Chapters one to four of Understanding Our Economy, CORE’s latest textbook, are now available online.
CORE’s new textbook has been written to address the needs of CORE’s growing audience in American institutions. In this overview, we’ll touch on who the textbook is for, how it differs from The Economy 2.0, and what you’ll find in the first four chapters. These chapters have been authored by Simon Halliday (Johns Hopkins University), Eric Bottorff (Oakton College), and Luz Marina Arias (University of Salamanca).
Who is it for?
Understanding Our Economy is intended for beginners, including:
- Students at two-year and four-year colleges and universities in North America.
- Students who take an economics course before deciding on their major.
- High school students with an interest in economics.
How does Understanding Our Economy differ from CORE’s The Economy 2.0?
Understanding Our Economy is designed for those students who may take only one or two economics courses, while ensuring that students who go on to major in economics are well- prepared for intermediate courses. To that end, we’ve:
- Made the language and terminology more accessible.
- Minimised the maths.
- Broken up some of the units in The Economy 2.0 into shorter, more focused chapters.
- Employed less technical and more intuitive models (for example, using marginal benefit and marginal cost).
- Added six core principles that run through the book.
Understanding Our Economy also changes where the journey begins. Rather than opening with historic growth trends that can feel abstract to new students, it starts with a bargain in which students can see themselves as decision-makers: negotiating a job, trying to afford a home, building a family, and working out how people cooperate when their interests partly conflict.
From that grounded microeconomic starting point, the chapters zoom out to the bigger story of capitalism, technological progress, rising living standards, persistent inequality, and planetary limits. In this way, the book delivers the core ideas of Unit 1 of The Economy 2.0: Microeconomics (‘The capitalist revolution’) at a more introductory level. Understanding Our Economy provides more scaffolding, more US-centred examples, refreshed data, and a clearer invitation for students to understand the economy as something they participate in, not just something they observe from a distance.
An overview of the first four chapters
Chapter 1 is about how people cooperate and come into conflict when producing their livelihoods together. Students will learn to define economics, institutions, and games, and will build and analyse a simple two-player bargaining model (using the real case of a lead-poisoned mining town) to see how outside options, opportunity cost, and economic rent determine what each party gets from cooperation. They will use game trees to understand why moving first in an interaction may allow the first mover to capture most of the gains.
Chapter 2 is about how changing the ‘rules of the game’ (institutions) can shift power and produce fairer outcomes between parties that cooperate yet have conflicting interests. Students will examine how improving a party’s outside options, or changing who has the right to set the terms of an interaction (for example, through representation and regulation), redistributes economic rents, using the historical rise of labour unions and the Fair Labor Standards Act as a real-world example. They will apply this framework to environmental inequality through the Clean Air Act: regulation produced broad gains in cleaner air and healthier communities, but those gains were not distributed equally, with race and income continuing to shape who bore the greatest pollution burden and who benefited most from progress.
Chapter 3 pulls back to look at the whole economy and how it has changed over the last two centuries. The chapter discusses two transformations that have roughly coincided: the rise of living standards measured using GDP per capita and the rise of capitalism. Capitalism is defined precisely through its three core institutions—private property, markets, and firms. The chapter explains how competition between firms, combined with the concentration of power within them, drove the technological innovation and specialisation that have raised labour productivity. Yet, the chapter is not a simple success story. Two more transformations are laid out: the same fossil-fuelled income growth has sent atmospheric CO₂ and global temperatures climbing, and while extreme poverty has fallen dramatically, vast inequality persists—both between countries and within them, as the striking ‘skyscraper’ income inequality graphs make vivid.
Chapter 4 is about technological progress and specialisation in capitalist economies. Students will construct and consider the limits of a model of how firms choose among technologies, examine why capitalist competition incentivises technological innovation, and learn about the importance of specialisation and learning-by-doing to economic growth. They will apply these lessons to the case of the Industrial Revolution, including the role of slavery and colonialism.
Read Understanding Our Economy for free
Understanding Our Economy is freely available, like all of CORE’s textbooks, and the first four chapters are available now. The remaining chapters will be published in the coming months.
