In 2016, I read a lot of books. I would recommend one above all the others though, to a general audience. Economix, written by Michael Goodwin and illustrated by Dan E. Burr, is the most generally useful book for understanding our world I read all year. It focuses on factual economics, or how economic theories interact with actual reality, instead of the fantasy land of much basic economic writing.
Factual economics is my own coined term, not Goodwin’s, so I’ll give it a quick explanation. To explore the differences between factual economics and economics as it is usually presented, let’s start by talking about Spaceballs1No one has ever said this before, ever..
Mel Brooks’s Imperial Economic Satire
In this 1987 Star Wars spoof, the incompetent villainous society of Planet Spaceball has wasted all their air. Their planet’s atmosphere is just disgusting with pollution and depletion. These days, the elites have to suck down on canned air just to get a hit of that sweet sweet. Everyone else must make due with the stuff above their heads.
We describe canned air as a luxury good; you can survive without the canned air, but no one finds it pleasant at all. So those with resources seek out canned air to improve their experience. Canned air has a high demand, and a low supply. People pay a lot for it. This idea comes up in the first week of Economics 101.
But the plot progresses: tired of having to make due with canned air, the Spaceball elite decide to get their hands on the pure atmosphere of Planet Druidia. Druidia has a huge supply of clean air, and Spaceball has a huge demand for it. Surely they could come to some sort of arrangement: exchange air, for, say, intergalactic warships? Negotiations could eventually determine a fair rate to exchange Druidia’s natural resources for Spaceball’s military might.
Of course, Spaceball could do something else with its military. It could just steal Druidia’s air. Enter Mega Maid, a spacecraft designed to do just that.
Spoiler alert: the heroes destroy Mega Maid, and keep Druidia’s air safely in its skies.
If the Spaceballs’ plan had worked, those villains could have solved the domestic crunch of high air prices while avoiding the perils of interplanetary trade. And all for a modest military investment! Most Economics 101 theories don’t account for the forcible seizure of resources; for that, you need a realist’s perspective. You need factual economics.
Back into the Real World
How could you explain the world without the Industrial Revolution? How could you explain the Industrial Revolution without the British Empire and its global resource wars? To me, you just can’t. The use of military force to circumvent ‘normal’ pricing happens throughout history. And we have more circumventions of normal pricing, and many more subtle: duplicity, time pressure, negotiating skill, relative strength, etc., all move the price of a good.
In fact, one might say that the price of a good comes from the relative negotiating strengths of the buyer and the seller, and that supply and demand in the market are actually just factors that influence negotiating strength.
This is one of Goodwin’s main lessons in Economix. You can have all the abstract reasoning about prices and markets that you might want, but things work in the real world, not the imaginative world. You can have markets, but you always, always have market interference. No one is free, these days, to traffic in indentured servants and slaves, even though this was standard fare three hundred years ago. Those villains who do participate in the modern slave trade know that their market has been regulated out of legal existence, and they will be punished severely if they don’t take precautions.
For the most part, people are OK with government regulations destroying the market for slaves and servants. So OK, in fact, that they don’t even recognize this as an infringement on the free market. Similarly, the labor market for small children to work in mines does not exist in Western countries, and most people who aren’t funded by Betsy DeVos are fine with this. Markets are, factually, circumscribed by governments, custom, history, and other forces that get their time in the spotlight in Economix.
Factual Economics, the Cartoon Way
Goodwin’s book talks about the economy in the frame of history. Seldom does economic thought outpace economic reality. Governments, markets, people and societies come up with new products, new ways of behaving, and economists must make a theory that can explain what’s going on before their eyes. Fischer Black and Myron Scholes, for example, won a Nobel Prize for figuring out the theoretical price of contracts that had existed for thousands of years!
So when you talk about how economic thought changes, you must talk about historical changes as well. Goodwin tackles the task. He periodizes economic history clearly, and introduces theories and facts in appropriate measure. He conveys well that the economy’s history comes from competition between various people and interests. And Burr’s art helps him a great deal.
Academics have a tradition of writing your eyes off. Sometimes, the more essential a text, the more likely a paragraph goes on for multiple pages. Paragraphs don’t work that way! Just jam a line break in there, please!
Sure, maybe writers find it difficult to know when something goes on too long. The comic format, though, makes that choice for Goodwin. He has to give Burr a chance to draw; that’s the whole point, right? So we get cartoons of famous leaders and theorists, the common man, talking prehistoric commodities, and walking malevolent skyscrapers.
Don’t Laugh. OK, Maybe a Little.
Yes, the evil skyscrapers representing corporations are a tad on the nose. But yes, they do help comprehension immensely. Down with the weasel words, down with the hedging, down with the rambles no editor has seen! We must trim our sentences so that we can fit enough evil skyscrapers to accurately represent oligopolies! Also let’s get in a mad banker literally steaming out of his ears, yeah that’s the good stuff.
The best success of this book comes from Goodwin and Burr’s skill at communication. The best idea in the world influences no one it does not reach. Clear writing and clear cartooning dominate the book, and make it good. Clever writing and cartoonish, insightful stuff even, transform it into an essential piece of reading.
Many of you may have taken a class or two of economics. You might remember things like shifting supply curves or, gasp, comparative advantage. This book has those, but it also has the best general communication of factual economics I’ve seen. You don’t have to be an expert to read this. Don’t think you have to be a novice either! It will hone your thinking about how history and the economy interact. Argue with it, learn from it, laugh with it, but don’t sell it short. Economix explains the economy better than anything else I’ve seen.
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