 Hi, this is Gerald Friedman, Professor of Economics, University of Massachusetts at Amherst. I'm here today to talk about ECON 103, Introduction to Microeconomics, and why this course is different from all other courses, all other classes in microeconomics. Sounds like the Jewish holiday of Passover, where there are four questions and the first question supposed to be voiced by the youngest person in the room is, why is this night different from all other nights? Well, why is this course different from all other courses? And the difference is that we are really different. We present a view of microeconomics that recognizes that the world is made of social conflict and to understand the world, you have to understand these social conflicts, you have to understand the history and the institutions that have developed over time. And because the development of the world is a historic process, the development of our social world, our social life is a product of history, it isn't necessarily good. And you can have a society that is not optimal. Now, it may seem ridiculous, you'd say, who would think the world is perfect, except that's the way most economics is taught. And we'll talk about that in a second. The other difference about our view of economics is because the world is constructed historically and our social life is built out of the social institutions that develop through political struggle and conflict, it is possible to make it better. In the orthodox view of the world, everything is as good as it can be and you can't make it any better because it's already as good as it can be and anything you do is just going to make it worse. Our view is you can make the world better if you try. I feel like singing Jimmy Cliff here or something, but we'll get to that. Orthodox economics, if you take standard textbooks, standard treatment of economics in the textbooks, they'll say it goes back to Adam Smith. Maybe they'll go back to David Hume or something a little bit further. That's wrong. It goes back to one of the most brilliant men in history of the Western world, Gottfried Wilhelm Leibniz, who was born in Leipzig, I believe, shortly after the end of the Thirty Years' War, which devastated Germany. Leibniz was a polymath. He invented the calculus, which in English-speaking, the Anglophone world is often attributed to Newton. Okay, they invented it simultaneously, maybe. He also invented the computer. He developed a digital computer. You can see a picture of it on Images Google, if you want, or probably Wikipedia, whatever. He was also a philosopher and a theologian. His theology is summed up in the syllogism that God is great, God is good. Therefore, if we have a great, omnipotent God who is also good, anything bad in the world must be to advance the goodness of God. Therefore, we must live in the best of all possible worlds. Not that the world is perfect, well, not that the world is happy, Leibniz was well aware that there are all sorts of really bad things in the world. I mean, he didn't live through World War II and the Holocaust, the bombing of Dresden or anything, but he lived through something almost as bad, the Thirty Years' War in Germany. He does not say we live in a good world, but we live in the best of all possible worlds, because if the world was anything other than the best of all possible worlds, then you'd be saying that God screwed up. God wasn't omnipotent. Or you'd be saying God wasn't good. Leibniz rejects both of those, therefore concludes we live in the best of all possible worlds. Now, there are many people who have marked Leibniz for this. Voltaire, most prominently, in Candide, labels Leibniz, Professor Panglas, and goes on showing how things are really very, very far from the best. But this view that we live in the best of all possible worlds has found its way through economics. To today, it is labeled optimization subject to constraint. Orthodox, that is, neoclassical economics, those who trace their ideas back to Warren Jevons in the late 19th century, really they go back to Paul Samuelson, the great American economist of the mid and late 20th century, argue that the economy is built from the actions of individuals. Each individual optimizes, that is, chooses the best path of economic activity, buys the right things for themselves, works the right amount, takes the right amount of leisure on the assumption that the individual is rational and therefore doing the best they can, not saying the individual's life is good, but it's the best it can be subject to their wealth and their capacities and the nature of the universe. I wish I could fly. I would be happier if I could fly. I flap my arms and nothing happens. Oh well, life's tough. That's my constraint. I can't fly. I wish I were a billionaire. Okay, then I'd pay the videographer a decent wage for what he's doing. But no, I can't. I don't have a billion dollars, so okay. We optimize, we choose the best we can subject to constraint. Then we add up the behavior of all these individuals, sort of like Hobbes, if you look at the cover of Thomas Hobbes' Leviathan, there's a Leviathan made up of all these individuals. That's the view of Orthodox economists. The world is made up of all these individuals. Each of them is optimizing subject to the constraint. The sum of all the optimizing decisions is the best of all the possible worlds. That's how Orthodox economics is handled. If you took economics in high school, if you took economics, microeconomics, someplace else, that's what you were taught. Economics is the life of Robinson Crusoe. Neoclassical microeconomics treats everybody like they're Robinson Crusoe. And then treats society as if it's the sum of all these Robinson Crusoe's. Robinson Crusoe, all alone on his desert island, isolated from everybody else, optimizes, add them all together, they're optimized. They have an optimized world. Oh God, this is so, it's such rubbish. Robinson Crusoe wasn't an isolated individual. Robinson Crusoe was the product of his birth. He got to that island on a boat, where'd the boat come from? The boat was built by a society, a society that had conquered the Americas, that was sailing into the Pacific, killing off whales and defeating the Spanish, defeating the Portuguese, defeating the native peoples of South Pacific. He was born, raised, educated in a society. And when he got there, he was alone for a little while, then he got his man Friday, a slave. How do you have slavery in a world of optimizing behavior by individuals? Was Friday optimizing? Were the 10 million Africans brought across the Atlantic Ocean, some of whom ended up washed up on the shores of little desert islands in the South Pacific, off Chile? Were they optimizing? No. To ask these questions is to answer them. We are not individuals. We are not individuals in any meaningful sense in constructing the economy. We depend on each other through the division of labor. I did not make the cotton for my shirt. I did not weave it, I paid for it through work I do, and in that way employ other people in the social division of labor. Our society is there. It structures our lives, it's struck through the division of labor. We work together as members of a particular community. We are born into these communities. We act according to those, the values, the norms, the opportunities, and the constraints created by that community. So I speak English. I grew up speaking English in an English-speaking community. Had Montcom defeated Wolf in the plains of Abraham outside of Quebec City, maybe I'd speak French. Maybe I'd read Camus in the original, rather than the translation. Maybe I'd be happier. Maybe we'd have a more just society. Maybe we'd have a less just one. I don't know. But whatever it is, I am here in this type of economy, in this type of society because of what came before me, just like Robinson Crusoe really was. And to understand the type of economy we have in Amherst, Massachusetts today, we need to understand the history. And once we think of this economy as a product of a society that is historically created, we can think about changing it because there may be opportunities to make it better. And that's what this class is about. Thank you. Enjoy the day. Bye-bye.