This is what happens during zero economic growth: wages decline, industrial production slows, international money supply decreases, and unemployment reaches an all-time high.
Basically, the world will go through the Great Depression again.
So, how is that prevented, and who keeps a hawk’s eye on the state of the economy?
The economists, of course.
These experts study the relationship between a society’s resources and its production or output. They give opinions and research findings to help shape various policies, including interest rates, tax laws, employment programmes, international trade agreements, and corporate strategies.
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Nobel Prize winner Daniel Kahneman developed the prospect theory with Amos Tversky. Source: AFP
Over the years, there have been some exceptional economists who have made an impact in the field.
Take 2002’s Nobel Prize winner Daniel Kahneman (1934-2024) for developing the prospect theory with Amos Tversky, for example.
Prospect theory suggests that humans tend to prefer certainties over probabilities. It is the psychological influences and biases that affect the behaviour and decisions of financial professionals, especially investors in the stock market, which explains various market anomalies.
However, not all people agree with economists. Heck, even economists disagree with economists.
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The two competing schools of thought mean that there are some disagreements about how things should be run. Source: AFP
This is because of two competing schools of thought: one believes that the government should play a role in markets – Keynesian theory; the other believes in the free market, where the government should be hands-off and let the market manage by itself.
Although most economic structures today follow the Keynesian theory, American economist Milton Friedman (1912-2006) agrees with the latter, who prefers to let the marketplace sort out any economic problems without the help of the government.
No matter what theory you agree with, economics is still part of our daily lives. And we need economists to help inform crucial decisions so that we do not go through another economic contraction, recession, or depression.
Here are the most famous economists who have changed the face of the industry.
5 famous economists you should know, from historical legends to modern-day game changers
Adam Smith (1723-1790)
It would be blasphemous not to include the father of modern economics, Adam Smith, in the list of famous economists. Smith was a Scottish philosopher whose economic theories have laid the foundation for others to follow and build upon.
He advocated the free market, even proposing the idea of an invisible hand in his first book, “The Theory of Moral Sentiments.” Here, he suggested the tendency of free markets to regulate themselves using competition, supply and demand, and self-interest.
However, it is his “The Wealth of Nations” that is considered his most important book as it forms the foundation for economic policies around the world today.
He popularised many of the ideas that form the basis for classical economics, and then other economists built on his work to solidify his theories. His ideas laid the basis for other works, notably those of David Ricardo, Karl Marx, John Keynes, and Milton Friedman.
Smith received his education at the University of Glasgow when he was 14. After graduating, he attended Balliol College, University of Oxford, where he studied European literature.
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One of the most famous economists is David Ricardo, who argued to revoke the Corn Law (the import and export of grain) and formulated the idea of comparative advantage. Source: AFP
David Ricardo (1772-1823)
Unlike Adam Smith’s theoretical approach, David Ricardo’s methods are more hands-on. At 14, he was already working at the London Stock Exchange and developed a knack for speculating in stocks and real estate.
His first published work, “The High Price of Bullion, a Proof of the Depreciation of Bank Notes,” stirred controversy with the Bank of England when he and his peers asserted that there was a link between the increase in prices and the volume of lending of banknotes.
His next work, “Essay on the Influence of a Low Price of Corn on the Profits of Stock,” also garnered controversy, only this time it was with Parliament. There, he argued to revoke the Corn Law (import and export of grain) and formulated the idea of comparative advantage – a term still used in free trade today.
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Centuries on, the Keynesian principle still remains one of the most important philosophies in economics. Source: AFP
John Maynard Keynes (1883-1946)
Often referred to as the giant economist because of his 6’6″ stature, John Maynard Keynes was the brains behind Keynesian economics, an idea that governments should play an active role in their countries’s economies instead of just letting the free market reign.
The basic principle of Keynesian economics is divided into two: that demand drives supply and consumption is the key to economic recovery.
He also believes that government spending will have adverse effects on economic recessions, depressions, and booms. This eventually led to the launch of modern macroeconomics.
Keynes studied at Eton College and the University of Cambridge, where he received a bachelor’s degree in mathematics.
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Elinor Ostrom was the first female Nobel Prize in economics winner, making her one of the most famous economists to know of today. Source: AFP
Elinor Ostrom (1933-2012)
As the first female Nobel Prize in Economic Sciences recipient in 2009, Elinor Ostrom made groundbreaking contributions to understanding how communities manage shared natural resources.
Through her work, she observed that small communities around the world were capable of developing diverse and effective methods for managing shared resources – like a fishing lake or livestock pastureland – sustainably without relying solely on government regulations or privatisation.
She was also a professor at Indiana University Bloomington and co-founded the Workshop in Political Theory and Policy Analysis (now called the Ostrom Workshop), a research centre focusing on the study of governance and public policy.
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One of the most famous economists of the modern day is Esther Duflo. Source: AFP
Esther Duflo
In 2019, Esther Duflo was awarded a Nobel Prize — alongside Abhijit Banerjee and Michael Kremer — for their contributions to an innovative experimental approach to alleviating global poverty, making her the youngest person and second woman to receive the prestigious award.
This is through her team’s Poverty Action Lab, which is most known for actually spending money on teaching materials, vaccinations, and other policies for poorer countries instead of having to rely on mathematical models or observational data first.
Duflo pursued an undergraduate degree at the École normale supérieure in Paris, France, where she specialised in history and economics. She later pursued advanced degrees, earning her master’s from the Paris School of Economics and a PhD from the Massachusetts Institute of Technology (MIT). She later became a professor at MIT too.
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Mervyn King is one of the famous economists from Britain and served as the Governor of the Bank of England from 2003 to 2013. He is a School Professor of Economics at the London School of Economics. He is also the Chairman of the Philharmonia. Source: AFP
The benefits of attending a good school
Some of the more recognisable economists today, like Joseph Stiglitz and Jeffrey Sachs, receive their education in some of the best schools for economics in the world.
These schools equip you with a deep understanding of how economies function, allowing you to analyse complex economic issues, make informed decisions in various fields, and contribute to policy development. It is a versatile and valuable skill to have, and is applicable in both the private and public sectors across a range of careers, from business to government and finance.
Take Christophe Barraud, for example. This seasoned economist is widely recognised for his predictive accuracy, and he has even been named the Top Forecaster of the US, Eurozone, and Chinese Economy for many years.
His knowledge and skills are all thanks to his studies at the Paris Dauphine University.
Other top economics schools, according to the QS World University Rankings include:
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