Economics is the study of the production, distribution, and consumption of goods and services — the economy. Economists attempt to understand the economy and the way it responds to various influences, such as changes in federal interest rates. Economics is considered a social science.
Modern economics began in 1776, with the publication of Adam Smith's Wealth of Nations. This was the first comprehensive defense of the free market, and continues to be an influential work to this day. Central to the work was the concept of the "invisible hand", the idea that the market, while appearing chaotic, is actually guided to produce the right amount and variety of goods and services. If there are insufficient goods, there will be great economic incentives to produce more; if there are surplus goods, there will be an economic incentive to produce less or different types of goods. Smith's work was so influential that previous tentative schools of economics were abandoned after its publication.
Economics is a field that can be broken down into a variety of different schools, divisions, and methods of analysis, although the primary two methods are macroeconomics — the study of economies in aggregate — and microeconomics — the study and modeling of individual agents in an economy. Economists have worked out theories of markets which approximate real-world trends and behaviors.
Most economists advocate a laissez-faire economy, meaning an economy with minimal government intervention. They point to the collapse of the Soviet Union as an example of a failed economy with too much central control, and the success of the United States as a model of a laissez-faire economy. Unfortunately for economists, polls of laypeople frequently shows they approve of limited government interventions in the economy.
Another basic tenet of economic theory is that, through self-interest among large numbers of agents, broader social interests may be served in the long run. When people focus on being as productive and possible and providing goods and services in sufficient demand, they do benefit, but so do others who utilize those services, and the public sector, which takes money off the top through taxes.
Michael is a longtime SmartCapitalMind contributor who specializes in topics relating to paleontology, physics, biology, astronomy, chemistry, and futurism. In addition to being an avid blogger, Michael is particularly passionate about stem cell research, regenerative medicine, and life extension therapies. He has also worked for the Methuselah Foundation, the Singularity Institute for Artificial Intelligence, and the Lifeboat Foundation.