Economics III – Conclusion

Physics deals with the same underlying substance no matter what level it is being studied at. An experimental particle physicist deals with the same universe that the relativist or the quantum theorist deals with. The equations may change, the paradigms may change, but the real universe being studied doesn't. Of course one could question the nature of reality itself, but that's a different matter and for another time. The act of studying the universe, or the different theories for it doesn't change the actual universe in any way. It is just our description of it that changes. We are looking at the same thing just from different angles, different perspectives. However, economics isn't a science like physics.

Although economics, too, has many manifestations, unlike in physics, the differences between them are not merely skin deep. The economics at a larger scale is very different from the economics at a very small scale. Economics driven by one set of principles and ideologies is very different from that driven by a different set of principles and ideologies. These differences are not the result of looking at the same thing from different perspectives. They are the result of looking at entirely different things altogether. Thus economics, largely, is not a science where one discovers hidden relationships, but more of a craft where relationships are created.

Don't agree? Let's revisit the premise. Human existence, for the vast majority of people, serves one single need: preservation of the species. Yes, we have made computers and mobile phones and rockets and what not, but for what need? What purpose does all this serve? Before humans had made any of this, they were feeding and breeding, and that's exactly what they do even now. So we do it a little differently. Instead of foraging, we farm. Instead of living in caves, we build houses. Instead of hurling stones as weapons, we hurl other projectiles. The difference is only superficial, "lipstick on a pig". All our endeavors simply serve to dress up a primitive instinct in pretty packaging. Now, there are a few occupations that seem to rise above these primitive purposes and people in those occupations perhaps believe there is some greater purpose to human life than merely eating and reproducing. They ask questions like "why does the universe exist", "where did the universe come from", "who are we and why are we here" and so on. But the practical world is as unconcerned about them as they are about it. So I'll leave them out of this as well. This is about the rest of us.

Every other species survives and breeds without the knowledge of economics. They don't barter, they don't trade, they don't manufacture. Yes, I know nearly all of humanity will be offended by my constant comparison between humans and animals. However, I also know that nearly all of humanity will be unable to show me a better, higher purpose of human life. Ironically, the only people who could point to a loftier goal for humans are the ones that humanity disregards, as I mentioned earlier. The reason I say this is to point out that the laws of economics do not exist in nature. They are not natural laws, unlike, for example the laws of gravitation or electromagnetism. Although the wolves, the deer, the sparrows and the tunas do not know those natural laws, they are still subject to it. However, they are not subject to the laws of demand and supply. They are unaware of the concept of "price" or "elasticity". There is no money in the wild, and scarcity in nature (natural scarcity?) is very different from scarcity in our markets (artificial?).

The laws of economics are man made laws. Just like the laws of governments. And like the latter, the laws of economics can change from nation to nation, from society to society. They can be different at different places and different times. Not only that, it is also different for different structures in society. There is economics of the nation, economics of the firm and economics of the family or individual. A nation can print more money. A firm can sell more shares. But individuals must cut their coats according to their cloth. Just like administrative laws, laws of economics are merely whims of those who are in a position to enforce them. It is a curious fact that economics is even called a science. It is no more a science than politics is. Economists who fancy themselves to be scientists should send in their papers to their elected representatives for peer review. As a side remark I must say that numerical analysis of people's behavioral data isn't quite economics either, although some modern economists like to think so. People's behaviors are the results of the laws of the societies they live in and behavioral economists are missing the forest because of the trees.

Therefore to say that economics applies equally and universally to all humans and is necessary for human existence is incorrect. The argument that all progress we see around us is the result of economic thought may be true but that does not mean that the progress we see around us is the most optimal outcome. Progress compared to what? What we see around us may very well be the worst case. Or perhaps we made all the progress despite economics.