Nov 26, 2007

I have took a trip with three economists to New York. And we talked many things.

I think the economists treat the economics as neutral. For example, they implicitly change the definition of profit when they talk about two different situations such as family and company. When they talk about family, the profit includes their happiness. But when they talk about company, the profit excludes the concept of happiness or the meaning of happiness changes. My point is that if the economics and the concept of profit can be separated, I have no complain for economics. I mean economics can be right when the definition of profit is right.

I can find an analogy for this point in physics. When scientists explorer the filed of nuclear, people made nuclear weapon. Some scientists said science is neutral, and people have to equip the wisdom and responsibility for the power. I think maybe some people who suffered the radioactivity from nuclear weapon or nuclear plant will hate the science itself. It is similar with the case that people who suffered the depressed economic environment really hate the economics itself. But science or economics maybe neutral.

I think if somebody want to improve the economic problems in real world, the question which is too abstract to discuss should be what the company should pursuit. And economics cannot give the answer. Furthermore, I think we cannot even recognize that there is problems, because they consider the problems as given constraints.

Albert Einstein who is famous for the formula, E=MC^2, left similar opinion in the famous article "Why Socialism?". One visitor for him said "Why are you so deeply opposed to the disappearance of the human race?" This question is similar with the question, "Why are you so deeply opposed to the death of the homeless?" I think it is not irrational. It is rational. Maybe science or economics is perfect enough. Somebody who considers only whether science or economics has any problem or not can have these kind of questions, because they does not show up any problems.


Petrik said...

most economists try to see the world as neutral, meaning they do not want to make normative statements ("you SHOULD do this or that") as they think this is unscientific. and indeed, no physicist would ever claim that two H and one O SHOULD make one water molecule, they just say....that is what happens. thus it is descriptive science. note however, that not all economics is like that and the world of economics is so politicized that it is indeed, hard to be truly value free.

furthermore, i think you are confusing the concept of utility with profit. a firm is profit maximizing in the sense that it maximizes the value of its sales minus the costs to produce the stuff. when you talk about a family, you talk about utility. a term that (i think) originated in the 19th century and means something like wellbeing. and so they are two different things. however, economics assumes that people are rational, and given their goals they try to maximize them by using the means that are efficient in reaching these goals.

so overall i think, most economists try to be neutral, because they want to explain how things are connected, what the causal mechanisms are, once they know them most of them do have values. nobody is value free. also i think economist do distinguish the concept of profit from the concept of utility. thus i do not think your attack against econ is justified.

Jay said...

Oh.. Thank you petrik. I'm so glad to read your comment. You gave me some correct terms such as 'utility' or 'descriptive science.'

But I don't think the point of my article is attacking or criticizing economics. I just wrote down what I have though descriptively.

Anonymous said...

I think you finally figure out that Economics is not the messy concern about money, but a reasoning methodology of the whole world. I should say, just as any reasoning in the phylosophy word, we "define" first, "assume" second, "connect" third, and finally we "balance". The beauty of economics lies in the will that we are trying to "defind" as loose as possible, trying to "assume" as close to the reality as possible, after "connect" them, we are trying to "balance" them both fairly and efficiently.
We do respect life, not only the rich but also the poor;
We do concern about the time,long run and short run are weighted carefully,
We do feel sad when the money make the world troublesome, but we still do not want to expel it since there is no better way than that.
The real economics is the reasoning spirit of the whole world, the money is only the temperal tool he or she may use.Who knows what will happen then...

Black Beauty

Jay said...

Thank RongRong for your comment. I respect your point of view, "It is not perfect but the best."

Hellen said...

I just want to add one point that Physicist can do controlled experiment in their laboratory, however, macroeconomists never have such chances to test their theoretical ideas. All their chocies are closely related to social wellbeing, so they must be very cautious. And I believe in this sense, Albert Einstein is correct that "we should be on our guard not to overestimate science and scientific methods when it is a question of human problems".

Jay said...

Thank you hellen for your comment. Yes, maybe it is unique characteristics of economics.

Petrik said...

"we should be on our guard not to overestimate science and scientific methods when it is a question of human problems"

spoken like a true austrian.