Here’s a great essay channeling an upcoming paper by Luis Garicano and Esteban Rossi-Hansberg. Highlights below:
There is a problem, though. None of these master explicators have so much as word to say about how the pencil comes into being. Nor, for that matter, does most present-day economics, which remains mainly prices and quantities.
In other words, economics assumes the pencil. Though this approach is often practical, Garicano and Rossi-Hansberg write, it ignores some very important issues, those surrounding not just the companies that make the products that make pencils, and the pencils themselves, but the terms under which all their employees work, and, ultimately, the societies in which they live.
The next great expositor of economics, whoever she or he turns out to be, will give a very different account of the pencil.
Thanks to Tyler Cowen for pointing to this piece on his blog.