The Economy 2.0 — Microeconomics

Take a closer look at the units of the microeconomics volume of The Economy 2.0: what they’re about, what models they present, how they’re changing compared with The Economy 1.0.


Unit 1 — Prosperity, inequality, and planetary limits


Unit 1 takes a big picture view of economic growth, centering on the “hockey stick” diagram of per capita GDP in various countries since the year 1000, and unpacks some key causes and consequences of economic growth. The unit discusses the rapid increase in average living standards that is associated with the Industrial Revolution, highlighting the roles of technological change, capitalist institutions and colonialism. It also discusses consequences of economic growth, including inequality within and between countries, as well as the environmental impacts of carbon-based production methods.



This unit introduces the production function and diminishing average product of labour. These concepts are used as part of the Malthusian model, which helps explain the flat part of the hockey stick diagram. The important concept of equilibrium, as well as the idea of causality and the use of natural experiments, are also introduced in this unit.


Major changes

A greater emphasis on climate change and the role of colonialism in economic growth, as well as a reorganization of material between Units 1 and 2.


The header

This is the header we’ve chosen for Unit 1.

It’s a bushfire burning out of control near Cape Town, South Africa, in 2009. It reminds readers of the environmental consequences of accelerated growth.

See how Unit 2 is changing →