Is there such a thing as economic science?

Many people say there is not and cannot be such a thing as economic science and who can blame them? Sometimes it seems that if we got the economists to predict the climate, and the climatologists to predict the economy, we wouldn’t be any worse off.

However there is no question that there is such a thing as physical laws. And these impose logically knowable consequences on human action and therefore human production. So we should logically be able to identify universally true propositions of fact about human production, and derive valid logical deductions, from physical limitations on human action.

For example, time limits human life. Therefore we should be able to posit a logical proposition that the time available to any individual is limited. This is a universally valid proposition about human production possibilities and therefore an economic law.

For another example, the amount of food you can produce from a given unit of land is finite, no matter how much fertilizer you put on. Natural limits on production possibilities logically give rise to universally valid propositions about economics.

Now you might say those examples are so simple, or so broad, as to lack significant explaining power. But the point is that we can logically derive universally true propositions of fact about human production, and therefore economic science is possible.

One of the basic propositions of Newton’s theory of gravitation is that things have mass. You might think that’s so simple, ‘So what?’ until you see what logical consequences can be derived from it.

Underlying the complex truths of trigonometry and survey, is Pythagoras’s theorem.

Darwin’s theory comprises three simple and observable premises: individuals of a species inherit differences; more are born than can possibly survive; and inherited differences affect survival and reproduction over time. But what enormous explaining power!

Therefore economic science is possible. It’s also not true that it lacks significant explaining power. In fact a comprehensive science of human action can be derived in this way.

How we can know such economic laws – that is the question.

Peter
It depends on one's view of human nature and political ideology which will shape either a Keynsian or Monetarist approach, which means there will be no agreement about economic laws. Economics is a human construct.

Science adapts to new evidence and continually re-evaluates. Science assumes an underlying 'truth' in the physical world. The fundamental economic theories have not changed for 100s of years only the history of how the constructs are applied.

You might argue that a piece of land will produce at most X amount but it varies depending on soil health, climate, seed viability, pests, fertilisers etc. Unless you can predict the climate and be sure about any of those other factors (like predicting a locust plague) even a theory about food production won't be definitive. An ag scientist might be able to scientifically work out the optimum production from a piece of land under varying conditions but that is science not economics. Economics is what happens after that process ie. the end result - how much to price the food, which markets to target etc. The soil and growing part is all pure science.

There are some rules of thumb such as when supply is limited the price goes up because consumers are competing for fewer goods and will pay more. That is the theory anyway. Fact is though some people might choose not to buy those goods while the price is high, some might only buy two instead of ten. So in total terms the value of the goods might be the same even if the turnover is reduced. Human behaviour is not static nor is it always predictable en-masse.

Economics cannot be science as it is not proved and the evidence is subjective and largely influenced by other factors like ideology.

<< Is there such a thing as economic science? >>

Of course there is Peter.

In fact, the development of a healthy vibrant economy that is actually doing its job of best supporting the population now and into the future has surely got to be one of the most important goals of scientific pursuit.

There is science that could be called economic science on all different levels, from science that has small spinoffs for economic gain to science that is targeted directly at economic refinement.

Or perhaps we could define economic science as only that science that takes into account the regulation of the demand side of the equation as well as the supply side and strives for a balanced non-continuously-expanding economic regime that can be perpetuated long into the future.

There is an awful lot of science geared towards improving the supply side, by way of ever-better efficiencies in resource usage, better technologies, utilisation of new resources, etc. But there is scant little science being done on regulating the demand side. That is; on researching how to best stop the demand from forever increasing.

So, there is scant little science that I’d call true economic science being done. But it does exist, here and there… in little pockets… by a few individuals …. who feel muzzled in what they can say publicly … and who continuously worry about losing their funding if the big all-powerful pro-growth-forever business lobby and government hear about their terribly subversive activities!

Peter, an interesting thought. Is there such a thing as economic science? Well of course, we have already achieved it.

All it takes is a bit of post-modern deconstructionism, ideology, the abandonment of the governing laws and rules, some “expert opinions” and bingo, economic science!

As I understand it, science is a process of testing and proving a hypothesis against the know laws of physics (not man made). Economics is a set of rules that govern the exchange of an assigned value of money for goods and services. Public goods and services from government in exchange for taxes collected and private (market driven) goods and services (man made). Mix them up all you like but disaster is guaranteed.

The only applicable “laws” in economics are the regulations imposed by governments and governance bodies.

We have lots of examples to show just how bad things get when “disciplines” are grafted.

When you screw with markets on ideological grounds you get “Pink Bats”. 200 house fires, four deaths, a $1Bn bill, 273 businesses fold, and 3,000 lost contracts for the industry. Excellent!

Now we are heading down the same path with NBN Co, mining tax, plus CO2 tax, plus GST redistribution, plus high A$, plus risky sovereign investment, plus tax review and a two speed economy just to mention few. Would you buy this? Absolutely not.

When we mix science fiction with religion we get scientology. When we mix science with international politics we get CAGW. When we try to mix economics with science we get Ross Garnaut.

It is all very simple; just keep changing the rules and the questions.

Example Peter. <<How we can know such economic laws – that is the question. >>

The “assumption” here is that there are such things as “economic laws”. There can be no such thing. You can have man made rules and there are literally millions of these. But you cannot have man made physics.

To answer you question. No. Unless of course you can point to some man made physics or some economic physics that would exist before humans. Good luck.

Pelican and spindoc
what if I can point to universally valid propositions of human action? "For example, all human action consists of preferring A to B". If it's universally valid, why can't we say that it is a proposition of economic science, or is an economic law?

spindoc
Not all science consists of the method of the natural sciences, i.e. testing of observed data against hypotheses. An example is geometry. We don't do field experiments to determine what percentage of right-angled triangles comply with Pythagoras's theorem, under what variable conditions. On the contrary, if it's a right-angled triangle, it complies, and if it doesn't comply, it's not a right-angled triangle.

Since the applied science of surveying derives from trigonometry, which in turn derives from Pythagoras's theorem, therefore we can have pure and applied science that does not use the empirical method of the natural sciences. It's logical, not empirical science.

Peter, thanks for that.

I did say that “grafting” of disciplines has potentially disastrous consequences and provided some examples. I have a serious problem with you redefining and providing examples of “non scientific” science.

Perhaps we will save this for another day however; your observations are a classic example of redefining science in order to make it fit into your “economic science” proposal. Your diversion comprises, human action consists of perhaps universally valid preferences? Is it “economic law”(which cannot exist), Is it “Pythagoras”? None of this is relevant at all.

There is not and can never be any element of “science” in economics. Maths? Yes, Formulae? Yes. Analysis of cumulative data? Yes. Nothing to do with science unless you wish to “bastardize” one discipline such as economics, to make it “fit” with your “bastardized” science.

Just look at the responses you have already. What you get from pelican is “human nature”, “political ideology”, “Keynesian v.s. Monetarist” approach and again “economic laws” (no such thing). Nothing to do with economics, just different socio-political ways to apply economics.

From Ludwig you get how the “economic science” is on different levels, that it exists in “little pockets” What is all this to do with economics? This is about “application modifiers” of economics to suit Socio-political ends. Esoteric nonsense.

Economics is for excample, the formula for calculating optimal product/inventory performance. GMROI (Gross Margin Return on inventory Investment). There is absolutely no “science” in any of this. It is simply maths, a formula and accumulated data. Man made data, man made formula and man made math’s.

Yes you can navigate carefully down the “math’s is science” path as much as you like, but it is not. Math’s is a means we humans have invented to help us understand our environment. Math’s was never invented by physics so we could understand our environment.

You draw on the nuances of empirical, natural, applied and logical science. Utterly irrelevant. The discipline of science in any form must not be grafted to the totally different discipline of economics. Only the output from one discipline is relevant to any other.