It’s my opinion. I am not familiar with how every educational institution on the planet is organized, but really, if economics is a branch of a science, it’s science; arguing over whether an indefinite article should be added before “Science” is kind of beside the point and doesn’t address what the OP is asking.
So is intelligent design a science? Astrology? Phrenology? All of those fit the definition of ‘the study of a particular element of the universe that seeks to determine truth.’
Surely there must be something more to science than just a desire to know the truth. Most charlatans and quacks think they are ‘seeking truth’.
How about a definition of science that excludes those things and other snake oil and nonsense? Karl Popper would argue that a real science requires tests for truth, and those tests must be able to pass or fail in a way everyone agrees with regardless of their priors or biases. Even if you don’t like falsifiability as the standard, there must be something else - predictive ability, perhaps? Or something else?
I’d argue intelligent design doesn’t even PRETEND to seek truth. It CLAIMS truth, a rather significant difference. It’s not even an “ology” or an “ics.” It’s an opinion.
If you want to throw in “through the establishment of falsifiable hypotheses and systematic testing of them” or such such phrasing, sure.
No I didn’t. In fact I intentionally started with three ‘laws’ from both the Capitalist and Marxist side. You are free to defend any of them, or add your own definitions.
So are you saying that there are no fundamental laws in economics then? Only laws that apply to Capitalism and are invalid under Marxism or something?
Let’s take ‘people respond to incentives’. It’s nearly a tautology, since an incentive is defined as a thing that causes people to modify their behaviour. But as a basic law, is it not pretty universal? Are there functioning people who do not respond to incentives?
How about ‘value is relative’. This contradicts Marx’s Labor Theory of Value, but it seems to me that it is obviously true. A person dying of thirst in a desert values a drink of water more than a Faberge’ egg, no matter how much labor went into the egg. Every product has different utility for different people.
Oh, and I’m not an academic economist, or an economist of any sort.
I agree, and it fails as a law since it is unfalsifiable. If person A puts $10,000 into an investment account, person B donates it to charity, and person C spends it on hookers and blow, they are all acting in their perceived self interest. So the predictive value of this law is nil.
Plus, self interest can be misdirected because we are not rational actors. Consider two cases - a person can drive 20 minutes to save $10 on a $20 purchase, or drive 20 minutes to save $10 on a $120 purchase. Experiments have shown that people will do the first but not the second, though the RoI is identical in both cases. Where is the self interest?
This totally leaves out the concept of perceived value. In an idealized market where all widgets are identical, it makes sense. But the purpose of marketing is to make sure that any product is not identical to competitors’ products, even if it is.
When I was at AT&T I was on a call with high execs of the Computer Division. They said explicitly that they could set prices higher because of a perceived quality advantage. I suspect that, like the first case, you can find a plausible supply and demand explanation for just about any price, even contradictory examples.
Hell look at any busy corner, and you will find basically identical gas sold at basically identical gas stations for very non-identical prices.
That doesn’t really matter. Even with identical widgets people will differ in how much they are valued. if there are eifferent widgets, they will each have their own supply/demand curve.
Marketing and pricing theory are not about figuring out what the price of something should be, they’re about price discovery. The price is what it is. It’s an emergent value determined by the marketplace. The power to set prices requires a monopoly or cartel or a market that doesn’t function for some other reason, such as an externality or coercion.
More likely you’ll see gas stations moving their price together, then being accused of collusion. But if two gas stations across the street from each other have different prices, it’s probably a small difference and indicates they aren’t quite identical. For example, one may have easier access than another one depending on the direction you are going, one may have a different gas formulation, or different services, or a discount card for some. Or, they just didn’t synchronize their price changes and you saw one that had changed while one across the street hadn’t yet.
But by far the biggest complaint you hear about gas stations is that their prices seem to move at the same time and converge to the same prices. There have been lots of conspiracy theories about how gas stations ‘collude’ or are all controlled by ‘big oil’ as an explanation for this. But it’s really just emergent market forces in most cases.
I might argue that there are fundamental rules of markets. They are sociological phenomena operating within a particular regulatory framework. And different regualtory frameworks, like different gravity fields, would be expected to deliver different outcomes but still in a statistically predictable fashion.
Where I disagree with the OP is that he seems to have confused “economics” with “mostly free markets.”
Markets are efficient over time. Housing bubbles exist, share prices can sky only to fall back down to earth, exchange rates can be all over the place. Japan since the 1980’s perhaps is an obvious one with the "bubble keizai economy, housing boom and bust, yen gyrating between 165 to 80ish and now back to 140 over the 40 years whilst the base economy hasn’t changed a whole lot. Lehman Brothers, Enron and GE being odious examples.
I’m really talking about economics, not a specific economic system. Although the discussion is wandering around the whole field
A good basic working definition of economics might be, “The study of human behaviour and organization under conditions of scarcity.” Or if anyone has a better definition I’m open to it.
I think I’d say that markets are ‘efficiency seeking’, but not necessarily efficient. Markets are complex systems, and in such systems there are tradeoffs between efficiency, exploration, and redundancy. Complex systems explore the unknown, and therefore have to be somewhat anti-fragile. It may be the best way to go, but it won’t be 100% efficient unlesx you can include things like redundancy and Levy flight into the efficiency calculation.
There is no permanent efficient equilibrium, only meta-stability brought on by current conditions and subject to change at any time. In a complex adaptive sytem, if you add a shock it will adapt. Remove the shock and you don’t get back to the original equilibrium, but a new equilibrium calculated by the system from current conditions.
Complexity economics and complexity theory in general calls into question a lot of what we thought we knew about economics in the past, including the efficient markets theorem.
I’m not sure if this is true. If an economic law is predicting a genuine truth, there’s no advantage in defying that law.
The law of gravity, for example, predicts how fast you will fall towards the ground. But knowing this law doesn’t make it advantageous to act against the law of gravity and jump off a cliff.
I strongly disagree.
The whole point of capitalism and the free market is that some transactions are better than others. The advantage of free market capitalism is that the people who are making good choices benefit more than the people making bad choices.
But the bad choices exist and are made all the time. It’s ridiculous to assume that a car is perfectly priced and any other price would be worse. It’s very possible that the price is wrong because it was the result of a bad decision. Somebody might sell at a different price and find they’re gaining greater advantage for doing so.
Rules of economics?
I think it is more incentives of economics. At the very base level of economics you encounter barter. I have this, what will you give me for it? There is not a rule. There is need, resources, already complex interplay.
In the present, economics is so many levels removed from basic immediate needs that rules are multitude, broad and or ridiculously specific, absent in many realms, unenforced, perverted.
Economics can be approached as a science. But only in isolated instances. Which are increasingly harder to find and or define. I liken it to meteorology. A world of chaotic variables. But meteorology can at least depend on the same laws being present and enforced similarly in multiple areas. Economic “laws” are subject to politics and society locally. Of course the chaotic weather we seek to define with rules also affects economics.
What I find most relevant in the OP and his subsequent comments is that every “good” feature of economics he classifies as something businesses or people do, and every “bad” feature is something governments do.
Pretty see-through fig leaf there.
- I believe that the rest of my post answered your criticism.
- Developing a device that allows you to resist gravity (e.g. an airplane) gives you a business advantage over everyone else who decides that gravity is “the law” and that you can’t resist it.
What happens if we define “economics” as “the study of how societies produce, distribute, and consume the goods and services needed for life”?
I’m not seeing it.
To keep things clear, here’s your post in full:
Let’s take a very basic economic rule; supply and demand. This theory says you can predict the price changes of a product that will result from a change in the supply of or the demand for that product. If the demand increases without a change in the supply, the price will rise. If the supply increases without a change in the demand, the price will fall.
If I’m understanding your post correctly, you’re saying somebody could gain an advantage by acting against this rule. For example, a person could produce more of a scarce high-priced product and plan on selling it his additional products at the same high price - in other words, to defy the rule’s prediction that the price will drop.
As I said, I doubt this would work. The economic law of supply and demand is predicting a genuine truth. So trying to act against it, won’t produce a different result than the predicted one.
But, being able to demonstrate that there are ways to take advantage of supply and demand doesn’t mean that there are always going to be ways to abuse or circumvent the system.
Gravity is real strong. It took some real ingenuity and research to best it. How to convert kinetic force into food, on the other hand, was pretty straight-forward. Sometimes it’s going to be easy to take advantage of and abuse economic norms, other times it will be difficult, and yet other times it might be completely impossible without changing the basic nature of what a “human” is. But, likewise, we believe that it’s completely impossible to travel faster than light - but that’s only until some inventive bastard figures out a way to do it.
Ultimately, you need to play some amount of defense when you’re working with economics. The actors in the system will often have a motive to abuse any knowledge that we take from it, so it behooves you to think of what those might be and work against them, as part of trying to add new policy.
Okay, if I’m understanding you, I don’t think we’re really in disagreement. I think we’re just using different words. I agree that you can manipulate economic situations. But I feel it’s done by circumventing economic rules rather than defying them.