Basic Introduction to Economics
Economics is a concept consisting of the words «eco», meaning house or home, and «nomi, meaning law, knowledge or mastery. Consequently, we are talking about knowledge or legalities associated with our home, meaning the human society or, in very broad terms, the entire universe.
In short, we could say that economics are about the way humans act and behave toward each other. Therefore, economics are tied to other areas, such as physics, chemistry, biology, and sociology.
A very basic economic tenet is as follows: You have to give something to get something. In order to go to the window and look at the view, for example, you must expend both time and energy. This principle holds true for all economic activity.
Descriptive and Normative
You can divide the study and the dissemination of economics into two groups: Descriptive (explanatory) and normative (judicial or value-laden). These often intersect.
Large parts of the study of economics are about descriptions: How does a market work? How has the economic development been? What will the price of this product be tomorrow?
Economics can also be normative, which means wanting or arguing for a certain type of economic system, that money is a negative, or similar.
Basic Market Economics
For liberalists, market economics apply. They do not settle for observing and describing economic development, they seek to justify their economic standpoints both morally and scientifically.
Essentially, liberal economic thinking is about the following:
Liberalism has nothing against constantly increasing profit or efficiency. The entire evolution revolves around making things more and more effective. Through ever more effective methods, forms of life have developed from simple single cell organisms to incredibly complicated organisms, such as humans.
This is profit, getting better results with less effort. Simpler and more effective solutions create a richer and better life.
This chemical/biological example can be applied to society and all its facets. The normative statement for market economics is that profit and making things more efficient is nothing negative, but rather very positive.
Increased profit enables us to live better.
Below you can see a video that explains several liberal principles in economics:
- Economics are about how individuals trade with each other
- We can divide the study of economics into the descriptive and the normative
- Normatively speaking, liberal economics are about arguing for market economic principles
- One of the most important principles here is profit and efficiency
- Increased profit means better results with less effort