After reading the first chapter of Thoreau’s “Walden” I had a lot on my mind about economics that I wasn’t used to. Being an economics major, I was actually excited to read Thoreau’s chapter to see if it conflicted with modern economics thought that is mainly derived from Adam Smith’s “Wealth of Nations”. The first passage I noted that really drew on my economics education was the quote: “A man is rich in proportion to the number of things he can afford to leave alone.” Thoreau is using the word “rich” as spiritually or intellectually rich. In the economy today, rich would be defined as having a house, a car, and hopefully a 401K retirement plan that will allow you to retire in your late sixties. Thoreau is clearly against the accumulation of monetary wealth as what really makes one “rich”. In my mind, this makes Thoreau more of a philosopher than an economist, which he is.
Compared with Thoreau’s ideas, modern economic thought and capitalism state that workers are incentivized to gather monetary wealth and consume more goods as they move up in social class. These ideas are macroeconomic views and aim to generalize every person into a system rather than as an individual. Thoreau’s views on economics were not macroeconomic thoughts, but microeconomic thoughts that were much different than what is thought today. Thoreau focuses on the individual and says that men should become rich by focusing on reading and intellectual advancement and by no means should they measure wealth by the amount of goods they can amass.
Thoreau does touch on a key economic concept that is accepted, opportunity cost. Opportunity cost is the next best alternative that is given up when a person chooses an option. For example, since I chose to write this blog post, I am giving up eating dinner with my roommates. Thoreau encompasses this by using the train example to show opportunity cost. One can either work a few days in order to pay for a train ticket or walk those days and not have to work those days to afford the ticket. This is not exactly opportunity cost but it brought some interesting thoughts to the front of my mind. I wondered if society would be better off if Thoreau’s train of economic/philosophical thought influenced society more than Adam Smith’s thoughts. Society may have never reached capitalism and society may value wisdom and knowledge more than material goods. Maybe then we could “learn what [life] has to teach, and not, when [we] come to die, discover that [we] had not lived”.
Thoreau’s idea that wealth is obtained by focusing on intellect and reading is fascinating. Some of the most wealthy people in Thoreau’s eyes could also be the poorest as far as monetary value goes. Thoreau’s concept of wealth makes sense to me, unfortunately most people don’t value intellect in the same way.
I liked how you broke down Economy. The title almost slips by me because it is (in a way) ironic. Thoreau definitely makes a “richer” philosopher than economist. I think part of the reason it’s titled Economy is to show how little he values the monetary things in life? Similar to how he describes “economical things” like opportunity cost, and then when he spins it into thinking how he spends his life. It shows how he deals with things economically, relating it to actual meaning in his life.
Your post reflects some of the same thoughts I had after reading the 1st chapter on the similarities of opportunity cost and Thoreau’s version of cost. I think he also touched on the concept of sunk cost, a cost that has already been incurred and can’t be recovered. Thoreau makes the point that many people are mentally trapped by their possessions, and this could be re-worded to say that we have attachments to the sunk costs of our possessions, therefore psychologically attached to them. According to economics, a sunk cost should be ignored in decision making, yet many of us use it anyways. For example, if I’ve paid $5000 for a car, and then said car breaks down a week later with an estimated repair of $5000, I should ignore the that first $5000 in my decision making process, but this is usually easier said than done. I might be better off looking for an entirely different car for the same price as the repair.
Secondly, his claim that a rich man has wisdom and knowledge and not monetary accumulation could be applied to the economics concept of utility maximization. By using your money only for goods or services you truly feel our worthy of giving up some amount of “life” you get the most satisfaction (utility) from those purchases and allow more time for leisure time.
So I would propose that, even if Thoreau didn’t know it at the time, he was using some fundamentally economic concepts to back up his claims. Do you think modern economists would agree?