Okay, it’s perhaps a bit more than just a thumbnail sketch, but it’s still a good introduction:
A basic definition of “economics” is given by Thomas Sowell (PBUH, may he live a thousand years), which I paraphrase here: “Economics is a system of allocating scarce resources which have alternate uses.” The key word I want to focus on here is scarce. It is not abundance but scarcity that lies at the heart of economics. Scarcity of resources is what makes economics a fundamental property of nature. Scarcity is an inherent, inseparable, eternal property of reality. It is not a problem that can be solved — it is bound up in the laws of physics that govern the cosmos.
The necessities of life — water, food, clothing, shelter — are drawn from scarce resources which have alternate uses and thus require a method of allocation. We generally think of systems like “capitalism” or “communism” when we think of economic systems, and there are others (feudalism, for example). But let’s boil down the allocation method to two basic kinds: market-based, where scarce resources are allocated according to supply-and-demand dynamics; and command-based, where a central authority divvies up resources according to some set of (usually arbitrary) rules.
Nearly every variant of market-based and command-based economies has been tried over the centuries, and the market-driven economy has emerged as the best solution we have found so far. It turns out that market-based economies work far better than command-based economies for one simple reason: because of what F. A. Hayek called “the knowledge problem”. Hayek’s insight was that allocating scarce resources is a very complex business in anything other than a trivially small economy, and there’s no way that a centrally-managed economy can hope to understand all the decisions and variables that go into making the production of goods and services possible. There is no way for a centralized body to determine how to allocate scarce resources efficiently across the hugely-complex landscape of a functioning economy. Mis-allocation of resources is almost always the near-term result, with the middle-to-long-term result being economic collapse.
Market-based economies use competition and pricing to guide the allocation of scarce resources. Supply and demand fluctuate, and the marketplace uses pricing of goods and services as a signaling device for both buyers and sellers. If supply is high but demand is low, prices drop and the resources that go into the low-demand item are diverted to a good or service where demand (thus price) is higher. If demand is high but supply is low, prices will rise and prompt competitors to enter the market at a lower price or (if the resource is inherently limited, as with beach-front property) drive more intense competition among buyers.
All of this is Economics 101, and it doesn’t matter if you’re a red diaper baby Communist or an Ayn-Randian hyper-capitalist, you have no choice but to work under these constraints. You live in a reality constrained by scarce resources that have alternate uses; there is no magical elixir or scientific discovery that will exempt you from it.
Due to mundane concerns (starting to organize the household for a move), I didn’t get to watch the first half of Sunday’s game between the Minnesota Vikings and the Chicago Bears, but I got enough worries from the text messages as the first half wound down … with running back Adrian Peterson leaving the game during the first half with a leg injury, among other scary updates). This meant that an offensive plan built around Peterson would have to be re-tooled on the fly to work to the strengths of second-year quarterback Teddy Bridgewater. I’m on record as believing in Bridgewater as Minnesota’s quarterback of the future, but it wasn’t clear whether the current personnel grouping would allow Teddy to carry the team in the absence of Peterson. I probably shouldn’t have worried about it, as Teddy put in his first career five touchdown game (four passing, one rushing, with no interceptions).
