Through the study of the course "Western Economics", I have a further understanding of the whole western economics system.
Western economics refers to economic theories and policy propositions popular in western Europe and developed capitalist countries in North America. It is formed by synthesizing and systematizing the important theories, concepts, policy propositions and analysis methods that can explain the operation of contemporary capitalist market economy and state regulation since the capitalist system came into being, especially after the 1970s of 19. Because economists have different world outlook and understanding of economic phenomena, there are many schools of western economics and complicated theories, so it is difficult for me to grasp its essence and connotation comprehensively and systematically.
Strictly speaking, the study of western economics should be called "modern economics", but due to ideological and other factors, it is called "western economics" in order to distinguish Marxist economics from economic theory based on capitalist market economy. In order to connect with textbooks, I still call it western economics here.
A science should be said to be universally applicable. Western economics, with its rigorous theoretical framework and unique angle analysis, makes it different from sociology and philosophy, and forms its own set of theories, a set of theories for reasonable explanation of phenomena.
Lin Yifu, a former professor at the China Center for Economic Research of Peking University, once said: If you want to become an economist, you can actually "crash", just remember two theories: one is relative price, for example, the house in Japan is small and the TV set is relatively large; In America, the house is big, but the TV is small. The reason is that the land price in Japan is more expensive than that in the United States, and TV sets are relatively cheap. This is the relative price. Another theory is the income effect, that is, with the increase of income, the demand will also increase (but the growth rate will be different according to the size of elasticity).
In fact, these two theories are the most basic tools of economics. Only by mastering the tools can we sail far and wide. I remember once a Nobel laureate in economics (it seems to be robert solow) said, "Economics is fascinating because all its theories can be written on a piece of paper." So the next step is to see how we use these "tools"-economic theory.
Western economics is divided into macroeconomics and microeconomics, and some branches based on them, such as institutional economics, international economics, monetary economics, industrial economics, environmental economics, labor economics, welfare economics ... now it also includes some new contents, such as "poverty economics".
Don't forget, the theory of economics is based on some important assumptions, and the assumptions have changed-due to changes in environmental resources or economic development policies, the assumptions have changed, so the theory has to change accordingly. Only in this way can some theories be expanded and innovated. So you should pay attention to theoretical assumptions when simplifying the model.
Although foreign countries are the origin of modern western economics, and their theoretical development is at the forefront of the world, China, as a country in transition, should consider whether the theory is compatible with water and soil when introducing foreign economic theories. For example, Teacher Lin Yifu said that there is a major implicit assumption in western economics, that is, it is assumed that all enterprises have viability (the concept of "viability", which I introduced in "Deep Reasons for the Failure of State-owned Enterprises"): that is, in an open competitive market, it is said that enterprises do not need external support under normal operation and management-that is, they can achieve the expected profit rate of society under the protection and subsidies of the government. This is applicable in developed countries, because most enterprises in developed countries are developed according to their own comparative advantages, so they all have the ability to survive, but it is not applicable in countries with transitional economies like China (see "Deep Reasons for the Failure of State-owned Enterprises" for details). This also explains why Russia and some countries in Eastern Europe adopted "shock therapy" in the process of transformation, which led to economic collapse.
Therefore, we should learn the frontier theory of western economics, but we should emphasize the thinking system and methodology of the whole theory and use it for reference selectively.