Abstract

Conventional economics is guided by the fundamental force of self-interest as envisaged by Adam Smith. Later on the concepts of rational man, marginal utility, Pareto optimality etc. developed. These assumptions were made by early economists to simplify the things so that mathematical calculations could be easy. A critical look at the conventional demand-supply curve reveals that it is related to wants and desires only. A need-based demand-supply curve will have a different appearance. Recent insights into psychology and social behaviors have challenged the very basic assumptions of economics. Yet these assumptions continue to play a decisive role in government policies and programs. As a result there is great disparity in society and a very inequitable distribution of wealth and resources. There is no differentiation between needs and wants. Consequently, very rich people and corporate houses have cropped up. Such entities prefer luxurious items and the production of non-essential goods and services. The governments find it difficult to take straight forward decisions regarding social welfare. It is time that Economics is demystified so that it is comprehensible even to a common person. If real social welfare is to be achieved, governments need to take bold need based decisions so that there is a more equitable distribution of wealth and resources.