I was reading Paul Ormerod’s Butterfly Economics, looking at some 3-dimensional plots of Lorenz equations, when I was struck by the thought: There is no such thing as the economy
Shades of Mrs Thatcher on society! Actually I rather agreed with her, thinking that she meant as a thing distinguishable as an entity in its own right, independently from human modes of perception
On these plots only the US GNP (not GDP) showed the glimmer of a structure which could be captured by mathematical equations. Amidst all the intellectual agonising over whether new models can be developed which capture adequately the risks in the market for credit, perhaps we should also be thinking about the concept of the economy as a meaningful entity for analysis
Perhaps the US comes closest to a structure simply because it is so big and diverse. Not just in climate & natural resources but, up to a point, in local laws. Relatively unrestricted movement of people (both in retirement & in labour) as well as capital. Allows the law of error or the law of large numbers more scope
The Economy is something usually tied to a nation state. We sometimes talk of The European Economy, but rarely of the South American Economy. And usually we talk about the Asian economies
When did we get a UK economy? Did Gladstone ever use the word?
Interestingly, although the OED has a quote from the 1712 Spectator: “In the Dispositions of Society, the civil economy is formed in a chain as well as the natural”, which refers to the organisation of human society as a whole, it is only at the end of the 19th century that we get the definition
“ The organization or condition of a community or nation with respect to economic factors, esp. the production and consumption of goods and services and the supply of money (now freq. with the); (also) a particular economic system”
The earliest recorded usage comes from the 1892 Journal of Political Economy 1 137: “Taxes are still the main support of the State's economy”
The second known citation comes from our own Journal of the Royal Statistical Society of 1924: “The importance in our nation's economy of, say, cotton or wool”
The earliest recorded use of the term macroeconomics, according to the OED, is found in The American Economic review of 1945: “Across the distinction between statics and dynamics cuts another one: that between aggregative or ‘macro’-economics, and the ‘micro’-economics of a single firm or household”
To be continued
Links
http://timharford.com/2009/02/some-recession-experiences-are-more-equal-than-others/
http://www.statistics.gov.uk/pic/
