Home
/
RELIGION & LIBERTY ONLINE
/
What Most People Get Wrong About Economics
What Most People Get Wrong About Economics
Dec 10, 2025 5:53 PM

I am not an economist. Truth be told, I only took one class in economics as an undergrad. However, I’ve learned a lot in the past few years, and one of the things I’ve learned is that most people don’t understand economics.

Pascal-Emmanuel Gobry knows this as well, and explains it far better than I could. In today’s Forbes, Gobry breaks down the understanding of economics into two broad camps: the “productivist” view and the “creativist.” First, the productivist:

pressed, theproductivist view of the economy holds that an economy works because it gives people stuff to do and stuff to buy. The reason why an economy which hums along hums along is because it produces enough stuff and people have enough money to buy that stuff so that people buy stuff and that gives jobs to the people who produce stuff, and in turn the stuff that is produced makes people want to buy them. To the productivists, the key thing is to keep the machine running and, hopefully, make it run faster, and more efficiently. But, fundamentally, what makes the economy run is this consumerist dynamic.

This, Gobry says, is the way most people – even economists – understand economics. It’s right in the short-term, but flawed. This viewpoint holds that economics is merely an endless cycle of buying and selling. As long as there is products are made, bought and sold, everything should be okay.

But it isn’t. And that’s why the productivist view is wrong.

What’s the other viewpoint? The creativist view:

In the long run, it is absolutely clear that what creates economic prosperity is human creativity. Economic models, which have almost no predictive ability as it is, are even more utterly useless here: it’s very easy to model a productivist economy, and probably impossible to model a creativist one, so guess what academic economists who want to publish papers with lots of equations do? If you look at the history of the Industrial Revolution, it is absolutely clear that what drove the Industrial Revolution was good old fashioned innovation: the pin factory; the steam engine; the mechanical loom; and so on. You can’t model that on a spreadsheet, but it’s the fundamental truth.

You see, economics is about people: what they do, how they do it, how they improve upon old ways of doing things. Instead of a cycle of buying and selling, economics is an endless array of human creativity and the drive to do and be more.

Now, the creativist es at a cost. You see, in the productivist way of thinking, one could simply keep making and selling the same things, for instance, electric fans to cool one’s house. Your fan wears out, and you buy a new one. That one breaks, and you purchase a new one, and so on.

But what happens when someone invents the air conditioner? More people start buying air conditioners and less fans. Some of the folks who make fans are going to lose their jobs, and those jobs e back. Now, we could pour government funds into fan factories to make sure those folks don’t lose their jobs, but is that really the solution? This loss of one type of work or industry for another is called creative destruction, and it isn’t pretty or easy. It is, however, necessary for economic growth. Fr. Robert Sirico, in his book Defending the Free Market: The Moral Case for a Free Economy, addresses this issue.

The challenge for all who are concerned with promoting a free and virtuous society is to minimize the damage done to people by the economy’s dynamism without suppressing that dynamism by wrapping business in a regulatory straitjacket. Sure, we could protect obsolete industries. But are you really protecting a person’s dignity by enticing him to continue making an obsolete product? How would you like to look back on ten or twenty years of labor and know that it wasn’t genuinely profitable but persisted only because your industry or business was on the public dole?

The problem goes beyond the loss of personal dignity. Every time resources are used to prop up an obsolete industry or pany, those are resources that cannot be used to fuel profitable and sustainable industries and businesses. The more resources an economy routes into inefficient and obsolete industries and businesses, the less economic growth there is for the economy as a whole. If labor and skills are not allowed to shift from sector to sector to find their most highly valued use, then economic stagnation is the inevitable result.

If economics were simply a matter of shifting money around, the productivist view would be fine. But economics is about people: their creativity, need to innovate, to have dignified work, to learn and grow, and not simply money. And that is what most people get wrong about economics.

Read “This Is The Fundamental Thing That Most People, Including Paul Krugman, Don’t Get AboutEconomics” at Forbes.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
PBR: Socialism Tyrannizes
In response to the question, “What is wrong with socialism?” In answering this question we could point to the historical instances of socialist regimes and their abhorrent record on treatment of human beings. But the supporters of socialism might just as well argue that these examples are not truly relevant because each historical instance of socialism has particular contextual corruptions. Thus, these regimes have never really manifested the ideal that socialism offers. So on a more abstract or ideal level,...
Acton Commentary: The Moral Bankruptcy Behind the Bailouts
Amid the Washington clamor for more and bigger bailouts, a few brave voices among elected officials and government veterans are being raised about the moral disaster looming behind massive government spending programs. If we ignore these warnings, writes Ray Nothstine in today’s Acton Commentary, we may be “continuing down a path that may usher in an ever greater financial crisis.” Read the mentary here and share ments below. ...
Acton Commentary: Hollywood’s Radical Che Chic
Was the real Che Guevara a lover of “humanity, justice and truth”? In mentary today, Bruce Edward Walker reviews Steven Soderbergh’s new four-hour “Che” film epic and discovers “a cinematic paean to one of the twentieth-century’s most infamous butchers.” Read the mentary at the Acton Institute website. ...
PBR: History Casts Doubt
In response to the question, “What is wrong with socialism?” I can hardly do better than Pope John Paul II, who wrote in Centesimus Annus, “the fundamental error of socialism is anthropological in nature,” because socialism maintains, “that the good of the individual can be realized without reference to his free choice.” The socialist experiment is attractive because its model is the family, a situation in which each gives according to his ability and receives according to his need—and it...
The ‘P’ Word
This guy fails the ‘anthropological Rorshach’ test: Jonathon Porritt, who chairs the government’s Sustainable Development Commission, says curbing population growth through contraception and abortion must be at the heart of policies to fight global warming. He says political leaders and green campaigners should stop dodging the issue of environmental harm caused by an expanding population. The 2 child limit that Porritt encourages is not just an attempt to limit population growth, but is instead a policy that would put the...
PBR: Aristotle on What is Wrong with Socialism
In response to the question, “What is wrong with socialism?” Writing well over 2000 years ago, Aristotle answered Plato, whose Republic advocated socialism, thusly: What mon to the greatest number gets the least amount of care. People pay most attention to what is their own: they care less for what mon; or, at any rate, they care for it only to the extent to which each is individually concerned. Even when there is no other cause for inattention, people are...
PBR: What is Wrong with Socialism?
This week we introduce a new regular feature we’re calling “PowerBlog Ramblings” (PBR). The concept is simple: we’ll post a question along with some background for why that question has been selected, and various PowerBlog contributors and guests will respond to that question. We’ve named this feature “PowerBlog Ramblings” in part as an allusion to the publication with which the institute’s namesake Lord Acton was closely associated for a time, The Rambler, which was in part aimed “to provide a...
Vatican Condemnation of anti-Semitism Unchanged Despite Misstep on Holocaust Denier
The pope has certainly earned his salary this week. In his attempt to heal a schism, he inadvertently set off a fire storm. As most everyone knows by now, the pontiff lifted the munication of four bishops illicitly ordained by the late Archbishop Marcel Lefevbre in 1988, whose dissent from the Second Vatican Council drew a small but fervent following. One of these bishops, Richard Williamson, is a holocaust denier. To understand the saga, it is necessary to peel back...
More on ‘The Moral Bankruptcy Behind the Bailouts’
“Government budgets are moral documents,” is the often quoted line from Jim Wallis of Sojourners and other religious left leaders. Wallis also adds that “When politicians present their budgets, they are really presenting their priorities.” There is perhaps no better example of a spending bill lacking moral soundness than the current stimulus package being debated in the U.S. Senate. In mentary this week, “The Moral Bankruptcy Behind the Bailouts,” I offer clear reasons how spending more does not equate to...
Of Men, Mountains, and Mining
Here’s a brief report from The Environmental Report on mountain-top removal mining, and the increasing involvement of religious groups weighing in on the question. One of these groups is Christians for the Mountains. A quote by the group’s co-founder Allen Johnson was noteworthy, “We cannot destroy God’s creation in order to have a temporal economy.” One other thing that struck me about the interview is that the AmeriCorp involvement smacks of “rebranding” secular environmentalism. Add the magic words “creation care”...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved