential one. Although the famous theorist Adam Smith argued that economic growth, as a result of the productivity improvements gained, was rooted in the division of labour (Smith, 1776). He, among others, also came to acknowledge the many downsides of a deepening division of labour (Walker, 1886 Smith, 1776 Marx, 1847).
Labour is distributed not only between countries and companies but also within each individual company. The wage disparity between middle and lower class and the wealth distribution between labourers and capitalists (business owners) that results from a deepening division of labour plays a much more significant role in determining what is produced, by whom it is produced, who is able to purchase these produced goods and services, and ultimately the subject matter of economics then one would initially assume.
The division of labour does not only refer to the dividing of complex tasks into simple tasks so that many, easily replaceable labourers, complete one task over and over to produce a product, (associated mainly with the industrial revolution); the division of labour refers to the division of labour between organizations. In modern times, labourers from individual organizations produce goods for another organization rather than directly for a consumer.
That organization then uses those goods, combined with their own, to produce a final product. This deepening of the division of labour resulted in the progressive substitution of self-sufficient production with industrial production and market exchange. (Schmidt, 2009) These worldwide networks and interdependencies between organizations, combined with the division of labour within the individual organization, further the disconnect between workers and the ownership of their work.
They lose pride of workmanship, close personal relationships, direct access to the means of production, and they become “a mere appendage to the cold, implacable, pace-setting machine” (Hunt & Sherman, 1986). Their work, or labour, is owned by the capitalist that owns the organization in which they work and they are left virtually powerless to control the economy in which they live. The labour of a CEO differs substantially from that of a production worker in an automotive factory, and so does the wealth accumulated by that labourer and the CEO and eventually, their heirs.
The ‘labourer’ who accumulates the most wealth has the most influence over the means of production. This labourer, once they own the means of production and are able to determine what is produced and the method of production comes to be termed a ‘capitalist’. A capitalist makes no secret that goods will not be produced and dollars will not be invested in production capital, regardless of people’s needs, because production decisions in a capitalist economy are based primarily on profit (Hunt & Sherman, 1986).
This capitalist, and the wealth they accumulate, also has significant influence over the political economy that sets the stage for capitalism to continue to thrive and to encourage capitalist accumulation and further the deepening of the division of labour. It is in this way that capitalism and the division of labour drives our production economy and influences the global markets and the modern subject matter of economics.