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ECON1401 Course Journal



I found the introduction to be particularly captivating. I feel that Heilbroner used this
opportunity to immediately assert the importance of the study of economics, and the
importance of the economic thinkers he will be referring to throughout his book. It is
interesting to note the late start of the study of economics, namely starting in the late
eighteenth century with Adam Smith, and after the advent of other major studies such as
history, science and philosophy. He particularly refers to the theorists whose ideas and
words, particularly regarding creation and distribution of wealth, has helped shape the current
world, quoting the economists to be on a “journey of history shaping ideas”. Heilbroner also
asserts his view of the underappreciation of economists in the modern era, arguing that the
great economists should be “as familiar as the great philosophers or statesmen”. I do largely
agree with this perspective, as economics is such an integral part of society, however without
being exposed to key economic figures through studies, there is very little recognition of
what they have achieved and how they have shaped society. I can appreciate Heilbroner’s
point here, as economics and the ideas of economic thinkers will be perpetually relevant to
the understanding and progression of society.

Chapter 1: The Economic Revolution

This chapter outlines a fundamental trait of human nature, where human beings are faced
with the challenges of survival, dependent upon work and cooperation with others.
Heilbroner asserts this through “the very fact that he has to depend on his fellow man has
made the problem of survival extraordinarily difficult”, made even more difficult by the
“self-centred nature” of humans. This is particularly relatable to me in both university and
work, as there is an expectation to complete the tasks at hand, however in order to do so,
there is often involved a lot of liasing with others in the forms of teams. The difficulty comes
in when individual members of these teams have different motives and levels of commitment,

however you still have to inevitably rely on them to get the work done. Heilbroner suggested
that there were two safeguards against this complication: Tradition and central command.
Specifically, tradition refers to tasks or work being passed down through generations, such as
a family farming business. Central command refers to the enforcement of economic survival
through dictatorship. These two methods have typically worked in the past to assure
economic survival, however since the Economic Revolution, a third system arose: The
Market System. This refers to a system where buyers and sellers are motivated by self-gain
and profit, also referred to as capitalism. The system was not made a lot of sense of until
Adam Smith’s ‘Inquiry into the Nature and Causes of the Wealth of Nations’ was released,
which introduced the aspects of capitalism and self-interest maximisation. It amazes me how
revolutionary this stage in economic history was, as the foundations laid out by Smith are still
closely followed by capitalist countries today such as Australia.

Chapter 2 – The Wonderful World of Adam Smith

Adam Smith was born in a small village in Scotland. He began university studies at the early
age of 14, graduating with comprehensive skills in European literature from Glasgow
University. After returning from travelling to Oxford for further studies, Smith delivered a set
of very well-received lectures at Glasgow University, before being appointed Chair of Logic
(1751) and Chair of Moral Psychology (1752) at the university. He eventually left academics
to mentor the Duke of Buccleuch in 1764, before receiving a lifetime pension in return,
allowing him to retire and begin composing his infamous piece ‘The Wealth of Nations’. It
was in this series that Smith portrayed the idea that individual self-interest is the optimum
way to boost the economic welfare of society, a phenomenon often referred to as the
‘invisible hand’; an unobservable market force which brings supply and demand of goods in a
competitive, free market towards equilibrium. The Wealth of Nations resembles more of an
encyclopedia, as it is extremely detailed in describing the new found market system. The
main laws presented by Smith outlined how society can depend on the unregulated market
system of capitalism, and how the individual’s selfish desires can benefit society. I was
surprised that such a revolutionary proposal such as that outlined in the Wealth of Nations
was so well received by other influential economists in the era, such as David Ricardo. Smith
also suggested limiting the income of producers, where in times of increasing profits, new

producers would compete to enter the market, eventually leading to a decline in excess