Me, myself, and economics: Specialization versus Interdependency

According to Wikipedia, the probably most widely used and most broadly reviewed encyclopaedia on earth, and the references cited therein, economics as a term was suggested by economists in order to establish their science “as a separate discipline outside of political science and other social sciences”. Looking back at my study of economics, I have to say that we probably pursued this intention a bit too far.

The definition for economics as well as economic science to be found in textbooks, dictionaries, and encyclopaedias often reduces our subject to concerns about “production, distribution, and consumption of goods and services”. In addition, we commonly narrow our investigations further down to only those goods and services whose exchanges are market outcomes or are at least accompanied by official transactions.  At the end, we frequently draw conclusions about optimality with regard to welfare and utility while a huge part of interactions, which our utility and welfare depend on, is not even taken into account.

It simply may not be a good idea to separate economic science from other social sciences, while final conclusions about the economic system can hardly be drawn independent of the social system it is embedded in. Instead of narrowing our perspective, we should rather reconsider a broader definition of economic science which is still used in some textbooks, according to which we should deal with all of those human activities that serve the satisfaction of needs. This does not only extent our investigation to individual behaviour aside from markets. It also emphasizes that it may be fundamentally wrong to exclude normative considerations from economic analysis. If our welfare and utility also depends on the satisfaction of needs for things like fairness and equality, our concept of efficiency has to be refined.

This already suggests that also the intended separation from political science has to face limits. In addition, every exchange and negotiation, on markets or not, crucially depends on initial endowment and corresponding bargaining power. Endowment as well as power is not god-given. Just like markets are not god-given institutions. They are manmade and just like every law and order they root in temporary compromises. There is no property right that does not depend on normative rules in the past. There is no economic outcome that does not depend on the institutional framework determined by the political system in charge.

For the same reasons, there may be no separation of economics from other social and political sciences without a corresponding loss in validity of our conclusions. While we certainly have to specialize in our disciplines, our disciplines themselves should not specialize more than there interdependencies allow for.

References

Wikipedia, https://en.wikipedia.org/wiki/Economics. (last access 29.01.2017)
The Free Dictionary, http://www.thefreedictionary.com/economic+science. (last access 29.01.2017)
Wöhe, Günter and Ulrich Döring (2008). Einführung in die Allgemeine Betriebswirtschaftslehre. 23rd ed. München: Vahlen. (p. 1)
Estrin, Saul, David Laidler, and Michael Dietrich (2008). Microeconomics. 5th ed. Edinburgh: Pearson Education and Prentice Hall. (p. 1)
Snyder, Christopher and Walter Nicholson (2008). Microeconomic Theory: Basic Principles and Extensions. 10th ed. Mason: South-Western. (p. 6)
Pindyck, Robert and Daniel Rubinfeld (2009). Mikroökonomie. 7th ed. München: Pearson Studium. (p. 27)

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One thought on “Me, myself, and economics: Specialization versus Interdependency

  1. This has never been my understanding of economics, and I don’t think it does justice to the wealth of issues economists are interested about. In my view, economics is a particular way of doing social science. It’s a method rather than a subject. Economics sees social phenomena as the result of the interaction of individuals who act according to certain goals (preferences) and are subject to certain constraints. It is a way of deriving useful hypotheses about the real world (that’s what economic theorists do) that ought to be tested against empirical observations in a systematic way (that’s what econometricians do). This approach has been found useful for a vast area of social questions. Just look at the current issues of the AER, QJE, Econometrica or other leading journals and you’ll see papers on politics, sociology, geography, history, law, psychology, etc.

    You are right to complain that textbooks usually don’t reflect the breadth of economics, although I know one that does: “Hidden Order” by David Friedman, which I always recommend.

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