Why Everyone Should Care About Economics

We hear a lot about the economy today. Numbers related to employment, investments, and output get tossed around regularly. But how many people really understand economics well enough to know what it all means?

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

This quote by Ludwig von Mises in his magnum opus, Human Action, is a plea to the common citizen to learn economics. At first glance, it might seem exaggerated. Is economics really relevant to everybody and everything? And is it really the essence of civilization?

In fact, it is. As Mises argues elsewhere in the book, society is simply the cooperative interaction of different individuals. But how does this cooperative interaction come to be? Human nature is selfish, so why don’t we just fight each other to get the things we want?

The answer, according to Mises, is the division of labor. By specializing in tasks and exchanging goods, each individual actually benefits more in the long run than if they were to fight each other. Division of labor is cooperation. This is the foundation of economics. It’s also the foundation of civilization.

However, the fact that the division of labor is more productive is not, in itself, sufficient for cooperation to take place. Each individual must also recognize this fact. Without understanding the benefits of cooperation, individuals would give in to their short-term instinct of plunder. Thankfully, humans are rational beings and eventually realized that cooperation and exchange are better than barbarism.

However, cooperation through the division of labor—the foundation of civilization—is constantly under attack by socialists who want to dismantle the market system. This market system based on property rights is nothing but the extension of the division of labor and exchange.

This is why Mises makes his plea for everyone to learn economics. If people lose this insight about the benefits of cooperation and give into short-term instincts for plunder and control, our society would suffer greatly.

Mises summed it up nicely in Human Action:

Everybody thinks of economics whether he is aware of it or not. In joining a political party and in casting his ballot, the citizen implicitly takes a stand upon essential economic theories.” Giving into rhetoric without examining economics yourself is “tantamount to the abandonment of self-determination and to yielding to other people’s domination.

Don’t let the political winds sway you. Don’t let ideas go unchallenged. Learn economics yourself. The teachings of Ludwig von Mises are a great place to start.