Introduction to Economic Theory & Policy

Economics has a profound impact on all of our lives—from where we live and go to school to what we do for a living to how we dress to how we entertain ourselves. Economics is also crucially intertwined with the social and political issues—such as global warming, poverty, and discrimination—that we care about. This yearlong course introduces a variety of approaches to economics, including neoclassical, Keynesian, behavioralist, Marxian, and feminist, and encourages students to apply these contrasting perspectives to current economic problems. The course begins with a brief history of our capitalist economic system, emphasizing the roles played by slavery and by women’s unpaid labor. We then discuss the Industrial Revolution, which provides historical context for the rise of the market-based “neoclassical perspective.” We explore and critique several centrally important concepts in this approach, including price/profit-based resource allocation, efficiency and opportunity cost, supply and demand, and market equilibrium. Next, we examine the Great Depression (the context for the Keynesian Revolution) and explore Keynes’ insights into the instability of the financial system. We contrast the “disequilibrium” Keynesian perspective of Minsky and Leijonhufvud with the market-based Keynesian perspective found in standard economics textbooks and examine the strengths and weaknesses of each. We briefly examine the emerging behavioralist perspective, one that combines insights from psychology and economics, to determine to what extent this micro-based perspective provides a foundation for Keynes’ macroeconomic insights. We then explore the Marxian/political economy perspective, including the historical context for the development of this paradigm and the origins and dynamics of class societies. We examine the labor market from a Marxian perspective, emphasizing labor control, labor relations, and the impact of political power on market phenomena. We then discuss the feminist perspective on economics and examine how feminist insights can expand and enrich our economic analyses. Finally, using the insights gained from the various approaches, we analyze the recent financial crisis and the Great Recession, with a particular emphasis on public policy.