Microeconomics: Competition, Conflict and Coordination

Samuel Bowles, Duncan Foley and Simon Halliday

2017-06-30

Provisional Cover Provisional Cover

“Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters …”

Introduction

Samuel Bowles, Duncan Foley and I (Simon Halliday) have an ongoing joint project writing an intermediate microeconomics textbook: Microeconomics: Competition, Conflict and Coordination (henceforth CCC). On this site, you will find preliminary content that we are providing to test-teachers who are planning to use draft chapters of the book as well as tips and pointers to do with teaching the book.

Simon, Sam and Duncan at SFI, Summer 2015 Simon, Sam and Duncan at SFI, Summer 2015

If you wish to sign up to be a test-teacher of the book (or even just a test-reader), then please provide your details in the following Google form so that we can gather your details. (If you’re unable to see the embedded form below, then please click here).

We believe the book is now ready to be taught by other professors, especially those interested in how economics has changed over the past thirty years. Once you have reviewed chapters of the book we’ll ask you to provide feedback to us in another Google Form (to be provided later). The book is under review by prospective publishers (summer 2017).

What are the flavors CCC?

MBIE, 2006, PUP MBIE, 2006, PUP

Though written for undergraduates, in content CCC has a strong flavor of Sam’s graduate-level textbook, Microeconomics: Behavior, Institutions, and Evolution published by Princeton University Press in 2006. As an advanced text, though, it is not suitable for many undergraduate classes because of the high level of the math and certain other aspects of its theoretical rigor.

Example page: Introductory page to Chapter 8: Production: Technology, Costs and Supply Example page: Introductory page to Chapter 8: Production: Technology, Costs and Supply

Example page: figure in chapter 7 on Economies of Scale and the Production Possibilities Frontier Example page: figure in chapter 7 on Economies of Scale and the Production Possibilities Frontier

CCC would also be an excellent follow-up text for introductory economics courses that use the The Economy produced by the Curriculum Open Access Resource in Economics (CORE Project) directed by Wendy Carlin and of which Sam is a co-author. CORE’s The Economy is based on many similar themes to CCC.

What are the themes of CCC?

We cover many of the standard economic concepts taught to second-year or intermediate-level economics students including constrained optimization, opportunity costs, trade-offs, complements and substitutes, Nash equilibrium, Pareto efficiency and risk.

But many of the themes of the book are unlikely to be encountered in most intermediate microeconomics texts.

Provenance

It’s hard to know exactly where your own ideas come from, but for us, those implicated certainly include:

We incubated many of these ideas at the Santa Fe Institute (where Duncan and Sam serve on the faculty), a center of interdisciplinary and dynamic problem-centered modeling.

Contents

Below is an abridged table of contents for the first 12 chapters of the book. Currently the first ten chapters are available for distribution with chapters 11 and 12 under active revision over the summer. We plan to have a final part, Part 3, which will go into greater depth on advanced topics, such as the fundamental welfare theorems (and criticisms thereof) and a final reflection on the institutions of capitalism. You can access a more comprehensive draft table of contents here and a copy of the preface here.

Chapter Title
Preface -
Part I People, Economy & Society
1 Society: Coordination Problems & Economic Institutions
2 People & Preferences
3 Constrained optimization: Doing the Best You Can
4 A Risky & Unequal World
5 Property & Exchange: Mutual Gains & Conflicts
6 Coordination Failures & Institutional Responses
Part II Markets
7 Specialization, Exchange & Market Demand
8 Production: Technologies, Costs & Supply
9 Competition, Rent-Seeking & Market Equilibrium
10 Information: Contracts, Norms & Power
11 Jobs, Unemployment, & Wages
12 Interest, Credit & Wealth Constraints
Part III Economic Systems: Ideal & Imperfect
13 Perfect Competition & the Invisible Hand
14 Capitalism: Innovation & Inequality

Calculus and Graphics

We use calculus in the book, but almost all of the calculus is contained in boxes (named for Alfred Marshall as you will see). We try to follow Marshall’s maxims with the mathematics:

Alfred Marshall, 1906, Letter to Arthur Lyon Bowley. Collected in A. C. Pigou, 1966, Memorials of Alfred Marshall, pp. 427-428.

“I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules

  1. Use mathematics as a shorthand language, rather than an engine of inquiry.
  2. Keep to them till you have done.
  3. Translate into English.
  4. Then illustrate by examples that are important in real life.
  5. Burn the mathematics.
  6. If you can’t succeed in (4), burn (3).

This last I did often."

We may not have burned as much of the mathematics as we ought to have done, but we try to restrain the mathematics to when it is most necessary. For the most part, the economics is conveyed through graphical intuition accompanied by algebra. All of the graphics are also available on github (see Simon Halliday’s github repo bfh-textbook). We hope later to provide interactive versions of the majority of the important graphics programmed either in R with Shiny or Mathematica.

Note, too, that although we do not use Lagrangians in the book to teach constrained optimization, we do cover them in an appendix and provide examples and worksheets using Lagrangians for those instructors who chose to teach them in their courses.

Course Materials

Once we have provided you with draft chapters of the book, Simon will share a Google drive folder with you that contains slide decks, problem sets, quizzes, worksheets, etc. Simon has test-taught the book at Smith College and much of this content is based on the course he taught along with content that Duncan Foley has used when teaching at Eugene Lang College (the undergraduate liberal arts college attached to the New School for Social Research). In the fall of 2016, the book was used by Stephen Kinsella at the University of Limerick, Ireland and Arjun Jayadev of Azim Premji University, India. In the spring of 2017, the book was taught in large intermediate micro classes at the University of Massachusetts at Amherst, USA by Daniele Girardi and Sai Madhurika Mamunuru, Azim Premji by Anand Shrivastava, and the University of Cape Town, South Africa by Justine Burns. This classroom experience is the basis of a rapidly expanding set of problems, quizzes, lecture slides and other teaching aids.

Quizzes

We will be providing access to multiple choice and checkbox quizzes for each chapter which we hope to have for each chapter after the summer.

Flashcards

The book has a glossary with all the definitions used in the book. Over the next academic year we hope to turn the definitions into a set of flashcards using Anki. Anki is an open-source flash-card service where the desktop and web-interfaces can be used free of charge, as can the Android app. But, the iOS app version needs to be bought for a fee of $25. As the web interface and desktop versions are free of charge and the notebooks are exportable to other formats, we still think it is the best current option. You will be able to import the flashcard decks to your Anki app when these are made available. They will be provided chapter-by-chapter over AY2017-18.

Pedagogical Approach

Our objective is not simply to teach students “how economists think” by algorithmic training using toy models, but to to teach economics as a social science: an inquiry into the main challenges our society faces and the policy options available to us to confront the challenges.

To do this we begin each chapter with one or more empirical puzzles or historical episodes that economic theory should be able to illuminate. Models are taught as a way of addressing real world problems and questions.

Our approach is informed by the latest ideas in the learning sciences. See, for example, Brown, Roediger and McDaniel, 2014, Make It Stick, Harvard University Press/Belknap Press, Cambridge, MA.