International Institute for Strategic Leadership

Economics can be seen as the study of how wealth is created:


consumers and producers

acting in

markets and hierarchies


scarcity or abundance


utility for consumers and profit for producers


demand and supply


products and services

expressed in

quality and quantity


commodity or differentiated

acting in the

short-term and long-term


competition and cooperation


individuals and collectives


bottom-up or top-down


capital and labour

focusing on

growth and stability


micro-levels and macro-levels


imports and exports

in the

monetary economy and real economy

avoiding micro “failures”:

markets vs firms

avoiding macro “failures”:

firms vs governments

examined via

modernism and post-modernism


Adam Smith

Karl Marx

John Maynard Keynes

Paul Krugman

Friedrich Hayek

Milton Friedman

Structure of Economic Thinking

“The Dismal Science”

Economics is known colloquially as “the dismal science”.

It was given this name by the 19th century Scottish historian/philosopher,

Thomas Carlyle, who wrote about the political economy as follows:

"Not a ‘gay science’;

no, a dreary, desolate, and indeed quite abject and distressing one;

what we might call... the dismal science.”

Occasional Discourse on the Negro Question (1849)

Carlyle was making an argument for the use of slavery,

and despaired that the political economy offered no support of his views.

Ten years earlier, Carlyle used the term “dismal

to define Thomas Malthus’ economic views on the limits to growth:

"The controversies on Malthus... are indeed sufficiently mournful.

Dreary, stolid, dismal, without hope for this world or the next...

Chartism (1839)

Thomas Malthus


Thomas Carlyle


Given that economics is the science of allocating scarce resources,

depending upon one’s point of view, the prescriptions can appear dissatisfying,

e.g. where there are limits to growth, or to losers in a profit-maximising market.

In a similar way the science of evolution and “survival of the fittest” can appear “dismal”,

e.g. from the point of view of the prey and not from the point of view of the predator.

The “Science” of Economics

Unlike the “natural” sciences of physics, chemistry and molecular biology,

social” or “behavioural” sciences like economics take a different form.

While “natural” sciences (like physics and chemistry) use the scientific method

to test hypotheses via controlled experiments,

such methods are more difficult in the “social” sciences like economics,

with macroeconomics being even more problematic than behavioural microeconomics.

It is difficult to “rerun” the 2008 global banking crisis

by repeatedly melting down the global economy

while controlling for varying interest rates.

(Methods like system dynamics do allow for modeling of such “controlled experiments”).

In addition, while “natural” science data tends to be

reasonably stable and reliably measured,

data of economic agents, who ostensibly exercise free will

are less predictable, less stable and more difficult to reliably measure.

In this sense, economics is more similar to organismal biology/ecology.

In addition, it is more difficult to remove biases in the social sciences

as the output of social science (e.g. predictions/policy prescriptions)

have an effect on the economist scientist and his/her identity politics.

Economics therefore tends to be less positivist (i.e. what is)

and more normative (i.e. what ought to be).