Wednesday, July 4

The Philosopher's Beard: The art of business and the science of economics

Dear Kannu

Good to hear that your religious education exam went well. 

I was reminded about the forgotten links between religion and economics. Religion is concerned about the behaviour and actions of the believers. Strangely enough, so is economics. And business. Some of the fundamental aspects of economics such as money,  interest rates, assets, free markets, tax deductibility of some expenses, accounting etc have some fascinating religious links. 

Anyway. Here's an interesting article on the difference between business and economics. It's good that you are studying economics first. It will give you a good picture of the overall world, markets etc etc.

it's surprising how many business people forget the basics of economics. But then people who forget the laws of economics are condemned to keep on violating them and pay for it. Spend less than you earn. Mind your cash flow. Invest in the future. Ensure you make your customers successful. Keep open to new ideas, capital and labour. Don't subsidise things. Etc etc. 



The Philosopher's Beard: The art of business and the science of economics

Business and economics are tied up together in lots of people’s minds. After all, they’re both about money, aren’t they? An awful lot of people seem to believe that economics is Big Business and business is small economics. (Even the generally reliable Economist magazine seems to use this definition in deciding what should go in its business or economics sections.) The failure to keep the two apart leads to some bizarre misconceptions in the popular understanding. For example the idea  that countries are businesses in competition with each other, or that business is about self-serving greed and economics is the soulless science of large scale greed.
Business is the art of commerce. Economics is the study of the production, distribution and consumption of goods and services. Just from the definitions we can immediately see one clear difference. Economics concerns systems and general principles and is therefore a theoretical subject eminently suitable for academic study in a university, while business is a practical discipline that does not belong there. Sure there are skills that are important for successful business life - like managing people well, knowing how to make a spreadsheet, giving great powerpoint - but there’s nothing academic about them. Business schools also make much of their case-studies, analysing a famous or infamous company or manager, usually with a particular theme in mind. This may properly be called biography (or creative writing), and seems as useless to practical business life as the obligatory single course on moral theory. Of course there are real theoretical economics issues associated with business that can be the subject of rigorous academic research, such as the economics of imperfect competition (industrial organisation), the theory of the firm, and logistics. But these can just as well be studied in economics departments.
So why does business studies exist as an independent academic subject? Two main reasons spring to mind: demand from students, and demand from business professionals. First, teaching business studies at universities allows young people who want to pursue a career in commerce to attain a certificate of academic prestige, which is fashionable these days [
previously]. They also seem to have the mistaken idea that university is a good place to learn useful skills (when in fact students of business studies, and other vocational subjects, seem to learn the least from their college experience). In order to meet this lucrative demand, simulacra of academic departments were created, which then, in order to support their legitimacy, had to invent some new field of scientific research or recharacterise an existing area of study as ‘business economics’.

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