The Economist reviews core ideas in economics. The introductory article to a new series points out that
economists’ fundamental mission is not to forecast recessions but to explain how the world works.
It argues that economists have delivered and it discusses six exemplary areas of economic research:
- Nash equilibrium (article, August 20);
- Mundell-Fleming trilemma (article, August 27);
- Minsky financial instability (article, July 30);
- Stolper-Samuelson trade effects on wages (article, August 6);
- Keynes fiscal multiplier (article, August 13); and
- Akerlof et al information asymmetries (article, July 23).
Refreshingly, the article argues that
[t]hese breakthroughs are adverts not just for the value of economics, but also for three other things: theory, maths and outsiders.
I agree. But the value of economics also derives from more elementary insights, related to, for example,
- budget and resource constraints;
- the information content of prices;
- public choice; or
- the link between monetary aggregates and the general price level.
Today, these latter insights might appear even more trivial than those picked by The Economist. But they are central, and emphasizing them might lead to different policy conclusions than the common focus on economic frictions and aggregate demand.