Samuel Bowles and Wendy Carlin write,
The Economy takes on board the fundamental innovations of Hayek and Nash used in contemporary economics research. But concerns about climate and other market failures as well as economic instability provide reasons to doubt Hayekâs argument that governments should limit their activities to enforcing property rights and other rules that permit markets to function.
Pointer from Mark Thoma. They refer to this free textbook. I can see that I disagree with a lot of it. For example, The Economy says,
Through most of their history, humans have regarded natural resources as freely available in unlimited quantities
This seems wrong to me. Prior to the invention of agriculture, humans had to take into account the limited availability of resources. If nothing else, when hunter-gatherers exhaust a food supply in an area, they have to move or face starvation.
Instead, I would emphasize that the price-and-profit system encourages humans to use our ingenuity to reduce our dependence on scarce resources. This natural tendency toward conservation in a capitalist economy is one of the most important concepts for economists to teach. Thus, the environmental lesson in their book is nearly the opposite of mine in Specialization and Trade.
Still, there are many ways in which their textbook strikes me as a constructive improvement over the textbooks in the Samuelson tradition. I am very sympathetic to their effort to bring more heterodox views into introductory teaching.
his natural tendency toward conservation in a capitalist economy is one of the most important concepts for economists to teach.
In terms of market economy examples, I have used the 1979 gas crisis in terms of conservation in capitalist economy. That the Reagan Revolution needed the sale small quality Japanese cars, Civics & Corollas, versus US cars to cut/control oil consumption to grow the 1980s economy. And We used less oil every year after 1978 until 1996. It is a simple example. (Also for history it was Japanese manufacturing that killed high paying union manufacturing jobs economy.)
This natural tendency toward conservation in a capitalist economy is one of the most important concepts for economists to teach.
One could argue conservation of resources in the modern global is one reason why the birth is dropping like a rock. Nothing conserves resources used by a country than having less people!
But exhaustion of local resources is precisely due to not taking into account their limitation, or taking it into account only after it has been made painfully obvious.
“Through most of their history, humans have regarded natural resources as freely available in unlimited quantities”
Most of human history was lived in universal poverty. The above statement is simply fNtasy.
Christians (and Jews) believed in unlimited resources freely available ONLY in … The Garden of Eden. And it was original sin which made humans leave, and started history as well as the history of competition, including that between brothers.
Emotional & relationship competition is heavily understudied in economics; if The Economy is terrible on natural resource scarcity, I won’t bother reading it.
I like the free e-book distribution. Arnold does a great job of having his book available — but a TERRIBLE job of promoting it. Where is the link on the right? Or even in the above article, where it is very relevant?
https://www.libertarianism.org/books/specialization-trade
This is a great book.
Arnold, you sometimes mention it — you should always also link to it.