Wednesday, September 21, 2011

A Crash Course in Economics - and many other things!

I recently read an “autobiography of a Pencil” written in a simple style, but an essay that is up there among the classics for its deceptive depth.

  • It brings out the economic impact of co-operation, exchange and sharing.
  • It encapsulates the Division of Labour of Adam Smith; it also equally facilely incorporates Ricardo's concept of Comparative Advantage.
  • It shows the benefits of co-operation without coercion, of team work, of how the sum of the parts can be more than the whole.
  • It has resulted in trading systems that set price for various products in various ways, and it is the bedrock of the currency system.
  • It results in inventions astounding in their complexity; indeed, in producing things (like the Pencil in this great essay) that no single person knows how to make.
  • It teaches us economics, helps us understand the theory of domestic or international trade.
  • It helps us understand the base of exchange rates.
  • It points to dangers of not co-operating on a continuous basis.
  • It highlights how we can, and why we should, encourage innovation and serendipity.
  • It illustrates and explains why producers and consumers will work together in spite of their divergent interests.
  • It explains why free societies are more desirable than repressive, dictatorial ones – the former are simply better at fostering exchange of ideas.
  • It makes us understand why Force is a poor nutrient for harvesting a crop of sustained co-operation and fertile innovation.
In listing the benefits of this essay, I am in danger of exceeding the length of the essay itself. So here I end. Not without giving you the link to this great essay. Read it yourself, and enjoy it. But please honour copyright. The man who gave us such wisdom deserves it.

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