In The Beginning: Saving

It could be argued that economics began when the first human had the idea to squirrel away some nuts for the winter. Of course squirrels had been doing so for a long time and ants forever, but we are talking people here. We gather or produce in order to consume, but the act of deferring some consumption for the future turns out to have profound consequences. That act of saving is the basis for all the elaboration of human society beyond the hunter-gatherer band. Most importantly, saving turns out to have a potentially multiplicative effect if that saving is used produce the means for greater future production.

That multiplicative effect acts first of all through technology. If we don't spend all of our time gathering food, we can spend some of it making tools which allow us to gather food with less effort, and potentially save even more. For a couple of million years, simple tools were as far as technology could take us. Our peripatetic life style limited our saving to more or less what we could pack around with us, and competition with other humans meant that our superior hunting skills made game scarcer and harder to catch.

Rapid progress really began with agriculture. Once a sedentary lifestyle had been adopted, houses and walls could be used to stash our stuff, including a supply of food for a whole year. Moreover, agriculture tended to require large organized efforts for building irrigation systems and herding domesticated animals. The surpluses now produced could be used to support societal specialists and construct fortifications and other durable structures.

Once regular and somewhat predictable surpluses existed, the human race had begun the practice of capital accumulation. That accumulated capital made possible progress, but it also presented a problem: Who controls and gets the benefits from it. And that is what economics is about.