Ritchie\’s new economics

That though begs the question, is there a limit to possibility? And does that mean achievement is constrained? It is this question that fundamentally changes the approach used here from that offered by conventional economics at this time. Conventional thinking is that the individual should think their consumption unconstrained, even though the reality is otherwise. In the economics proposed here is the individual is recognised to be constrained they then recognise a different goal – which is to work to achieve within the constraint. And, of course, the answer is that the individual is constrained, and there is a limit to possibility that they must accept.

Now I understand what he\’s saying and in half of it he is correct. We do face constraints upon our actions and our consumption.

This is because resources necessary for the satisfaction of our desires are limited.

Where he\’s wrong is in thinking that conventional economics thinks any differently.

Given these two assumptions it follows that there is a fixed material amount of resource we may each enjoy at a point in time. That defines a practical limit to achievement.

Sure, resources are scarce.

Here is part of the GCSE economic syllabus. The part dealing with \”Basic Economic Problems and Decisions\”.

The central importance of scarcity
Emphasis should be placed on the universal problem of scarcity and
how this necessitates choice.
The concept of opportunity cost
Candidates should have a basic understanding of rational choice based
on the comparison of benefits and costs.
Markets and resource allocation
Candidates should have an understanding of how markets allocate
scarce resources and appreciate that resources are also allocated
through non-market mechanisms. Candidates should begin to assess
the outcome of resource allocation in terms of efficiency, sustainability
and equity.

Well done Mr. Murphy. You have just managed, from first principles, to recreate the central insight of economics. Resources are scarce.

The only bit that puzzles me is why you think there\’s anything new in what you\’ve found?

7 thoughts on “Ritchie\’s new economics”

  1. Let’s hope these Guardian journalists suddenly are enlightened to this amazing ‘new economics’ and start preaching about how society can become enriched by letting ‘the people’ decide what to do with their own economic resources in a free manner.

  2. I think he’s trying to sell it to people like Guardian journalists who don’t have a clue about economics.

  3. I’ve been trying to decide whether it’s worth the opportunity cost of writing a critique of the methodology of Mr. Murphy’s ringpiece diagrams over at Counting Cats.

    How influential is this man?

  4. “the goal of human life is to achieve one’s potential”

    I really wonder what people are thinking when they write sentences like that … does he have in mind potential, singular … in which case, how is this potential selected from the set of potential potentials? Or, as would seem more natural to me, if there are very many potentials, some better than others and mutually exclusive, how can achieving ‘them’ be our goal.

    If he’s thinking that given our preferences, achieving our potential means doing the best we can, given constraints …. hey, now there’s an idea

    grammatical pedantry is no attractive, so I won’t mention his mis-use of ‘begs the question’.

  5. Murphy, in common with many quasi-literate douchebags, uses the phrase ‘begs the question’ in the catachrestic sense, whereas its real meaning is that of using an unbolstered assumption in support of an argument (a technique of which he is most fond.)

  6. “This is because resources necessary for the satisfaction of our desires are limited.”

    This is because those resources take knowledge and effort to make. We are limited to the extent that our time and knowledge are limited.

    I think what he is talking about is an absolute limit, valid forever. What economics talks about are temporary limits, valid until somebody invents a better way of doing it.

    By “accepting constraints” he’s not talking about those temporary constraints dealt with normally in economics, he’s saying we shouldn’t try to invent better ways of doing things if they’re more resource hungry. He’s saying you can’t invent new resources, that their total is fixed and finite forever. He’s wrong.

    It’s the “litany of doom”, again. It’s not new; it’s a repetition of errors dating back to Malthus and before. As a dog returns to its vomit, so leftists return to the zero-sum fallacy and its variants.

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