Practical analysis for investment professionals
21 July 2015

The Hidden Moralism in Economic Models

Tomáš Sedlácek, economist, university lecturer, and chief macroeconomic strategist at ČSOB, examines the Old and New Testaments as well as ancient Greek and Roman myths for concepts that can inform modern economic thinking. His book Economics of Good and Evil, a bestseller in his native Czech Republic, was translated into English and published by the Oxford University Press in 2011.

Sedlácek sat down recently for a Take 15 interview with Jason Voss, CFA, to discuss his research.

Sedlácek believes that although mathematics is a crucial component of economics, other approaches should not be excluded. “Analytical economics is fine, but that’s just one way of looking at it,” he says. “If you read the classics, it’s much more down the line of philosophy, ethics, and argumentation that is far, far away from mathematics.”

Furthermore, he says that micro and macroeconomics do not account for the entire economic picture. “There is something that’s smaller than micro which is family relationships, I call it nanoeconomics . . . and then there is something that’s above macroeconomics — I call it megaeconomics — that’s when a country goes bankrupt or a big company goes bankrupt,” he says. Both of these situations are examples where traditional rules break down.

Sedlácek also compares communism and capitalism, using the example of his native Czech Republic, formerly part of Czechoslovakia. “During communism, we had crises as well, but they were crises of supply,” he says. “The demand was healthy, but supply was collapsing all the time. Now, we have an exactly opposite situation where . . . the demand is faltering and the supply is ready.”

“The economy today cannot eat everything it cooks, so the government has to consume in its stead . . . the irony of our situation is even though we do not demand everything we supply, we are trying to solve the problem by cooking better, and more, instead of relaxing and saying okay, we don’t have to work this hard.”

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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2 thoughts on “The Hidden Moralism in Economic Models”

  1. Jameson says:

    Cool post. Certainly plenty of economics lessons in the Bible and of course the Classics, though I have not many or any of those… At any rate, the economics principles of the Bible, especially in the Proverbs book, are even more evident if one reads it in a modern English translation like the ESV or NASB or The Message. Certainly nothing wrong with older translations like the KJV, but at the same time the KJV was translated for how people spoke in the 18th century, and very frew people conversate like that anymore.

    1. Sam Del Rowe says:

      Very interesting–thanks for reading!

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