Module 3 Essay: A reflection on “Chapter 1: The How of the Market” In The Seen, the Unseen and the Unrealized: How Regulations Affect Our Everyday Lives, as well as “Chapter 1: What Economics Is”, “Chapter 2: Economic Theory”, and “Chapter 4: A Process, Not a Factory” In How to Think About the Economy: A Primer.
Alexis Del Angel
School of Business, Oklahoma State University – Stillwater
EEE 2083: Entrepreneurship & Society
Professor Steve Trost
2.16.2023
Module 3 Essay: A reflection on “Chapter 1: The How of the Market” In The Seen, the Unseen and the Unrealized: How Regulations Affect Our Everyday Lives, as well as “Chapter 1: What Economics Is”, “Chapter 2: Economic Theory”, and “Chapter 4: A Process, Not a Factory” In How to Think About the Economy: A Primer.
This is my reflective essay relating to the economic theories presented by Per L. Bylund in two distinct books he has authored: The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives & How to Think About the Economy. Those theories are presented specifically in Chapter 1 and Chapters 1, 2, & 4, respectively. I will open with a summary of the three chapters from the latter book. Following that will be a summary of the Chapter 1 reading from the previously mentioned book. Closing out this reflection with what my thoughts are and how much I ultimately agree or disagree.
On: “Chapter 1: What Economics Is”, “Chapter 2: Economic Theory” and “Chapter 4: A Process, Not a Factory" by P.L. Bylund In How to Think About the Economy: A Primer
Bylund provides some context for what economics is in Chapter 1. He mentions that the economists of old were seeking to uncover how the world worked and, in doing so, saw structure in the economics of the world. That structure, or laws, are examinable, that examination is economics. Core to understanding the economy is understanding that it is about
"using means to attain ends" (Bylund, 2022, p.15).
That interaction creates value and is what we are economizing on. Economizing creates an unplanned order that provides for the needs and wants of the people. Unplanned order and value creation lead to a production issue, as demands must be met, and we can’t turn nothing into something. Understanding those is economics.
In Chapter 2, Bylund goes into economic theory and attempts to explain it. He explains that theory is a way for us to understand how an economy works. In order for it to be useful,
"it must be built on solid principles and reliable assumptions" (Bylund, 2022, p.22).
He also posits that human psychology is beyond the scope of economic theory. Outside of the purposeful behavior behind human actions, revealing a major economic theory avenue for study. He later states,
“Economics uses logical reasoning to uncover the processes that make up the economy and it recognizes that the motivation for action is personal—that value is subjective. Value subjectivity allows economists to formulate a realistic and reliable theory that explains prices as a result of personal valuations on the margin” (Bylund, 2022, p.25).
Bylund is giving us a clue as to why looking at human action that is purposefully driven is so valuable. It creates a connection between the action and the person’s value rankings.
"A Process, Not a Factory" is about the logistics of the economy and market as a whole. That is significant; we need to understand why and how goods end up on store shelves. In doing so, we are able to recognize the economy as a process. This process is coordinated; it involves many different tradespeople working together to achieve. The tradespeople then innovate on their methods, moving that process forward through time. This evolving economy creates another constant: uncertainty. As goods drive the economy, their fluctuation in value has the potential to be detrimental. In other words,
“horse buggies were valued goods until there were affordable automobiles” (Bylund, 2022, p.46).
On: “Chapter 1: The How of the Market” by P.L. Bylund In The Seen, the Unseen and the Unrealized: How Regulations Affect Our Everyday Lives
"The How of the Market" makes us ask important questions to better understand the market. Opening with the difference between "the market" and "the economy." Bylund describes them as two different forces: one being purely economic, the other being political. These forces create a "mixed" economy. Stressing the importance of understanding the market comes from knowing what comprises it. As,
"Only then can we understand it as an organism or system" (Bylund, 2016, p.12).
Following the initial question, he starts to break down the structures of the market. The primary component being the exchange. Bylund defines it as
"Simply put, an exchange comprises at least two individuals exchanging something that is valuable for something else that is also valuable" (Bylund, 2016, p.p.12-13).
This brings us to the next component, there must be value in trade, as people would not be willing to do so without it. As voluntary exchanges are possible only when each party has something the other values more. With that voluntary exchange, another component starts to coalesce, time.
"With time, things change" (Bylund, 2016, p. 14).
Bylund is highlighting the fact that we don’t have forever to make an exchange; resources may dwindle or flood the market; profitability; and the value may change. What people like today is different from what people liked 20 years ago. Understanding these components is invaluable from an entrepreneurial standpoint, and voluntary exchange is the most important piece.
He finishes by highlighting the very messy nature of trying to pin down the functions of a nebulous thing such as the market and economy.
"In other words, the real market—an economy engaged in numerous production undertakings—cannot be anything like the mathematical models we learn in undergraduate and graduate economics courses" (Bylund, 2016, p. 20).
Bylund is letting us know that, at the end of the day, economic theory is just that: a theory. There is nothing that can truly account for innovative disruption—things that completely change the production and consumer models. As what model can calculate that things will continue on the same. So, instead of trying to pin down rules, we are better off seeing it as a process.
Conclusion
In conclusion, this was a hard read for me. Bastiat was honestly easier; I feel as though Bylund finds ways to repeat or fluff out a three-sentence point into a whole essay. In particular with the first readings. Chapters 1, 2, & 4 of How to Think About the Economy: A Primer really only establishes economic definitions and context. Where I find more opinions and things to talk about within The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives is the idea of two forces (the market/economy), voluntary exchange being a fundamental component, and, most agreeably, that it’s all too messy to pin down.
I agree that there are two forces, we don’t need to look past the U.S. for examples of two forces colliding. Plenty of past corporate mergers that the U.S. Government has blocked. Clear example of political forces intervening (even if it is for the better). Voluntary exchange being the fundamental component is pretty obvious, but it really highlights how simple the beginnings of a market/economy are. All we need is one party to exchange something valuable for another. Even in the western world, garage sales, Craigslist, and Facebook Marketplace all provide means of voluntary exchange in its most human form. The part I agree with the most is the messiness of it all, in particular because Bylund mentions innovative disruptions. Who would have predicted the dominance of smartphones 30 years ago? Who would have seen the change the internet would bring to businesses, the economy, and the market as a whole 40 years ago? Who would have predicted globalization completely changing how we manufacture 50 years ago? These are the things that fundamentally alter our understanding of the economy and the market. That is something impossible to pin down. We do not know what the economy will look like in 50 years; we can only observe it and hypothesize based on the information we currently have. No one can predict the future, and if the economy is a process, it is inherently difficult, if not impossible, to predict.
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 @delangel, I appreciated reading your perspective on these weekly readings and the insights you gave. One of the main points you stated, and I also found interesting from these articles, was the importance of value placed on products in the economy. Every product or service has a different importance and value for each individual based on how they will be using the item. Then when something of more value comes to market and replaces it, we tend to disregard what we once said was so valuable and easily replace it with something new. This is how our economy and marketplace is built. Always changing, always replacing, always finding new to replace the old. You used the quote,
This quote shows the idea of how people will make decisions to trade products within the market if they perceive that the new product still has value. It’s ironic that most people think things are more valuable if they are new, while others think old antique items are equally as valuable. But the trading of products is what makes our world economy work. However, I disagree with you on how this was a harder read than the Bastiat articles. I struggled with comprehending Bastiat because of the way that it was written, in legal jargon. I also disagree with you on the way you thought Bylund was trying to pin down how the economy works and how he was saying that the market/economy has a predictable future. I think that he was just expressing the way he saw how value of products works in society and that everything is always changing. And I agree with him on the fact that each person sees value differently based on the way they are going to use an item, how they have individual choices, and how they live in different ways. He also points out that the changing of technology and improvements in products has an effect on everyone and is what shapes our society. Overall, I think we both agree that individuals in our society have an influence on the products or services that are in our market and the value or price placed on the items. Businesses are the ones who help shape our market and give us the things that fit our wants and needs and entrepreneurs are the ones who do that but are able to adapt quickly with people's changing desires.
I enjoyed your essay on Bylund's writings. I agree that he tends to fluff out important ideas into longer writings, which can make it somewhat exhausting to read some of his works. I would, however, say that some of the examples he provided added some important insight into how he viewed the market and the economy (although they did extend the readings by a considerable amount). I also found his focus on the importance of timing in entrepreneurship and trade interesting. You examined it very well when you said:
I have heard quite a bit about how to make your product/service more appealing to consumers, and the importance of voluntary exchange, but it was refreshing to read an author that acknowledged the importance of timing in exchange. I think it's very important for aspiring entrepreneurs to study the markets that they operate in, and observe any cycles that exist. As you wrote above, what people like has changed drastically in the last twenty years, and understanding the social and technological changes that feed into that is extremely important.
I definitely agree that the market is very messy and unpredictable. Like you wrote, who could have predicted the rise of smartphones? Or cars, headphones, personal computers and cameras, and the thousands of other products that have rendered previous innovations obsolete. I think this ties back to the idea of timing: thirty years ago, one could be a successful entrepreneur if they created an innovative solution to make landlines more convenient. Today, however, the same technology would go unappreciated because it is no longer needed by the majority of consumers. It is the entrepreneur's responsibility to attempt visionary revolutions in the market, and to "shake up" the way we view everyday problems.
I enjoyed reading this essay so much! The way this essay was formatted really helped me find what points stood out to me the most! I completely agree with you point that the economy is not planned nor organized. There is no way we could plan the economy because the world is continuously changing day by day.
I completely agree with this point. Humans have so much to do with the economy and how the world works. The economic theory was made by humans and I feel like helps us realize how much human psychology goes into economics. Humans behavior can change many things about the world what happens to the economy. You state how important trade is for the economy and I agree with this. Trade helps the economy change and bring in new products to benefit entrepreneurs. I agree with the fact that things are constantly changing. Everyday there is a new trend or new style and entrepreneurs need to be able to keep up with this in order to be successful.
I completely agree with the above statement. I felt the same way about the author repeating himself. I felt like he was saying the same thing but in different ways. I feel like Bastiat was a lot more entertaining to read because he talked about a bunch of different things but somehow they all had similarities with having to do with the system. Overall this essay was a great read and I enjoyed reading your arguments about the articles. You made many valid points that honestly helped me better understand the required readings we were given.