Since the end of the second World War, economics professors and classroom textbooks have been telling us that the economy is one big machine that can be effectively regulated by economic experts and tuned by government agencies like the Federal Reserve Board. It turns out they were wrong. Their equations do not hold up. Their policies have not produced the promised resultsSince the end of the second World War, economics professors and classroom textbooks have been telling us that the economy is one big machine that can be effectively regulated by economic experts and tuned by government agencies like the Federal Reserve Board. It turns out they were wrong. Their equations do not hold up. Their policies have not produced the promised results. Their interpretations of economic events -- as reported by the media -- are often of-the-mark, and unconvincing.A key alternative to the one big machine mindset is to recognize how the economy is instead an evolutionary system, with constantly-changing patterns of specialization and trade. This book introduces you to this powerful approach for understanding economic performance. By putting specialization at the center of economic analysis, Arnold Kling provides you with new ways to think about issues like sustainability, financial instability, job creation, and inflation. In short, he removes stiff, narrow perspectives and instead provides a full, multi-dimensional perspective on a continually evolving system....
|Title||:||specialization and trade a re introduction to economics|
|Format Type||:||Kindle Edition|
|Number of Pages||:||95 Pages|
|Status||:||Available For Download|
|Last checked||:||21 Minutes ago!|
specialization and trade a re introduction to economics Reviews
I like Kling and probably agree with him on most things. The central thesis of this book is that macro is bunk, and that micro is not. No disagreement there. He elaborates on this over a mostly-enjoyable ten chapters, and the resulting text makes for a pleasant little read.I didn't really get into the way that Kling approached this thesis though. He writes from a perspective that treats specialization and trade as largely extricable from the core phenomena of scarcity, preference, and comparative advantage. I take the orthodox microeconomic view that specialization and trade are the logical results of these phenomena; Kling himself sort of seems to accept this early in the introduction, but then asserts that he'll operate on the level of specialization and trade anyway. I raised an eyebrow very early on at:The phenomenon of specialization helps explain why we observe markets, firms, property rights, money, and finance.I think this claim is tautologically true for firms, but the rest feel like a bit of a stretch, or at least can be explained more naturally by appealing to scarcity, preference, and comparative advantage (à la Mises, for example) or even moral philosophy (à la Huemer) in the case of property rights. In retrospect I guess that Kling wanted to use specialization as a sort of abstraction barrier to analyze macroeconomic issues, but I didn't think this was clear, or that it worked tremendously well. If specialization and trade are to be the core units of analysis, then I'm really hoping for "an economist does his best Nick Land impression". But that's not what I got.
Kling and I do have something in common: we hate our field
Disclaimer: This review is from the perspective of a machine learning specialist with a basic undergraduate knowledge of economics.My jargony and perhaps extreme take on the book's thesis: there is a dual problem to the common macroeconomic optimization problem. In this dual we (as an economy, a mass of particles in a "labor-space") continually rearrange ourselves into new patterns of specialization, attempting to maximize our own individual profits. We can view economic growth as a local search problem in this labor-space.The past centuries have seen extraordinary amounts of labor specialization, to the extent that most humans today produce few or zero goods that are actually directly consumable. We can imagine this specialization physically as an explosive movement in labor-space.Kling stresses several times that this is a humanizing view of economic activity. Rather than viewing an economy as a machine which is powered by interest rates and price levels, we see it as a fizzing mass of specialized human activity which constantly rearranges itself into new patterns.This is not just a cute analogy. One of the key ways that this dual can improve over a macro-econ 101 picture is in its capacity to explain "dynamic adjustment" — i.e., the creation of new jobs in the face of structural changes, as opposed to a simple re-matching of jobs and workers. In the physical analogy above, we can see dynamic adjustment as a string of particles wandering into unexplored patches of labor-space. If the new specialization patterns are discovered to be profitable, these patches become basins of attraction. The monolithic "GDP-factory" (Kling's term) view of the macroeconomy does not account for these dynamic adjustments. While I find the thesis (or at least my reading of it!) very attractive, I was pretty disappointed with the book as a whole. As you can expect from Kling, it's very well written and manages to explain complicated things to an econ-dummy like me. But I think the book tries to do far too much. The majority of the book is a rehashing of GMU-style Econ 101, with a mention of the phrase "patterns of specialization and trade" thrown in every 5 pages or so. As someone who has gotten plenty of GMU-style Econ 101 from Russ Roberts and Arnold Kling already, I found it tedious to page through all of this just to figure out which parts exactly were the novel ones related to the book's thesis.I was caught off-guard when my Kindle told me that I had finished the book. There was altogether too much content which was either introductory ("here's how the economy works") or negative ("here's why the MIT guys were wrong") which distracted from the new ideas that I really wanted to understand.I would very much like to see a separate work (a paper, perhaps!) introducing this impressive thesis apart from the "re-introduction" to economics. Would it be antithetical to ask for some mathematical models? A simulation? Some discussion of how all this talk quantitatively fits real-world data?5 stars for original thinking.3 stars for delivery (YMMV — I may not be the intended audience.)Overall 4 stars.Useful resources:If you'd like to try the book out, you can find it in digital version for free at libertarianism.org. But do pay the author if you think it's worth it!EconTalk (2 May 2016): Arnold Kling on Specialization and TradeEconTalk (7 February 2011): Arnold Kling on Patterns of Sustainable Specialization and Trade
Specialization and Trade is the kind of economic text that the world needs more of. Kling is heterodox through and through, using whatever approach he sees as reasonable no matter how many traditions he breaks with. At the same time, he really knows how to make himself understood and his reasoning transparent. The result is a book that's both innovative and a didactic masterpiece. If I don't rate it higher, then that's mainly because Kling is all over the place, talking about various methodological issues, the influence of the Fed, the shortcomings of Keynes, the role of economics in general and the effects of the division of labor. His ideas are more loosely connected and run across across a broader range than the title of the work suggests, yet they aren't complete enough to form a whole system. Specialization and Trade felt like it wanted to deal with a very particular issue but instead ended up a kind of unfinished systematic treatise. Even then, it's a great book that stands strong against the pseudoscientific tendencies of modern economics.
This is a book that I'll recommend to students of economics who have finished grad school and just joined public policy: "Read this book. It is short but contains many useful lessons that call for much unlearning and rethinking. You will understand the ideas in this books, but not their full importance now. You will learn to appreciate them with experience."I've been reading Kling for close to a decade now. This book is a good synthesis of his ideas.
A small but clear book on rethinking how we approach macroeconomicsA great reintroduction to macroeconomics thru a different lens than the classical macro training. Kling does a fine job appealing to armchair economists while still keeping a certain rigor to the material.
Clear writing from my favorite curmudgeon. Convinced me that a lot of the science underpinning current economic thinking is bunk.
As usual, Kling's prose is crystal clear, and his ideas are thoughtful and thought-provoking. In addition to providing an excellent case for a trade and specialization based economics, he delivers a good economics primer and a persuasive case against basing economics on mathematical models.