Toward A Truly Free Market
The Innocence Mission: The Brotherhood of Man

Are There Laws of Economics?

From Toward a Truly Free Market:

There are certain tendencies in human beings that allow us to make lawlike statements. People do tend to buy more of a product when it is cheaper, and they tend to make more of that product when it is dearer; between these two tendencies, we really can posit supply and demand curves, and we can, at least in the abstract, discover the equilibrium point between these two tendencies. And while the result of our calculations will not be a law in the sense that gravity is a law, in that it cannot be violated, it will be lawlike: that is, useful enough for us to give useful descriptions of a particular economy. All of this is true. But the real difficulties in human thought come not so much as an argument between truth and error (pure error is too easy to spot), but between greater truths and lesser truths. Correct thought is a matter of arranging truths in their proper hierarchies, of not allowing a lesser truth to displace a greater, or of not reducing all truths to one truth. This last error is the besetting sin of economists because, to make economics work as physics works, guided by physical measurement and ruled by pure mathematics, they have to reduce man to a physical object in a world of physical objects. They have to reduce man's labor to a mere commodity, purchased at the lowest value like any commodity; they have to reduce man to an economic calculater, the mythical homo economicus. Mostly, they have to divorce the economic question, as Disraeli desired, from any question of ethics. But one cannot found a science on a myth. Nor can one reduce man to something he clearly is not, or at least is not completely. Man occupies a moral universe as well as a physical one, and to ignore the place he occupies is to lose the man and hence lose the science.


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Excellent post, Maclin.

Thanks, but just to make sure there's no misunderstanding: it's all a quote from Medaille, except the first line.

Perhaps if we stopped using the word "law" to refer to tendencies in human nature we'd be less tempted towards reductionism. We could use "rule of thumb" instead: the rule of thumb of supply and demand, the rule of thumb of unintended consequences, Murphy's rule of thumb....

"Murphy's rule of thumb"--I like that. Yeah, if God has trouble enforcing his laws on us, what chance does a sociologist or economist have? :-)

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