This document discusses the purpose and importance of economics. It notes that for most of history, around 90% of mankind lived in poverty and misery. However, starting in the late 18th century in England, living standards began to rise significantly due to advances in technology, trade, and the industrial revolution. By the late 19th century, the view emerged that economic conditions were not predetermined but could be improved through human effort and knowledge. This led to the rise of modern economics which aimed to study and influence the "social mechanism" to continue creating more opportunities and raising living standards for more people worldwide.

1. THE PURPOSE OF ECONOMICS
Nine tenths of mankind

2. Source Material
• Grand Pursuit: The
Story of Economic
Genius
• By Sylvia Nasar
• Author of A Beautiful
Mind

3. Economics
• Importance
• Relevance
• Purpose
• Impact
• Basic First Principals

4. Nine Parts of Mankind
• In a Misery of this Sort,
admitting some few
Lenities, and those too
but a few, nine Parts in
ten of the whole Race
of Mankind drudge
through Life.
Edmund Burke, A
Vindication of Natural
Society, 1756

5. Poverty and Suffering
• The experience of
nations with well-being
is exceedingly brief.
Nearly all, throughout
history, have been very
poor.
John Kenneth Galbraith,
The Affluent Society,
1958

6. A world of Oppulence
• Georgian England’s
wealth “excited the
wonder, the
astonishment and
perhaps the envy of the
world.

7. European Enlightenment
• Triumph over:
– Superstition
– Ignorance
– Tyranny

8. “Vulgar Economy”
• Prevent:
• Discomfort
• Wretchedness
• And ruin

9. Jane’s family was privileged
• Owned property
• Had leisure
• Chose their professions
• Went to school
• Had:
– Books
– Writing paper
– Newspapers
• Neither Jane nor her
sister Cassandra were
forced to hire
themselves out as
governesses- the
dreaded fate in Emma.
• Or marry who they did
not love.

10. The Gulf
• Between the Austens
and the so-called lower
orders was, in the
words of a biographer,
“ absolute and
unquestioned”

11. Plight of the Miners
• Scarce ever see the Light
of the Sun; they are
bureid in the Bowels of
the Earth; there they
work at a severe and
dismal Task, without the
least Prospect of being
delivered from it’ they
suvsist upon the coarsest
and worst sort of Fare;
they have their Health
miserable impaired, and
their Lives cut short”

12. unhappy wretches

13. And Yet…
• In terms of their
standard of living, even
these “unhappy
wretches” were among
the relatively fortunate.

14. Typical Englishmen
• Farm laborer
• Material standard of
living not much better
than that of an average
Roman slave.
• Cottage consisted of a
single dark room shared
night and day with wife,
children, and livestock.

15. Life
• Owned a single set of
clothing
• Traveled only as far as
feet could carry
• No medical attention
• Illiterate
• Childeren sent into
“service”

16. Food
• In good times, only the
coarsest food – wheat
and barley in the form
of bread or mush.
• Even potatoes were a
luxury beyond his reach
• 1500 calories a day

17. Suffering
• Chronic Hunger
• Extreme fluctuations in
bread prices put them
at risk of outright
starvation.
• Eighteenth-century
death rate were
extraordinarily sensitive
to bad harvests and
wartime inflations.

18. Yet…
• The typical Englishman
was better off than his
French or German
counterpart.
• Burke: “slavery with all
its baseness and horrors
that we have at home is
nothing compared to
what the rest of the
world affords of the
same Nature”.

19. Resignation Ruled
• Trade and the Industrial
Revolution had swelled
Britain’s wealth.
• Still, even the most
enlightened observers
accepted that these could
not trump God’s
condemnation of the
mass of humanity to
poverty and “painful
toil…all the days of your
life”.

20. Stations in life
• Ordained by the Deity or
Nature.
• Even education
• The children of the poor
“should not be educated
in a manner to elevate
their minds above the
rank they are destined to
fill in society” lest “ those
destined for laborious
occupations and an
inferior situation in life”
become discontented.

21. In Jane Austen’s World
• Everybody knew his or
her place, and no one
questioned it.

22. Fifty years later…
• Jane Austin died July 18,
1817
• by 1870
• That world altered
beyond recognition
• “extraordinary advance
in wealth, luxury, and
refinement of taste.”
• Unprecedented
improvement in the
circumstances of those
whose condition was
assumed to be
irremediable.

23. Robert Giffen
• Reminded that in
Austen’s day wages had
been only half as high
and “periodic starvatin
was, in fact, the
condition of the masses
of working men
throughout the
kingdom fifty years
ago…”

24. The Sense that
• What had been fixed
and frozen through the
ages was becoming
fluid.
• The question was no
longer if conditions
could change but how
much, how fast, and at
what cost.

25. The Sense that
• Changes were not
accidental, or a matter
of luck, or divine
provenance, but the
result of human
intention, will, and
knowledge!
• http://www.npr.org/20
12/03/08/148235387/d
a-vincis-ghost-manifest-
in-the-vitruvian-man

26. 1870
• The notion that man
was a creature of his
circumstance, and that
those circumstances
were not
predetermined,
immutable, or utterly
impervious to human
intervention is one of
the most radical
discoveries of all time.

27. 1870
• It called into question
the existential truth
that humanity was
subject to the dictates
of God and nature. It
implied that, given new
tools, humanity was
ready to take charge of
its own destiny.
• It called for cheer and
activity rather than
pessimism and
resignation.
• Before 1870 economics
was mostly about what
you couldn’t do.
• After 1870, it was
mostly about what you
could do.

28. Alfred Marshall
• The father of modern
economics:
• “The desire to put
mankind in to the
saddle is the mainspring
of most economic
study.”

29. Victorian Popular Imagination
• Captured by Economic
Possibilities.
• Instead of;
– Political
– Spiritual
– Military
• Intellectuals were
obsessed with economics
and aspired to produce a
great work in the field.

30. Inspired
• By progress and
advances in the natural
sciences
• Began to fashion tools
for investigating and
controlling the “social
mechanism”
• Creating a wealth of
new opportunities.

31. Ultimately
• The new economics
have transformed the
lives of everyone on the
planet!
• The notion that the
nine parts of mankind
could free itself from its
age-old fate took hold
in the Victorian era in
London
• It is still spreading.