Logic Contd

Logic Contd

Logic (cont'd) There are differences of degree between the natural sciences and economics (and other social sciences). Controlled experiments can often (not always) be used to test the theories of the natural sciences, but not to the same extent in the social sciences. The laboratory of the economist is the complex real world of interrelated events, where any one set of events cannot usually be isolated. For example, to examine the effect of a change in price on the quantity demanded of a commodity it is necessary to assume no change in all other influences which may simultaneously affect demand such as personal incomes and preferences, quality, the weather. The theoretical constructions of the economist are therefore necessarily abstract 'models' of real life, and they invite the criticism that the conclusions he draws from them derive entirely from the artificial assumptions and definitions with which he began. Such criticism would be justified if the economist were concerned only to develop a theory, and then juggled with the assumptions and definitions so that it always 'fitted the facts'. Economics is not, however, an intellectual exercise in deductive reasoning pursued for its own sake. Its merit, as that of any other empirical science, has entirely in the light it throws on the practical problems of the everyday world. The safeguard against useless theorizing lies in the continued testing and criticism of theories in the light of observed fact wherever possible. In this respect the progress of economic theory is no different from that of any other scientific discipline. In periods when the critical attitude is lacking scientific advance languishes, and conversely.

This view underlines the basic purpose of all scientific knowledge to provide guide lines for human action. The laws of science are best regarded as general prohibitions telling us what man cannot do, rather than as positive statements telling us what he can do. They set upper limits to what can be achieved by man with the fund of knowledge at his disposal. The laws of economics are basically no different. They provide a guide for policy by indicating the direction which the unintended consequences of actions may take. The theory of money, for example, does not try to say that if the quantity of money is increased by z per cent, prices will rise by y per cent, but that it is impossible (other things remaining the same) to increase the quantity of money in the economy without it exerting some effect on the level of employment, or prices, or the level of interest rates. Such a statement, and the use to which it can be put, constitutes an addition to the stock of human knowledge.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

Economics is in the last resort a technique of thinking. The reader will therefore need to make an intellectual effort, more substantial for some web entries than for others, to get the most interest and value out of this website.