Description

ECON1401 Economic Perspectives

Main Assessment: 3,000 words essay, giving students a current policy issue to discuss and to link to the ideas of famous economic thinkers of the past

In your assignment, you will apply the conceptual frame of TWO different economic thinkers to ONE of the following
topics:
1. Competition: Competition is an essential element of the capitalist economic system. The invisible hand of the
markets is mainly a manifestation of competition, where firms compete to provide goods and services that are
demanded by consumers. In recognition of the important role competition plays in creating fair economic
outcomes, Australia – and many other countries – have laws and regulatory agencies to explicitly promote and
create competition in the markets. In Australia, this regulator is the Australian Competition and Consumer
Commission.
Using the conceptual frame of your two chosen economists, what you have learned in class, and outside
research, analyse the state of competition in Australia today. Would each of your thinkers agree that
competition is a good thing? Would they argue for more or less competition? Does your thinker make
predictions about competition and its effect on wages? Yes? No? Are the predictions good or bad? Are their
policy prescriptions that the thinkers would support or oppose that should be considered in Australia? The
specific questions you address will vary by the thinkers you choose.
2. Affordable Housing: House prices have risen substantially relative to incomes in most Australian capital cities
over the last decade making affordable housing a key concern among many Australians. There is no consensus
over the cause of the increase in prices in Australia. In fact, housing prices throughout most of the world
experienced large appreciations over this time period. Although, many markets also experienced major declines
before, during, and after the GFC. Governments both local and national play a large role in the housing market.
They often have a large influence on where and how much housing is built, which affects the supply of available
housing. They also have influence in credit markets that determines the availability of mortgages, which affects
the demand for housing.
Using the conceptual frame of your two chosen economists analyse the state of the housing market in Australia
and the policies, both in effect and proposed, on the state of housing affordability. Would your chosen
economists approve of the large interventions into the market on both the supply and the demand side? What
policies, if any, would your chosen economists want to see enacted to alleviate the problem? Do your
economists agree or disagree? The specific questions you address will vary by the thinkers you choose.
The first task of the assignment is to decide which of the above topics you would like to analyse. The second task is to
select TWO economic thinkers we have studied in the course to serve as the frames of reference for your analysis of the
issue. A complete list of economists is provided at the end of this document. To select your two economists, visit the
Moodle site and sign up using the “Select a Thinker – Written Assignment 2” link under Course Assessments and
General Resources. There are two separate links, one for each thinker. Please sign up for one thinker using each link.
Only 17 students will be allowed to adopt each economic thinker. You may not choose the same economic thinker
chosen for your first assignment.
The paper is a compare and contrast essay, where the views of both economists are analysed and evaluated. The best
way to start this type of essay is to create an independent list of each economist’s views on the topic and then to look
for similarities and differences in their views. Once the key similarities and differences are found, a narrative can be
structured around why the economists agree or disagree about the topic. It is expected that you will conduct some
outside research on the topic and on your chosen economic thinkers to supplement the information you have gained
from class readings and lectures. Please include a reference list with your paper. The quality of your sources will be a
factor in assigning marks.
The essay should be between 5 and 8 pages and should attempt to balance the amount of information presented on
each economist’s view. One suitable structure for the paper is to write a separate section for each economist
summarizing their views, and then compare and contrast their views in a new section. Another way to structure the
essay is to align yourself with one of the thinker’s positions. Argue why your position is correct using the arguments
supplied by your thinker and why those who believe the opposite and who are aligned with the other thinker are wrong.
But, there are many suitable ways to structure the essay. Try to draw upon what you learned from the first writing
assignment to create positions for these now dead economists on these current issues. Do not include detailed
background information about your economists’ lives unless it is directly relevant to your argument.
Ensure you use complete sentences and well-organised paragraphs. Stick to the page limit. You will be penalised if your assignment is under 5 A4 pages or over 8 A4 pages. Do not use a font size below 11 point and do not play games with spacing or margins. Deliberate attempts to make essays appear longer or shorter than the specified limits will result in a loss of marks.
For a full guide on how you will be assessed, refer to the marking rubric on the final page of this document

Solution

          ‘Competition in Capitalist Economic System: Australia’Introduction

Competition is the process by which rivalry among firms is developed in a bid to gain sales and thus increase the profits (Colton 2017). Competition is pivotal to markets operation, and in the process, it enhances innovation, productivity as well as growth; these factors are critical in creation of wealth and ultimately, poverty is reduced. Weak competition results from anti-competitive conduct by organisations, which amounts to unfairness to rival firms, while consumers are disadvantaged by having low quality goods or overrated prices. In this view, most governments around the world have formulated policies that ensure fairness among rival companies by promoting honest competition between firms and consumers. In Australia, fair competition is enhanced by the Australian Competition and Consumer Commission (ACCC) whose main role is to ensure that businesses and consumers comply with Australian competition, fair trading, as well as consumer protection laws as outlined in the Competition and Consumer Act (2010) (Webb & Burton 2017). Taking this into consideration, this paper will analyse the current state of competition in Australia. In doing so, this paper will consider the arguments by two great thinkers; Karl Max and Adam Smith. Based on the views on competition by these thinkers, this paper will discuss whether they would advocate for more or less competition, the effects of competition on wages, and the policy prescriptions that should be considered in Australia which would either be supported or opposed by the two thinkers.

Competition: More or Less?

Competitive pressure is critical in enhancing economic performance as it ensures resources are utilized optimally. In a market economy, individuals own the factors of production-entrepreneurship, land, labour, and capital-and freely control how they will use these factors based on the prevailing conditions in the market place (Fuchs & Monticelli 2018). In such as system, the role of the government is minimal. Therefore, this economy is characterized by competition and self-interest. Indeed, this was the view of Adam Smith regarding competition as he argued that competition was brought about by the selfish interest of individuals in pursuit of living a better life (Skousen 2015). Adam Smith asserted that self-interest is the driver of all economic activities since all individuals have got their own personal goal or gain they want to achieve which prompts them to get involved in economic activities. In his book, ‘The Wealth of Nations,’ Smith stated that “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 interest (Skousen 2015, p. 64).” This statement means that human being are more concerned by their own interest rather than the interest of other people. However, the term ‘Self-interest” is usually associated with negative meanings such as immoral or greedy, and therefore, it has been challenged by various scholars. Nonetheless, literatures agreeing with Adam Smith argue that self-interest implies seeking personal goals, a concern that almost all individuals have. The opposing forces of self-interest was discussed by Smith as “The Invisible Hand.” When individuals are pursuing their self-interest, they end up providing goods and services that are needed by other people.

Competition, according to Kurz (2015), regulates the economic activities carried out by human beings. For instance, a producer cannot overcharge his products on the basis that customers will shift to rivals. Similarly, the producer will maintain high quality goods to protect customers from shifting to rivals. In line with this fact, Adam Smith would advocate for more competition as it results to not only better product and services, but also enables producers to be innovative in provision of goods and services. In the eyes of Smith, competition is a good thing that should be allowed in all economies.