Economics (economic science)

Alegoria de la economía, de José Alcoverro, en el Edificio del Banco Hispano Americano de Madrid.

Symbol that represents the growth trend commonly associated with the economy.

Icon that shows notes and coins with the monetary symbol of weight popularly related to the economy.

The economy (from the Greek οἶκος oîkos 'house' and νομός nomós 'rule, law, prescription'; "household management") is the social science that studies the laws that govern the production, distribution and consumption of goods and services, as well as the economic models and systems in which they are carried out. carry out the various human economic activities.

For its study, economics is generally divided into two large branches, on the one hand, microeconomics, which studies the behavior of individual economic agents, and, on the other, macroeconomics, which studies the effects of all interactions between individual agents as a whole. global.

Since its origin, man has sought ways to satisfy his needs, which presents many obstacles since the source of most goods are non-renewable and perishable resources. The combination of these factors, the availability or not of goods, human needs and their social nature gave rise to the economy at the time.

The economy is born from the ever-growing needs of the main nucleus of society, which is the family. Just like the etymological origin of the term "economy" indicates, in a house many decisions must be made, among which must be decided what tasks will be carried out by each of its members and what they will receive in return. An example of the natural administration that occurs in a house is the one who, lending his "labor", cooks or washes clothes and as payment receives an extra dessert at dinner or decides what will be seen on tv. In short, in a family the resources, which are exhaustible, must be distributed among the different members according to their abilities, efforts and desires. Like a house, society faces numerous decisions on a day-to-day basis.

A society must find a way to decide what jobs should be done and who will perform these tasks. People with different professions and trades are needed to work the land, others to make clothes, others to design and build buildings, etc. Once the various tasks have been assigned to the individuals who will carry them out (as well as the land, buildings, and machines), the different goods and services that will be produced and the manner in which they will be produced must likewise be designated. that the allocation of resources in society will be made.

The economy does not have much difficulty since it is a natural activity of the human being that derives to a large extent from their gregarious behavior, as seen in other animals that exhibit the same type of behavior such as ants or bees that among its individuals present a very specific division of tasks, which has the sole purpose of ensuring the survival of the complex colonies that they form in their anthills and hives respectively. Regardless of whether it refers to the economy of a city, a country or the world, the economy is simply a group of people interacting with each other on a daily basis. The behavior of an economy reflects the behavior of its individuals.

The economy as such has existed since man had to face the scarcity of resources and excess demand, as well as the fair and efficient distribution of them.

Economics as a science

Economics as a science is relatively young: it was born in the 18th century with Adam Smith, who in his book The Wealth of nations (1776), developed the first model of market economy.

Economics is a social science that studies human behavior and choices between alternative goods, in a context of scarcity of resources. That is, the economy studies the behavior of man in the face of scarcity of resources. For this reason it is said that economic activity is human, and economics is a social science.

Scarcity refers to the insufficiency of resources in the face of man's ever-growing needs, and to explain it, a distinction must be made between the types of goods available:

• Free goods: They are those who do not fail, that is, they exist in unlimited quantity, are not exclusive nor rivals; therefore their consumption does not generate any economic problem.

• Economic goods: They are those who are scarce, or are available in limited form, so at the same time they can be exclusive and rival. According to supply and demand laws, the market distributes them efficiently.

Being a social science, whose object of study is the economic behavior of man, the economy is transformed at the same time that the human being evolves.

The problem of economics is to solve and correctly allocate resources. To do this, the questions what, how, when, where and for whom to produce must be answered.

In the field of social sciences, economics is the closest to the exact sciences since it uses mathematical and statistical methods and its results can be predictable.

So, economics (as an economic science) is the social science that studies:

• The extraction, production, exchange, distribution and consumption of goods and services;
• The way or means of meeting unlimited human needs through limited resources;
• The way people and societies survive, prosper and function.
• Efficient distribution of productive factors in a society.

Therefore, economics can be defined as the science that studies «how a society is organized to produce its means of existence that, distributed among its members and consumed by them, allow the society to produce them again and so on., thus providing, in a constantly renewed form, the material basis for the whole of the reproduction of society in time».

Beyond the focus on economic processes (extraction, transformation, production, distribution, and consumption) economic analysis has been applied to business, finance, health care, and government. They can also be applied to disciplines as diverse as crime, education, family, law, public choice, religion, institutions, warfare, science, and the environment. At the turn of the 21st century, the expansive dominance of economics in the social sciences has been described as the imperialism of economics.

The ultimate goal of the economy is to improve people's material living conditions.

Definitions

In economics there are different points of view, depending on the approach adopted. Two of them stand out above all: the objective approach and the subjective approach; therefore, the objective definition and the subjective definition stand out, which refer to two theories of value (objective and subjective, respectively).

Classical objective definition

The classics did not speak of economics, but of political economy. In the same way that the mercantilists tried to increase the productive capital fund of the nation, also in order to increase the defensive capacity of the nation but, fighting the mercantilist policies, they tried to achieve it with a free exchange. An Inquiry into the Nature and Causes of the Wealth of Nations, written by Adam Smith, has few original aspects, but his overview has greatly influenced later economists. Wealth in those days meant a productive capital fund.

For a program of growth, Smith proposes, in the opening sentences of his major work:

• Reducing unproductive work, i.e. work that does not re-insumption of the next productive cycle, mainly the consumption of landowners who live in rents. This Smith concept owes it to the physicists he was with in Paris.
• Increase markets to facilitate greater division of labour. This concept includes specializations, technological improvements and inventions. Competition, i.e. the imitation of higher technologies, causes the division of labour to lower prices, increase real income and purchasing power that in turn allows to further deepen the division of labour. With regard to unproductive work, that is, a commodity or a service that will not be part of the next productive cycle, the division of labour is not important, since the lower price is not a cheaper insumption of the productive cycle that reduces the overall price level.

Marxist objective definition

The classic definition of the objective Marxist current is from Friedrich Engels, who states: «Political economy is the science that studies the laws that govern the production, distribution, circulation and consumption of material goods that satisfy needs human». Karl Marx in turn points out that economics is "the science that studies the social relations of production." It is also called "the science of correct administration", as opposed to the chrematistics. The objective Marxist current is based on historical materialism, it refers to the concept of work-value, so that value has its objective origin in the amount of work required to obtain goods. And it is historical because it conceives capitalism as a social form or organization corresponding to a certain historical moment. This definition has spawned a stream of economic thought now known as political economy.

Subjective or marginalist definition

The classic definition of the subjective or marginalist orientation is from Lionel Robbins, who affirms: «Economics is the science that deals with the study of the satisfaction of human needs through goods that, being scarce, have alternative uses between the which ones to choose".

Object of study

The purpose of economics is to study the distribution of economic goods, considering the processes of production, trade, distribution and consumption of these to satisfy the needs of the human being. In other words, it analyzes the decisions related to the resources that are available (limited) and the needs that they cover (unlimited although hierarchical), of the individuals recognized to make such decisions. The object of economics is very broad, since it covers the study and analysis of the following facts:

• How goods prices and productive factors (land, labour, capital and business skills) are set and how they are used to allocate resources.
• The behaviour of different types of markets and the way capital is allocated in society.
• The consequences of State intervention in society and its influence on market efficiency.
• The distribution of income and proposes the best methods of aid to poverty without altering economic results.
• The influence of public spending, taxes and the budget deficit of the State on the growth of countries.
• As economic cycles develop, their causes, the oscillations of unemployment and production, as well as the measures necessary to improve economic growth in the short and long term.
• The functioning of international trade and the consequences of establishing barriers to free trade.
• The growth of developing countries.

Basic economic concepts

• Benefit: the result of the difference in expenditure and income from an economic activity, if the costs are higher, losses will occur.
• Well: a good is all that satisfies a need and has a value.
• Service: it is a benefit intended to satisfy a personal or social need but it does not consist in the production of an object.
• Cost of life and inflation: the cost of life is the amount of the minimum costs necessary to obtain basic goods and services; to calculate it is added the value of a set of products and with this result the CPI index of consumer prices is defined. The rise in product prices is what we call inflation.
• Investment and speculation: investment is the amount of money that is intended to start a business or to keep it and improve it in order to obtain a profit. When you get a quick profit from a commercial operation based only on the price of the goods you talk about speculation.
• Market: a group of consumers who demand goods and services to all the producers who offer them.
• Production and productivity: we call production of goods and services generated by an economic activity. The relationship between what is produced and the means employed determines productivity. If high productivity is obtained using few means, production is said to be high. When many means are used but productivity is small, production is low.
• Gross domestic product (GDP) and per capita GDP: GDP is the total value of goods and services produced in a territory for a whole year. GDP reflects the wealth or income generated in that territory, but to know what the wealth or average income of its population is, that is, GDP per capita, the GDP of the territory considered among the number of its inhabitants must be divided. This does not consider the depreciation of the equipment, only its initial or new value, when you want to know the total value less depreciation, is called "PIN" Net internal product.

Social objectives of the economy

• Economic stability: The stability of prices has to do with avoiding inflation or deflation, as these can cause inequalities in the economy.
• Full employment: Full employment exists when the resources that are scarce in an economy (working hand) are used completely.
• Sustained economic growthNo drastic changes.
• Economic equity: Economic actions and policies are evaluated taking into account what people consider correct and incorrect, through the convenient distribution of economic resources, which will allow these resources to be combined in the best possible way to supply the necessary goods and services.
• Economic efficiency: Economic efficiency is the state in which an economic system achieves and uses scarce resources in a more productive way, generating greater or better results in services or goods than expected, without increasing production costs.
• Economic freedom: It refers to aspects such as the freedom of consumers to decide how to spend their money or save it and the freedom of workers to change employment.
• Economic growth: It has to do with the increase in the production of goods and services over time. It relates to the rate of increase in its population and its productivity. Economic growth is measured according to changes in the level of real gross domestic product (GDP).
• Economic security: Protects consumers, producers and owners of the resources of the risks that exist in society. Each society decides that risks are those that need protection and whether individuals, entrepreneurs or government should pay them.
• Successful distribution of income: It refers to a distribution according to the differences in initiative, effort and skill. The state serves as a balance in the redistribution of wealth through its power of expenditure.

Elements of economics study

1- Factors of production

• Earth

• Labour

This section is a work extract (economy).[chuckles]edit]

Mechanical worker adjusting a steam machine. Photograph by Lewis Hine (1920).

Allegory of work, in the monument to the Marquis of Larios (Malaga, Spain).

Work or work is the activity that people perform either as a duty or activity dependent on the profession, needs and desires of a wider community. Alternatively, work can be seen as the human activity that contributes (together with other production factors) to goods and services within an economy.

Throughout history and co-existing among them there have been many forms of organization of work and production such as, for example, homework or from an establishment, from slavery to a small artisan workshop, through servitude and parking. But since the 19th century and the industrial revolution and without disappearing other forms, wage labor is the dominant form. At present, wage work, self-employment (liberal professions, traders and others), informal or irregular work (which remains a wage but without the control of the festivities), servitude, as well as a level of unemployment (persons seeking and failing to obtain employment) still coexist.

The wage is the value of the work of the payment in the labour market, determined in a contract of work that can be carried out individually (individual contract of work) or collective (collective contract of work).

The work is essentially related to the construction and use of tools, and therefore to the technique and technology, as well as to the design of the processes of work and production (see: fordism, taylorism, toyotism).

In economy, work is generally a measure of real effort. According to the vision of the classical economy, it is one of three factors of production, along with land and capital. Great economists like Adam Smith, David Ricardo, among others, gave the job a central place in their theories. Karl Marx and John Maynard Keynes developed their economic theories around work and employment. From the Marxist economy it refers to the labor force and the theory of value-work.

• Capital

• Organization and business

2- Economic agents

• Private sector

This section is a private sector extract.[chuckles]edit]

Panes in a shop in Genoa. The production of bread is typically carried out by the private sector.

The private sector, which is opposed to the public sector, is that part of the economy that seeks profit in its activity and is not controlled by the State. By contrast, State-owned enterprises are part of the public sector. So, the private sector is composed of non-state and non-state enterprises families. Organizations private non-profits are included in the voluntary sector or third sector.

The legal forms in which the activities of the private sector can be carried out are very varied and range from the individual exercise by a person of a business activity to the large companies that are listed in stock and are owned by thousands of shareholders, through other forms such as the limited liability company, the property community, the temporary union of companies (UTE), etc. In each country the legislation collects some forms and assigns them certain characteristics. Although 2 countries share the same language and are valid in the same legal form, they may adopt different official denominations. There are also legal forms that exist in some countries and not in others. Even if the same legal form exists in 2 different countries with the same denomination, it may have different treatment and obligations in them.

• Public sector

3- Production or activity sectors

• Primary sector

This section is a primary sector extract.[chuckles]edit]

U.S. hay packing. Agriculture was one of the first members of the primary sector.

The primary sector consists of the [zwamels [economic activities]] related to the collection or extraction and transformation of natural resources with little or no manipulation. The main activities of the primary sector are the agricultural sector (agriculture and livestock), forestry (forest exploitation), apculture, aquaculture, fisheries, and hunting. Usually, primary products are used as raw material in industrial productions.

Industrial processes that are limited to adding value to natural resources, which are often considered part of the primary sector, especially if such a product is difficult to be transported in normal conditions at large distances.

The dominance of the primary sector, whether it is reduced to the agrarian sector or the whole of the extractive sectors, is often a defining feature of the economy of the underdeveloped countries. However, a number of developed countries also have strong primary sectors, which are added to added value-added production.

• Secondary sector

This section is a secondary sector extract.[chuckles]edit]

Ford Mounting Chain in Ontario, Canada. The automotive industry is one of the most luxurious representatives of the secondary sector.

The secondary sector is the industry sector that transforms raw material, extracted or produced by the primary sector, into consumer products, or in equipment goods. That is to say, while the primary sector is limited to directly obtaining the resources of nature, the secondary sector executes industrial procedures to transform such resources.

• Tertiary sector

This section is a service sector extract.[chuckles]edit]

Inside of a Zara shop. Retail trade is one of the closest representatives of the tertiary sector.

The services or tertiary sector is the economic sector that encompasses activities related to non-producing services or transformers of material goods. They generate services that are offered to meet the needs of any population in the world.

It includes subsectors such as trade, communications, call centre, finance, tourism, hospitality, leisure, culture, entertainment, public administration and so-called public services, provided by the State or private initiative (health, education, dependency care), among others.

It directs, organizes and facilitates the productive activity of the other sectors (primary and secondary sector). Although it is considered a production sector, its main role is in the next two steps of economic activity: distribution and consumption.

The predominance of the tertiary sector compared to the other two in the more developed economies allows us to speak of the tertiary process. The Bank of Sweden Award for Economics in Memory of Alfred Nobel, Paul Krugman argues that the lower productivity of the services sector and the difficulty in improving its productivity is the main factor of stagnation of living standards in many countries.

• Quaternary sector

This section is a Quaternary Sector Extract.[chuckles]edit]

The biotech researcher Laufey Hrólfsdóttir. Biotechnology companies are some of the first members of the quaternary sector.

The quaternary sector is a part of the economy whose characteristic is to be based on knowledge and to have impossible services to mechanize, such as the generation and exchange of information, technology, consultancy, education, research and development, financial planning among other mainly intellectual services or activities. The term has also been used to describe the media, culture and government: it can be key in the development of better youth as it also includes education.

In the quaternary sector, companies invest to ensure greater expansion, which is seen as a means of generating greater margins or profitability of investments. Research is aimed at reducing costs, taking advantage of markets, producing innovative ideas, new production methods and manufacturing methods, among others. For many sectors, such as the pharmaceutical industry, this sector is the highest added value, as it creates future brand products that the company will benefit in the future.

The Quaternary Sector includes activities related to the development and research of new technologies. These cutting-edge technologies apply to all sectors of the economy and lead to scientific-technological research; they are, for example, microelectronics, computer science, robotics, aerospace industry, telecommunications and biotechnology. This sector requires significant investments in human capital to cover the salaries and fees of employees, who have high training..

Branches into which the economy can be divided

Theoretical and Empirical Economics

• La theoretical economy It seeks to create models that explain economic phenomena (e.g. general balance).
• La Empirical economy seeks confirmation or refutation of such models through experimentation or access to empirical sources (e.g., Economic History).

Microeconomics and Macroeconomics

Economics is divided into two fields: microeconomics and macroeconomics.

• Micro-economy refers to the study of the elections made by individuals, companies and governments, called "economic agents"; that is, their behavior in the face of scarcity. Micro-economy explains how variables such as goods and services prices, wages, profit margin and income variations are determined. Economic agents will make decisions trying to get as much satisfaction or useful as possible.

• Macroeconomics refers to the study of the functioning of the national and global economy. It analyses aggregate variables, such as the total amount of goods and services produced, the total income, the level of employment, of productive resources, the balance of payments, the exchange rate and the overall behaviour of prices.
• The fields of mesoeconomy and metaeconomy have recently been added. However, they are not fully consolidated as the previous two.

Normative Economics and Positive Economics

In the sciences, a distinction is made between the analysis of what is and what should be, economics distinguishes between positive economics that studies what is (from an objective point of view), in this economic branch propositions can be demonstrated wrong based on actual observations. On the contrary, normative economics studies what should be (from a subjective point of view), so this approach depends on people's value judgments.

Orthodox and heterodox economics

• The orthodox or conventional economy is the one that is normally taught more in universities and mostly treats the triad rationality-individualism-balance.
• The heterodox economy forms a more heterogeneous and divergent body of economic analysis and encompasses other frameworks such as the triad institutions-history-social structure.

Political economy and business economics

• La political economy is the study of production and trade and its relations with law, customs and government, and with the distribution of national income and wealth. As a discipline, the political economy originated in moral philosophy in the centuryXVIII to explore the administration of the wealth of States.
• La economy of the company is the study of how to direct scarce resources in such a way that a directive goal is achieved as efficiently as possible. Contributing to increase the profitability and current value of the company.

Microeconomics is the branch of economic theory that studies the behavior of economic agents, that is, investors, companies, consumers and workers ° The economy also focuses on the behavior of individuals, their interaction in the face of certain events and the effect they produce on their environment. For example, the effect they produce on prices, production, wealth or consumption, among others. It is a social science because it studies human activity and behavior, which is a highly dynamic subject of study. ° Capitalism is an economic and social system based on the fact that the means of production must be privately owned, the market serves as a mechanism to allocate scarce resources efficiently and capital serves as a source to generate wealth. A capitalist system is based mainly on the fact that the ownership of productive resources is private.

Multidisciplinary economics

In neoclassical theory there is a conception of the economic as a closed and autonomous system in which the other subsystems (political, technological, social, ecological,...) enter as restrictions of the autonomous system. However, while there has been resistance to the introduction of factors other than the market into theoretical models, their influence has been inevitable.

Currently, economics uses different disciplines to provide greater logical and empirical consistency to its propositions, as well as to increase the capacity of its predictions:

• Psychology to study in a more positivist and empirical sense how economic agents actually interact in markets; what engines motivate their decisions, and whether they are usually rational or not (behavioral economy)

• Philosophy to explain how the objectives are determined and to speculate about the normative, legal or moral order to subjugate the economic goals and behaviors of both natural and legal persons, as well as their contractual relationship with the State.

• History, with its respective field of economic history that studies how human beings have managed to meet their needs throughout this (through so-called economic systems). Since experiments cannot be carried out in the economy, it is a very important empirical source.

• Sociology that applies frames of reference, variables and sociological models associated with the distribution, production, and consumption of goods and services.

• Political science that explains the power relations that intervene in economic processes.

• The Law as a legal order that embraces and establishes the set of permitted economic behaviours, as well as the recognition of property rights, essential to the understanding of the modern economy.

• The statistics and mathematics applied to inform ordained, rigorously and reasonably any argument, hypothesis and theory, as well as to analyze data and create descriptive and prognostic models on economic phenomena.
• The applied computer sciences, which provide modern methodologies and powerful tools for computational simulation of hypothesis, as well as for modeling, managing and analyzing large amounts of economic data. In this regard, the computer economy and the artificial economy are a clear example.

• Economics and administration. These sciences are related because both study the following variables: demand, supply and markets, costs and income, utilities, financial aspects, among others.

Recently, research from natural disciplines such as neuroscience (neuroeconomics) or physics (econophysics) are trying to apply models and descriptions from such sciences to explain different economic behaviors. The economy, therefore, is a tremendously multidisciplinary area of study that requires a wide range of knowledge for its complete understanding.

History

This section is an excerpt from History of Economic Thought.[chuckles]edit]

The wealth of nations is considered the first modern book of economy

The history of economic thought is the branch of the economy that studies the history of intellectual efforts to understand and explain the common phenomena of nature. That is, it is the discipline that deals with the chronological process of birth, development and change of different ideas and different economies in different societies, showing the contribution of dominant economic thinking to the modern economy.

The classical authors spoke of Political Economy (Political Economy), not Economics. Over the years, the use of the word Economics became more and more because economists wanted to constitute an “authentic science” like Physics (Physics) or Mathematics. (Mathematics). Note the suffix of these English words.

The reason for going back to these changes in words is because Economics, when trying to do pure science like Physics, took notions from it: particles (economic agents), the principle of optimization (utility maximization and minimization of costs) and convergence to equilibrium (when the particles stabilize around some prices).

The research methodology in Economics initially consists of studying the system “without frictions”, to later incorporate them.

Criticism

General criticisms

"Gloomy Science" is the appellation given to economics by the Victorian-era historian Thomas Carlyle in the 19th century. It is said that Carlyle gave it this name in response to the writings of the Reverend Thomas Maltus, who predicted that the Malthusian catastrophe in which the starvation of much of humanity was predicted by the geometric growth of population versus the arithmetic of food. Despite this, the phrase was formulated by Carlyle in the context of a debate with John Stuart Mill about slavery, in which Carlyle argued in favor of it, and Mill against it.

Some economists, such as John Stuart Mill or Léon Walras, maintain that the production of wealth should not be associated with its distribution.

In The Wealth of Nations, Adam Smith pointed out many issues that are also the subject of debate. Smith repeatedly attacked politically aligned groups that wanted to influence governments in his favor. In Smith's day, these groups were referred to as "political factions," but are now called "special interest" groups, a term that can encompass international bankers, corporate conglomerates, oligopolies, monopolies, trade organizations and other groups.

Economics, as a social science, is independent of the political action of any government or decision-making organization. Despite this, many policy makers or individuals with a high position who can influence the lives of others are known to arbitrarily use a plethora of economic concepts and rhetoric as vehicles to legitimize political agendas and value systems, without limiting their observations. to issues relevant to their responsibility. The close relationship of economic practice and theory to politics is a focus of contention that can overshadow or distort the less pretentious principles of economics, and are often confused with specific social agendas and systems of economics. values.

However, economics has a legitimate role in informing and guiding government policy. Let us remember that this comes from the old field of political economy. Some academic economics journals are making greater efforts to build consensus among economists on certain policies in the hope of creating a more politically informed environment. Currently, there is a low degree of approval among professional economists for many public policies. Policy issues that stood out in a recent survey of AEA economists include trade restrictions, social security for those made unemployed by international competition, genetically modified food, recycling, health insurance (several issues), poor medical practice, barriers to entering the medical profession, organ donations, unhealthy food, mortgage deductions, internet sales taxes, casinos, and inflation targeting.

In Steady State Economics (1977), Herman Daly argues that there are logical inconsistencies between the emphasis on economic growth and the limited availability of natural resources.

Issues such as the independence of the central bank, its policies and the rhetoric in the speeches of its governors, or the premises of the State's macroeconomic, monetary or fiscal policy, are sources of contention and criticism.

Deirdre McCloskey has argued that many empirical studies are underreported, and she and Stephen Ziliak argue that while their criticism has been well received, practice has not improved. This latest contention is controversial.

A 2002 study by the International Monetary Fund looked at the "consensus predictions" (predictions by large groups of economists) that were made before 60 different national recessions in the 1990s: in 97% of the cases economists were unable to predict the contraction a year later. On the rare occasions that economists successfully predicted recessions, they significantly underestimated their severity.

Criticism of assumptions

Neoclassical economics has been criticized a lot because it depends on certain unrealistic, unverifiable, or highly simplified assumptions, which in some cases do nothing more than simplify the tests for the desired conclusion (not the true one). Examples of these assumptions include perfect information, profit maximization, and rational choice theory. The field of information economics includes both mathematical economics and behavioral economics research, which is related to studies in behavioral psychology..

However, prominent mainstream economists such as Keynes and Joskow have noted that much of economics is conceptual, rather than quantitative, and difficult to model and formalize quantitatively. In a discussion of oligopoly research, Paul Joskow pointed out in 1975 that in practice serious students of economics tend to use "informal models" based on qualitative factors specific to particular industries. Joskow had a strong feeling that the important work on oligopolies was done through informal observations while the formal models were "brought outex post". He argued that form models were unimportant in empirical work, and the fundamental factor behind the theory of the firm, behavior, was denied.

Philip Mirowski observes that:

The imperatives of the program of Orthodox research of economic science leave little room for manoeuvre and for originality.... These mandates... Appropriate as many mathematical techniques and metaphorical expressions of respectable contemporary science, mainly physical as possible.... The notions of the nineteenth century of the "natural order"... It strongly denies that neoclassical theory imperviously imitates physics.... First of all, it prevents any rival research program that invades you... ridiculing any external attempt to appropriate models of physics of the twentieth century.... All theorization is [in this way] taken as a hostage of the concept of the nineteenth century of energy.

In a series of peer-reviewed studies in journals and conferences, and books published over several decades, John McMurtry has long criticized what he calls "unexamined assumptions of economics, and their consequent cost to the economy." people's lives."

Nassim Nicholas Taleb and Michael Perelman are two more scholars who have criticized 'mainstream' economics. Taleb opposes most economic theorizing, which in his view suffers acutely from the overuse of Platonic Theory of Forms, and calls for the cancellation of the Nobel Prize in Economics, stating that the harm of economic theories can be devastating. Michael Perelman has provided a great deal of criticism of neoclassical economics and its assumptions in his books (and especially his books written since 2000), as well as in articles and interviews.

Despite these problems, conventional economics graduate programs are becoming more technical and mathematical.

Economics for Philosophers

Economy, for Aristotle, is the science that deals with the way in which resources are managed or the use of existing resources in order to satisfy the needs of individuals and human groups.

Its object of study is human activity and, therefore, it is a social science. The social sciences differ from the pure or natural sciences in that their claims cannot be refuted or validated by laboratory experiment and, therefore, they use a different modality of the scientific method. Hence its complexity and high level of uncertainty, using approximations, or at least defining the trend in the behavior of economic variables. On the other hand, the study subject is highly dynamic, so it is risky to venture to predict their behaviors with precision. On the other hand, the notions that derive from what economics "should be" are typical of normative economics and, as such, cannot be proven.

Economics is always justified by the human desire to satisfy its own ends. This aspect of the definition proposed by Robbins is debatable and is probably the least developed in the entire history of economic analysis, except perhaps for the Austrian School and especially for the production of other goods and services. This concept of cost, beyond the pure monetary concept, is typical of economists and is known as opportunity cost. In order to allocate resources, there must be criteria that allow social and economic tests to begin.

Main schools of economic thought