It may be true that you will never need to consciously apply the economic theory of the invisible hand in whichever endeavor you choose, however it may be the very foundation that you build on if you choose to pursue economics as an academic discipline. The invisible hand theory was used as a metaphor by economist Adam Smith to describe the self-regulating nature of the marketplace. Used in conjunction with the economic forces of self-interest, competition, and supply and demand the invisible hand theory can be a valuable aid when trying to understand the state of the economy at different points in time. It can also be a helpful tool to formulate strategies to improve the efficiency of a given economic situation.
The Invisible hand provides a justification for the Laissez-fair economic theory which proposes that the best approach to solving an economic crisis may be by taking a “hands off” approach with little governmental intervention. The state of the economy will not be constant or accelerate until the demand created from the needs of a community become constant. Until then the economy will fluctuate more or less with the cyclical needs of the populous.
Religion brings up an interesting aspect of economics. Specifically I am referring to the cyclical patterns of spending and saving induced by the calendar events in a given year. These periods were formed in accordance with the seasonal harvest periods as they apply to different regions of the world. Religion provides a general explanation for the predictable events that take place during the course of the 365 day cycle that the earth travels through. For example Christianity encourages the sharing of resources during winter when resources and work become scarce. In December markets rely on the values and beliefs engraved in Christians, Jews, and other religious denominations to facilitate the exchange of goods, services and money during times when humans would not naturally do so. It is interesting to observe correlations between the economy and the strength of a religious following. This view can help to explain some of the natural hostility that arises between religious and ethnic groups. When one person from one part of the world comes to another part of the world where the climate and seasons differ, their religious consumption patterns may offend the natives because of their awareness of the patterns of scarcity and abundance of resources at a given point in the year. For example if a Christian tried to celebrate Christmas in a part of the world where it would not be practical to do so hostility may arise to protect the way that the community functions.
It is because you are frugal that you do not understand the consumption needs of those who buy compulsively or to fulfill a perceived necessity. Many times individuals may buy things just to buy them and do not give a thought as to why they bought what they did, all they know is that they receive a positive feeling from consuming things. As humans we are natural consumers. If we did not on a basic level consume food, water, clothing and shelter we would not survive. Before we lived in societies and communities we were on our own hunting and gathering in order to survive. When we caught game or acquired a necessary resource our bodies would release a hormone in our sympathetic nervous system such as dopamine and serotonin as a reward for preserving, and perpetuating one’s life. Now we live in societies where we are no longer required to hunt and gather in order to survive. We have not yet fully evolved mentally out of the state of the hunter gatherer so it makes sense that some people still receive a dose of a given neurotransmitter every time they buy something regardless of the necessity to that individual’s survival. Successful marketers have tapped in to this theory and manipulate people through certain media to stimulate or impede our behavior in the market.
Consuming to impress (specifically expensive cars and clothes) can also be explained by our innate drive to dominate and attract or repel different social and economic classes of people to facilitate the reproduction of our species. Social Darwinism theorizes that those with superior genes will be chosen to reproduce and make our species stronger. This is not limited to physical characteristics but also includes mental capacity and the ability to generate income in order to provide.
These are all theories that help to explain the nature of economics. It can be difficult to understand certain economic phenomenon but if you apply different disciplines in conjunction with economics you can better understand the way that the economy works. By studying other disciplines as well (electives or minors) you can better understand and apply the teachings of economics.
