The Market and the Economy
The How of the Market
Chapter 1 in Bylund’s book, The Seen, The Unseen, and The Unrealized, discusses what the market is in relation to economics. His explanations about how the economy works really helped to understand the role entrepreneurs have in society. Bylund (2016, p.4) explains that the market economy is made up of exchanges of valuables. He explains that exchanges only happen when both parties find value in the objects they are trading for. I have never really thought about what makes the economy function, but when you think about it in simple terms like these, we only typically get something when we see value for it, mostly by buying it. In return, the other person generally receives money, which is of value to him or her. Later in this chapter, Bylund brings up the role of entrepreneurs in society. His quote,
Many disruptive technologies change people’s behavior not because they respond to an observed want expressed by consumers as an unmet demand, but because they solve a problem that many of us have long stopped considering as a solvable problem – or haven’t even thought of as a problem to begin with (Bylund, 2016, p. 10).
The use of the term “disruptive technology” really changes the perspective of what entrepreneurs do when they create new, innovative products. When something new comes to the market, people generally rush to be the first to use it. However, what happens to the product that it replaced? These products then get pushed aside, and for the most part, never get used again. The new products becoming “disruptive technology,” even if it changes the way we live for the better, is a unique way of addressing the ever-changing market economy. We exchange things of value that we find even more valuable. I found this chapter very insightful because it shows how we, as consumers, interact with entrepreneurs to affect how the market economy works through exchanges and new products.
What Economics Is
Core to understanding the economy is recognizing that it is about human actions and interactions (Bylund, 2022, p. 15).
While we just discussed about how the economy is exchanges of value, Bylund furthers this with explaining how economics is about our interactions with one another. When we exchange something of value for something of value from someone else, we are creating the versatile economy. Bylund (2022, p. 16) explains this in terms of opportunity cost. Human actions build the economy because we must decide how we want to spend our time and resources, and what we do not choose is the tradeoff to what we did choose. We cannot have it all. We either can have one thing or the other, but never both at the same time. This is what creates value because we must choose what is more important to us when given multiple opportunities. Bylund (2022, p. 18) later says,
Value is never automatic.
The opportunities we choose not only come at a price, but they also come from a lot of work. Value doesn’t just appear from nothing. What makes something more valuable than others? I find this interesting to think about because what makes something more valuable to me than from someone else? This leads back to the exchanges we make because we all have different inputs on what is better than something else, which inclines us to trade each other for that resource. There is so much information that can be gathered from this chapter about how our actions and interactions create value in the economy, but the main thing to take away from it is that we must educate ourselves on how big of a role we play in running our economy.
Economic Theory
This chapter by Bylund focuses on the importance of action for economic theory. Bylund (2022, p. 22) believes that the reason people act to achieve something is because they value the potential outcome. This is a good way to look at why we do what we do. It is human nature to not put forth effort unless we expect a good outcome. I think of this in terms of sports. We do not join a team knowing that we could get hurt and that we must put a lot of effort into it, but because we expect to win. To achieve something of value, we must work for it. However, we do not always do this as a team. Bylund explains this with,
We can also conclude that human action is in fact always individual action motivated by some personally valued end and taken toward that end (2022, p. 24).
When we work in a group, even if we believe that we are helping others, we are still doing it because we value the outcome. There is intrinsic motivation when acting towards something. It takes individuals to complete something worth value, even as a group effort. This is the economic theory, in which we use actions to achieve something for the outcome we desire.
A Process, Not a Factory
In the last chapter, Bylund discusses the processes and productions used in the economy to create what we see day-to-day. Products do not just have a singular step before getting to the market; there are many different processes that occur when creating something new.
Together, these processes – often carried out by different businesses – make a very long chain of operations that step by step produces the specific good from the “original factors” that were available to us at the dawn of time: nature and labor power (Bylund, 2022, p. 43).
Sometimes, we do not think about the effort that is put into creating something. Because of this, we tend to take advantage of what we have and not appreciate the value of the good. This relates to the other chapters Bylund wrote because they all lead back to one thing: human action to create value. Bylund (2022, pp. 46-47) refers back to ‘The How of the Market’ in which he mentions “creative destruction,” which is similar to disruptive technology. Older products lead to new, more innovative products that change the way we live for the better. He ends this chapter with,
The consumer, in other words, is sovereign and, through buying and not buying, determines which entrepreneurs earn profits and which entrepreneurs suffer losses (Bylund, 2022, p. 49).
We are the people that control the economy, even if we believe that it is all up to the entrepreneurs and businesses that lead it. Consumers are responsible for telling whether a business is successful or not by if we buy the products. We determine what is popular by our actions to supporting specific businesses, and periodically changing products depending on our needs and wants.
Conclusion
I find this whole topic of economics to be really fascinating. Bylund explains it in terms that are easy to understand and connect to make a flowing argument about how we work together to create the market economy. By supporting what we find valuable and always working towards what we see is worthwhile, we are creating value in our own lives and helping entrepreneurs know what we want to see in the future.
References
Bylund, P. L. (2016). Chapter 1: The How of the Market. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 1–14). essay, Lexington Books.
Bylund, P. L. (2022). Chapter 1: What Economics Is. In How to Think About the Economy: A Primer (pp. 15–20). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 2: Economic Theory. In How to Think About the Economy: A Primer (pp. 21–26). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 4: A Process, Not a Factory. In How to Think About the Economy: A Primer (pp. 41–50). essay, Mises Institute.
Hi @brieb , I enjoyed reading your essay and your interpretation of our weekly readings. You made some unquestionably strong points that I found very interesting. To start, you expressed the term “disruptive technology” and how the products we use continuously change and evolve into new products that consumers find more value in. In our society today, I see this happening all the time and I even find myself replacing products with different ones that I find provide higher value. For instance, the iPhone I’m currently using is the fifth version I’ve purchased because Apple keeps upgrading their technology with each new iteration of cell phones it releases. Going along with this idea in the secondary readings, you pointed out the fact that Bylund expresses how our economy is based on human interactions. You used the quote,
I personally agree with Bylund and you on this idea of exchanges with human interaction. When we replace one thing with something we find more valuable, we are affecting the purchasing cycle and impacting what manufacturers produce, which then trickles down to the consumer because now they see new options. Our economy is completely affected by the constant changing of individuals' wants or needs and their buying power. It is also interesting that you pointed out how value is determined by individuals and that something may have more value to you than it would to me. I absolutely agree with you on this point because everyone lives differently and has different tastes in products. For instance, with music, some people really like country music, while others love rock, which means those people will be buying different albums. Lastly, you point out the term that Bylund uses “creative destruction”, and you relate it back to the idea of disruptive technology. Because by changing our buying needs based on the latest creation, we disrupt the old item and replace it with the latest and greatest, which is usually based on some new technology enhancement. Everything we purchase seems to have a downstream effect on others, our market, and our economy. Both Bylund and your words are exactly how I would describe our market/ economy and how it works. Society is a bunch of different processes connected to make our world work better and each one of us has a role in it.
Some overlapping themes of this post revolve around the fact that the economy is dictated by us the consumers, but I think in order to get to the bottom of this we can not just look at what we deem the normal people, we also have to look at the corporations and the government as they also have an impact on our economy. I think the group of consumers that is able to impact our economy the most has to be the corporations and government because they have much more to “trade” with. This allows them more say, so to speak, in deciding what will become of our economy. The author continues this thought process into the next segment they write, they continue to say that consumers dictate our economy, and while part of me believes that is true I do not think it is as easily explained due to the many different kinds of consumers that we see. And while all the corporations, government, and normal people are all consumers they all want different things out of the economy so it has to be understood that they will act accordingly to their interests, which the author brings up when they say, “We do not join a team knowing that we could get hurt and that we must put a lot of effort into it, but because we expect to win.” This is a great example to reiterate that mankind will do whatever is in their best interest. This leads us to the author's section on the economic theory, where according to Byland can be broken down to mean that people work towards their own agenda, and I agree with this because it is very rare that people go buy something purely for the good of others, now I am not saying that there are not people who live for others, but the majority of mankind is going to go shopping for their own personal gain. I myself am a great example of this, I, unfortunately, am known to indulge in a bit of retail therapy so when I go shopping I go with the intent of getting myself something, but then when I get in the store I can very easily be persuaded to get things for my friends because I want to show them that I care.
Some overlapping themes of this post revolve around the fact that the economy is dictated by us the consumers, but I think in order to get to the bottom of this we can not just look at what we deem the normal people, we also have to look at the corporations and the government as they also have an impact on our economy. I think the group of consumers that is able to impact our economy the most has to be the corporations and government because they have much more to “trade” with. This allows them more say, so to speak, in deciding what will become of our economy. The author continues this thought process into the next segment they write, they continue to say that consumers dictate our economy, and while part of me believes that is true I do not think it is as easily explained due to the many different kinds of consumers that we see. And while all the corporations, government, and normal people are all consumers they all want different things out of the economy so it has to be understood that they will act accordingly to their interests, which the author brings up when they say, “We do not join a team knowing that we could get hurt and that we must put a lot of effort into it, but because we expect to win.” This is a great example to reiterate that mankind will do whatever is in their best interest. This leads us to the author's section on the economic theory, where according to Byland can be broken down to mean that people work towards their own agenda, and I agree with this because it is very rare that people go buy something purely for the good of others, now I am not saying that there are not people who live for others, but the majority of mankind is going to go shopping for their own personal gain. I myself am a great example of this, I, unfortunately, am known to indulge in a bit of retail therapy so when I go shopping I go with the intent of getting myself something, but then when I get in the store I can very easily be persuaded to get things for my friends because I want to show them that I care.
It was interesting reading your response to Bylund's first chapter from The Seen, Unseen, and Unrealized. My thoughts correspond very similar to yours on the main takeaways from this reading. I agreed with your statement that the study of economics is fascinating, and we should view it as a way to support what we find valuable. I like how you included that he goes into the role that entrepreneurs have in society. Many people do not realize the power they hold in both small and large markets. This is because they are the ones who are willing to put in the work to make a difference. Disruptive technologies have recently become even more of an important point of discussion. While this is not necessarily a bad thing, it does leave large effects on the economy. The increase in social media marketing has made it very easy for new companies to compete with established ones. When thinking about platforms like Instagram, it is hard to tell if the company was created as an online store, or if a product is being advertised. Going along with social media, technology has made it very easy for entrepreneurs to see what consumers value. This is a great example of how consumers and entrepreneurs exchange value. The quote you included explains perfectly stating: “Many disruptive technologies change people’s behavior not because they respond to an observed want expressed by consumers as an unmet demand, but because they solve a problem that many of us have long stopped considering as a solvable problem – or haven’t even thought of as a problem to begin with” (Bylund, 2016, p. 10). Understanding the relationship between consumers and entrepreneurs is very beneficial to fully understand the economy. In the section answering the question of what economics is, I further understood the tradeoff with value. I had not considered the effect that opportunities left on people and the economy. I agree with your statement on the importance of being educated about the economy. Entrepreneurs have a large effect on the market and the quantity of output and input. It was interesting to hear your takeaways on economic theory and how achieving something of value takes work. I had very similar takeaways from Bylund's book, and see why it is important to read.
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