Apr 16 2007

Marco Garofolo on the imperfect science of Economics

Marco’s IB Economics Blog: Class Discussion Continued

Marco, in the above post, brings up some serious questions about the science of economics. Good insights, as always Marco. I tend to agree with him on his main idea, that economics as a science tends to perhaps unwittingly make value-based judgments even as economists claim to be objective observers of some fundamental law or principle.

The risk with broadening economics’ focus to the Aristotelean “metaphysical” level that Marco speaks of is that a science rooted in the law of scarcity is scarcely equipped to deal with metaphysical resources beyond those very physical resources we deem to be finite (land/labor/capital).

Some economists, such as Julian Simon, have explored the idea of the infiniteness of resources due to the creativity and innovation of the human mind, claiming that any physical scarcity that may exist on our finite planet can be overcome as human ingenuity (the “ultimate resource”) constantly develops new and better means of employing those otherwise finite resources. Even this venture beyond classical economic thought runs the risk of shattering the foundations of the basic science, that is the belief, the TRUTH, that “scarcity exists”. If we accept this truth, and we accept that the market mechanism is an effective means of dealing with scarcity, then we have no other choice than to embrace the price mechanism in all its materialistic and dehumanizing, “Machiavellian” glory.

“…as a social study, economics studies society and the world around us. However, that does then not mean that we should only perceive the world in terms of economics, and economics today connotes profit maximization.”

As Marco says, “we should not only perceive the world in terms of economics”. On this point I could not agree with him more. Indeed, economics may not provide you or me with answers to life’s most basic questions, like where I’ll go when I die; but one question this imperfect science will help answer is how will my basic needs be met while I’m here on this earth burdened with the curse of scarcity? The answer? Markets. Alas, the invisible hand of which Smith spoke may not be that of God, rather that of the Almighty Dollar.

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About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

2 responses so far

2 Responses to “Marco Garofolo on the imperfect science of Economics”

  1. andrewon 18 Apr 2007 at 12:15 pm

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  2. Efl Activitieson 19 Jan 2015 at 6:48 pm

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    Marco Garofolo on the imperfect science of Economics | Economics in Plain English