In the broadest terms, economics is the study of how society organizes production and distributes what is produced to its members. For most of human history the economy was embedded in the social order, and people did not perceive "the economy" as something separate from other social institutions. The development of capitalism -- with markets in labor and land and the rise of the factory system -- made people aware of the economy as a separate sphere of social life and gave rise to the field of economics, or political economy as it was then known.
The Oxford English Dictionary defines political economy as a "science dealing with the laws that regulate the production and distribution of wealth." The goal of the economics major is to equip our students with the tools of this science and, perhaps most importantly, instill in them an analytical approach known as the "economic way of thinking."
Economics is more quantitative and theoretically more rigorous than the other social sciences, but it is decidedly more "social" than "scientific" in comparison with the natural sciences. Modern economics is divided into the two separate branches of microeconomics and macroeconomics. Microeconomics is the study of how individual production and consumption decisions are made and how they are coordinated by markets. Macroeconomics is the study of how overall output and employment and the price level are determined. Both of these branches of economics aim not only to study (understand) the economy but to prescribe policies to improve its performance. Ultimately economics and economists must be judged by the usefulness of economic analysis and the economic policies derived from that analysis. That is our challenge.
The Tools of the Trade
Theory
An intermediate level grounding in the basic theories which guide modern economic analysis is essential as a base for the major. One of the purposes of the major is to help the student look critically at the ways in which society organizes and manages resource use. Without some framework within which to organize ideas - including dissenting ideas - criticism and analysis become aimless, diffuse, and, ultimately, ineffective. It is true that no one theory, or category of theory, is accepted by all economists as adequate to understand the economy. But it is also true that an understanding of the main theoretical tenets of modern economics is the touchstone from which almost all development, elaboration, and criticism of economic arrangements flow.
The basic theory is presented in the principles courses, Economics 150 and 153. This theory is developed more rigorously and embedded in formal economic models in the intermediate theory courses, Economics 250 and 253.
Statistics and Mathematics
Since economic knowledge is ultimately drawn from the real world, statistical techniques are an important tool both for gathering information and for testing economic theories against the world they seek to explain. These techniques are taught in our basic statistics course (ECO 190) and further developed in the econometrics course (ECO 280).
Economics has become increasingly mathematical. At Smith an economics major must be proficient in mathematics through the pre-calculus level. Calculus-I (Math 111) is strongly recommended as an adjunct to your economics major. If this is to be of significant value to you, however, it should be taken early in your college career. Students planning to go to graduate school in economics need to take ECO 227 and 280 and additional math courses as listed below and in the catalogue.
Economic Thought and Political Economy
Important adjuncts to the basic intermediate theory courses are courses in economic thought and political economy. The history of thought (ECO 275) deepens one's comprehension of the modern doctrine by placing the evolution of modern theories in an historical context, and by showing the forces which shaped this evolution. The Marxian paradigm asks different questions and provides different answers than does conventional analysis, and a significant number of economists find it a fruitful approach to the study of social problems (ECO 256).
Historical and Institutional Setting
If theory and statistics provide us with tools of analysis, then history and institutional forces provide the setting for economic problems and constraints on their solutions. Without an awareness of these realities, the use of theory, statistics, and other sophisticated techniques is likely to lead into blind alleys and unwarranted conclusions. The study of history and institutions in courses such as labor economics, American economic history, economic anthropology, comparative economic systems, and economic development, provides the opportunity to go beyond the abstractions of theoretical arguments to the analysis of real problems. Most "applied" courses naturally incorporate elements of history and institutional arrangements, and a few are primarily devoted to this issue. A major adds fundamentally to her comprehension of the subject by being exposed to thinking along these lines.
Empirical and Applied Analysis
In the end, if economics is to be respected it will not be because of the abstract beauty of its theory or the broad sweep of its historical insight. It will be studied and used only if it contributes to the understanding of particular problems. To that end the economics major will take a number of courses in specific applied areas such as business and government, law and economics, urban economics, labor relations, public finance, money and banking, economic development, international trade, or growth and crisis. They use theory and draw on historical insights, but at their core are contemporary, practical, and policy-oriented.
Familiarity can be gained by applying basic tools to several areas, or by taking a sequence of several courses in one area. Both are useful and legitimate approaches to learning about economics and what economists do. Either can provide the student with the experience of applying the tools of economic inquiry. In these upper-level courses theory, statistics and other tools of analysis are brought to bear on unsolved problems and unsettled questions, in contrast to the emphasis in the introductory courses on what we already know.
A major curriculum designed in this way can contribute importantly to a student's gaining both competence in the economic way of thinking and confidence in her own knowledge of both its uses and inherent limitations. And this is the underlying goal of majoring in economics in a liberal arts college, regardless of the subsequent uses to which it may be put.
Smith College,Department of Economics, Wright Hall 12 , Northampton, MA 01063
Tel: (413) 585-3602
Fax: (413) 585-3389
