It’s no news to Austrians that the world is suffering from a lack of economic understanding. With the sorry state of mainstream economics education, this economic illiteracy is an expected result. (And with the popular belief in large-scale, one-size-fits-all political solutions to [politically created] problems, dismissing economic sense is all but necessary.)
Yet, whether or not people wish it, economic truths remain true — and they affect our everyday lives. Entrepreneurs, who spend every waking hour trying to make ends meet in untested market territory, are bound to learn this lesson. But without a proper economic understanding, they struggle with fitting the pieces of the puzzle together and see the whole picture. In other words: they are starved for economic understanding, and this ignorance directly translates into losses in their businesses. No wonder entrepreneurs are open for and interested in learning the basic economic truths that mainstream economics courses in college fail to teach!
This interest is obvious considering the types of articles that get published, read, and circulated in business magazines. While written in a language that is far from the dry and roundabout style published in scholarly journals, these magazines can offer entrepreneurs glimpses of what economics in practice is about - and what economic theory should look like. In other words, to make economics palatable for entrepreneurs, who have little time to study theory but whose livelihood depends on understanding the market, it needs repackaging. But the truths remain true.
Consider these recent columns in online business and entrepreneurship zines and the “Econ 101” truths they’re based on:
Theory to Practice: 5 Ways Economic Theory Directly Affects a Small Business. Subjective value, price elasticity, opportunity costs and more - for entrepreneurs.
Is the Ultimate Goal of a Business to Maximize Profits? Ditching the perfectly competitive model’s predictions and replacing it with a market process view.
The Price Is Right – Now Choose Your Cost. Your business doesn’t actually “set” the [economic] price, and it is definitely not a function of your cost. You choose your cost.
3 Ways to Ditch Hierarchy and Improve Company Performance. The knowledge problem of centralization and hierarchy, and the beauty of decentralized systems.
There are plenty more examples, of course, and there are more and better examples than my own humble excursions into the world of management and entrepreneurship “how-to” columns. But the fact is that there is value as well as demand for sound economic thinking - and especially understanding - among those who earn their living providing the “driving force” for the market process. It’s our duty to help them by sharing what we know.
