as according to Tohm Curtis
a new series outlining why Economic Rehab is crucial
What does ‘Economics’ mean…there’s some confusion as to whether it is a science or a philosophy? Wikipedia can provide some insight into the history of economics. I think though that maybe the simple starting point is:
Economics is the study of reality.
Okay so what do I mean when I say Economics is a study of reality? What I mean is that this is really what makes it a science. I would say the exact same thing of Physics, I would say the exact same thing of Mathematics. Bertrand Russell incidentally said ‘Pure mathematics consists entirely of assertions to the effect that, if such and such a proposition is true of anything, then such and such another proposition is true of that thing.’
In Physics this means Isaac Newton’s description of gravity as any two masses exerting a constantly attracting force on each other is true. That is what happens in reality. For Physics to work, you can’t have a law of gravity that has exceptions. A theoretical world where some people fall towards the earth and other people float up into the sky would not hold as science. The laws have to conform to reality. They must be based on observations of things that happen.
Economics supposedly represents a scientific reality. Just we seem to get surprised in Economics much more regularly than we do in Physics or Mathematics.
When Richard Dawkins talks about the difference between religion and science. He says that a science is capable of accepting that if you go your whole life believing one thing and then are presented with evidence to the contrary, the scientist accepts the new contrary position. Once the evidence has been peer reviewed, the new evidence is what is taught from then on.
However, he suggests a religion is something that holds its truths to be absolute and rejects any new evidence no matter how compelling.
So you can’t just have an ‘Economic Theory’ that doesn’t conform to reality. Because reality places constraints on what Economic Theory can be. Economics, as the study of the management of the household, is challenged by the reality of scarcity.