Economics is a part of our everyday life. We hear about it in the news and experience the effects of economic activity daily. Yet, when someone asks you to provide a clear definition it might take a while to find the exact words to express it. That is because the science of economics in itself has an elusive and complicated nature, influenced by a myriad of variables.
Are you interested in economics and exploring whether you’d like to delve into things like the game-theory, environmental economics, applied economics or Government policy? Those are all different in nature and whether you plan to acquire a degree in Business economics, Bachelor of Business or even a qualification in international business, to pursue and study economics will provide you with invaluable knowledge to use in all walks of life.
Studying economics and statistics or choosing to complete a business degree in South Africa might, however, can be a big commitment. We’re here to help you explore what economics is, where it comes from and touch on some economic specialisation fields you can enter as you become an Economics student.
An Introduction to Economics
According to the Oxford dictionary, Economics can be explained as “the branch of knowledge concerned with the production, consumption, and transfer of wealth.” People automatically refer to economics when they analyse the financial condition of a country and you might’ve of phrases like ‘The South African economic forecast’? Economics is that and a whole lot more than the expression of a country’s financial state.
Economics is the condition of a region/group as regards material prosperity.
– Oxford Dictionary-
Did you know that Economics is also referred to as the ‘science of scarcity’? Since the beginning of time the human race had to find the best ways to deal with scarcity. Initially we searched for food as hunter-gatherers, but in our modern society we’re dealing with this scarcity issue in different circumstances as we attempt to create financial well-being. We produce goods and services to create wealth for ourselves by tapping into resources like time, money, labour or raw materials.
The art of juggling and matching various resources to influence production output is what Economics is all about. One country might have a shortage of skills, but their wealth lies in ample natural resources. Another country on the other hand has bounteous skills but lacks the natural resources to produce goods and services. In a modern, global economic environment we attempt to bring these two countries together to create optimum conditions for production and societal development.
Macroeconomics will focus on this big picture of how a country or societies can produce, trade and create wealth. It is more concerned with the overall economy, how the employment rate, international trade policies and economic aspects like monetary policy will influence a country’s economic health.
Microeconomics on the other hand, is about the smaller, intricate workings inside a specific geographic region or country. Microeconomic theory places its emphasis on how human behaviour influences output and how relative relationships between economic resources influence each other. It is the study of how decisions are made to make decisions around resource scarcity and wealth creation in a society, households and industries.
Economics can be explained as a social science that focuses on the measurement, analysis, modelling and forecasting around the production and creation of wealth in a nation.
The Pioneers of Economic Theory
Since inception, the science of Economics has been experiencing some conflicting views on what exactly it constitutes. Some questioned whether it is a science while others referred to it as a ‘dismal science’ because of its relationship to unpredictable human behaviour.
Economic theory has been and will always be influenced by different economic perspectives, views, backgrounds and socio-economic climates. In view of this many economists are comfortable with the fact that they can have conflicting views around economic issues.
Here’s a short list of five pioneering economists whose views and seminal work helped to develop economics to the science it is today:
- Adam Smith is considered by some as the ‘father of modern economics’. He wrote ‘An Inquiry into Nature and Courses of the Wealth of Nations’ in 1776 and developed key ideas that formed the foundation for classical economics theorists.
- The British essayist, Thomas Carlyle, used his writings and poetry to deliver social commentary. In 1849 he referred to Economics is a ‘dismal science’.
- John Stuart Mill was an English philosopher from the 19th He was a key figure in utilitarianism and published works like ‘A system of Logic’ and ‘Principles of Political Economy’.
- Thomas Robert Maltus wrote ‘An essay on The Principles of Population’. His work fuelled the scarcity discussion as he believed population growth will collide with resource scarcity and lead to disastrous effects like famine and disease.
- Lionel Robbins published ‘Principles of Economics’ in 1890. This influential economist introduced us to economic terms like supply and demand and the costs of production.
Since 1969 the Nobel Price for Economic Science has been awarding outstanding economists for their contribution to humanity. Researching the history of economic thought, economic theories and contributions is fundamental if you plan to become a well-known economist one day. This list of the Nobel prize laureates from the last decade might be a useful resource to get you started.
Understanding Economic Indicators on The News
Economic recessions, a shrinking economy and rising unemployment rate … These are all key economic phrases used when economists comment on economic data and economic reporting via the news, Economic podcasts or articles. Like any professional science, Economics has a language of its own. Economists use familiar economic principles and phrases to express their views and predictions and having an understanding of this language will enable you to participate in economic discussions.
Informed views around economic perspectives will, however, only happen once you have a solid understanding of economic theories as well. Economic concepts can be tough when you start your studies but be patient. Soon you’ll be able to be applying your knowledge to the things you hear on the news around production, international trade tariffs and labour issues. You can also hunt for articles online about the global economy.
An economic system is the means by which a government regulates the factors required for production of goods and services.
An economic system includes measures and policies around the allocation and control of physical production resources, information resources, labour, capital and entrepreneurism. Just imagine how various governments behave differently around economic conditions due to their political climate, current global influences, historical economic background and future economic goals? Not only do we have different social beliefs, we also face different challenges in South Africa and therefore our government’s approach will always differ from other countries. Here's brief overview of the core classifications for economic systems.
Also referred to as a free-market economy, this is a system where government intervention is minimalised, and they trust that the general rules of demand and supply would ultimately lead to balance in the market.
In a command system the government takes control in the regulation of the five factors of production mentioned earlier. It’s usually prevalent in a communist society that drives the ideology that production factors should be shared by all while limiting private ownership.
A mixture between command and market economy, a mixed economy allows for private ownership under free commercial activity, but the government will intervene to control and curtail economic activity that they feel is not to the overall advancement of social objectives.
As a mixed economy, South Africa has enjoyed significant growth in comparison to its counterpart African countries. The debate around whether certain sectors needs to be state-owned is a continuous discussion and certainly high on the agenda for many political parties. But, like most economic discussion there’s always more than one side to the debate. Some favour socialist policy and the promise to provide better lives for everyone while others believe that free-market capitalism is the way to go.
In economic study we model behaviour on historic events. The Covid-19 epidemic has however, displayed that a ‘similar’ global event would not necessarily impact all the same way. The study of economics will open up the complexities of this ever-changing economic world to you. You’ll learn how changes in one production aspect might or might not equate to a predictable related change in another. There are many moving parts to any economy and economics will continue to elude, challenge and inspire the world.
Most undergraduate Business degrees in South Africa will require that students have Microeconomics and Macroeconomics on their curriculum. If you plan to enter the world of business or study a Business degree you can also choose Economics as major. Completing your studies in economics will also allow you to delve into one of these specialist fields:
- Econometrics and econometric analysis
- Labour economics
- Financial economics
- Macroeconomics and fiscal-policy or Government regulation
- Behavioural Economics
- International economics, international trade and finance
An academic advisor or economics professor at the department of economics will help you to explore the syllabus options, coursework and study path to actualise your career ambitions. If you are still a prospective student or undergrad, an Economics tutor on Superprof could be ideal to get your feet wet in Economics. Simply search Economics tutors near me, browse and compare them for some of the best tutors on one platform. It might be the beginning of a long and exciting relationship with Economics.