is probably best translated as "rules of thumb for estate management."
In explaining these two terms, it might help to go back in history a bit. The word "economics" is based on Greek roots, but that is a bit of a humbug, since the Greeks didn't have a field of study anything like economics. The two Greek roots of the word "economics" are oikos -- meaning more or less the household or family estate -- and nomos, which can mean rules, natural laws or laws made by the government, but which in this case primarily means "wise saws" or "rules of thumb." Thus the book Oikonomia, by the Greek author Xenophon, is probably best translated as "rules of thumb for estate management."
Here's how the word "economics" evolved to its modern use. By the 1600's, the interdependence of people and nations through markets had grown so great that it was necessary for governments to have carefully thought out policies to deal with the markets. The most common such policy was "mercantilism" -- and the essence of mercantilism is to try to sell as much as you can to your neighbors, while limiting what they sell to you, so that they have to pay you in gold. But this policy was criticized by
a number of thoughtful scholars, of whom Adam Smith is the most famous. They were engaged in a new specialization: the study of "rules of thumb for the management of the common political household," which is expressed in the Greek-derived phrase "Political Economy." And that is what the new field was called.
(The Greek root of the word political is, of course, polis -- the word for the political community, or state).
Adam Smith and his immediate successors, the "Classical Political Economists" (as Karl Marx called them) were concerned mostly with the workings of a market economy as a whole. In modern terms, we would say that they were concerned with "macroeconomics." The new Greek root here is, of course, "macro," meaning "big." Macroeconomics is concerned with economic phenomena which are "big" in the sense that the whole is "big" in relation to its parts.
However, beginning in the 1870's, scholarship in economics took a turn toward a much more analytic approach, and economists began to be concerned with the workings of the parts which make up a market economy: with the workings of markets for particular goods and services, the functioning of particular companies, and the determinants of demand on the part of individual consumers. This is now called "micro-economics." The Greek root "micro," meaning small, tells us that the microeconomist is concerned with economic phenomena which are small in the sense that the parts are small in relation to the whole.
This analytic economics began to see itself (with some reason) as a science, and the term "political" in the phrase "political economy" seemed an embarrassment. So it was dropped, and the ending " -ics," as in physics, was tacked onto the end of "econom," to make it sound more scientific.
The analytic approach was very successful for a time. The macroeconomic approach of the Classical Political Economists never disappeared entirely, but it was (so to say) put on the back burner around 1900. But by 1930 -- as the Great Depression got well under way -- the analytic approach didn't look so good. Many economists felt it was time to go back at least partway to the macroeconomic concerns of the Classical Political Economists. The most famous of these economists is John Maynard Keynes.
By the late 1950's -- when Paul Samuelson's seminal economics textbook appeared -- it was clear that there was much that was useful and true in both approaches, and that the economics profession had to be committed to both macroeconomics and microeconomics. Thus, it was necessary to have words for the two great divisions of economics.
Of course, most economists specialize in one or the other. In practice, the microeconomist studies the working of markets for particular goods and services, and the interdependencies among these, and the supplies and demands of individual enterprises and consumers. (I should say that the individual enterprises and consumers are abstract, not concrete and specific, individuals, as a rule. The individual markets may be either abstract or concrete). The macroeconomist studies phenomena which seem to affect or arise from the operation of the market system as a whole: unemployment, inflation, the workings of the monetary system, and the determinants of economic growth
Applied Fields in Economics
