‘The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through and captures the essence of evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA.’—Gordon Gekko, Wall Street (1987)
So after four years at the university of Melbourne, studying economics and a bit of politics along the way, it’s suddenly all come to an end. Which feels odd because for the greater part of this year, my Honours year, the focus hasn’t been on finishing the degree, or my time at university for that matter, but instead it’s been on the arduous/dreaded/painful thesis and making sure it got completed by last week’s Monday deadline. You may have noticed a collective sigh go up across the Economics department on Monday afternoon as everyone submitted their papers.
Economics as a discipline is a victim of huge misunderstanding. We are seen to be obsessed about utility maximization, profit maximization, efficiency and equilibria (to name a few among the many words in the economist’s vocabulary that appear to degenerate human behavior into some egotistical mathematical equation!). These perceptions are mostly true; however, the misunderstanding lies within the economist’s relationship with the homo economicus. Most people would think that economists are in love with the rational but fictional economic man. However the truth is that economists are in some twisted love-hate relationship with this agent.
By W. Max Corden
When I was a student at Melbourne University’s Commerce Faculty immediately after the war – from 1946 to 1949 – the memories of our parents, and of the ex-servicemen who came back from the war, were of the Great Depression. Never again! It was a memory of unemployment and of real misery, either experienced directly or endlessly heard about from our parents.
Richard Downing was a young and charismatic lecturer in the Faculty who had spent time first at the University of Cambridge and then in Geneva with the International Labour Office. He brought back to Melbourne the message that economists had found a solution to the problem. There need not be another depression. This solution has come to be known as Keynesian economics, and in subsequent years has provided the basis for undergraduate textbook macroeconomics.
Psychologists refer to game theory as the theory of social situations. More specifically, it is the study of the strategic decisions, available to rational agents, producing outcomes with respect to the utility of those agents. Through analysis of different courses of action a ‘player’ can take, the outcomes which these actions lead to, and the actions which other ‘players’ might take, an optimal outcome – oftentimes a counter-intuitive one – can reveal itself. In the movie ‘A Beautiful Mind’ (2001), starring Russell Crowe as Robert Nash, game theory is explored in one scene.