Malls, Money and Microeconomics

Shining shop windows, glittering ornaments, fancy gadgets, delectable sweets, inviting sports gear and of course fashionable dresses, the list of things that attract us and that we wish to buy is endless. It is only the amount of money that we have in our wallet limits us from buying everything we want. It is sad but true that most of us have only limited resources with which we try to prioritize fulfilment of our wants. If we total the wants of all citizens of a country and also its resources, we get a similar situation. The country in question then has to judiciously use its resources so as to ensure the greatest good for all.

While this game of choosing what to buy now and which buying to postpone, we indulge in every day with great difficulty and considerable pain, the country finds doing it even more difficult. The countries that have been able to do it with foresight and effectiveness are today the rich nations of the world.  This game when played by us as an individual is studied as a part of Microeconomics and studied when played by countries is called Macroeconomics.

The Wealth of Nations, the famous work by Adam Smith, deals with the games mentioned above, as played by both individuals and the nations. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages”, so he said in his treatise on economics, which is akin to the first book on the subject. He coined the two famous and frequently-used terms “Invisible Hand” and “Division of Labour”.  The first is only a beautiful and evocative picture of our self-interest helping the nation in making prudent use of its resources where as the second is just a tool to make sure that the usage is efficient. 

Smith was not an economist as we know them. He was a Professor of Moral Philosophy at the University of Glasgow, England. He had a large nose, bulging eyes and a protruding lower lip that gave him a not so handsome appearance. He famously quoted, “I am a beau in nothing but my books” He was also a classical absent-minded professor who once put bread and butter into a tea pot and drank the concoction, declaring later that this was the worst tea cup he had ever had.