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Published online by Cambridge University Press: 18 July 2011
There is not a great deal to be said about economics which is truly universal. One can say that economics is the study of economic systems. Economic systems can be defined as systems of human actions concerned with the production and the distribution of goods and services which are scarce relative to the wants of the community. But statements of this kind, which attempt to define the economic aspect of human society in universally valid terms, are far too general to serve as premises from which an economic theory, useful for understanding actual economic problems, can be logically deduced. To have theory, one must start with premises and assumptions about some particular economic system, historically given, or some particular kind of economic system. The great bodies of economic thought of the Western world—mercantilism, classical and neo-classical economic liberalism, and the various schools of Marxist economic—have been theories relevant to particular economic systems: those, let us say, of the Western world in the seventeenth, eighteenth, and nineteenth centuries.
1 This is not, of course, to deny that scientific truth for its own sake (like beauty) is not or should not be a valuable human end. Science (like the arts) is a valuable human activity not only for its social utility but also for its own sake. In general, however, societies—particularly modern Western society—allocate many more resources to applied science than to theoretical, or fundamental, science.
2 It is doubtless true, as Whitehead says, that there can be spontaneous creativity in the biological and even the physical realms which results in the emergence at extremely long intervals of new patterns of structure (laws). From a human standpoint, however, physical and biological laws appear as immutable conditions of existence.
3 Contemporary philosophy has pretty well demolished the positivistic premises of the search for universal laws of social and economic development. Nevertheless, the hope persists among some social scientists that such laws may be discovered after more data about social and economic change have been accumulated.
4 Eucken, Walter, This Unsuccessful Age, Edinburgh and London, 1951, p. 83.Google Scholar
5 Colm, Gerhard, “Economies Today,” Social Research, IV (May 1937), pp. 191–92.Google Scholar
6 As Schumpeter, Galbraith, and Walter Eucken have pointed out from widely different ideological standpoints. I do not mean, of course, that contemporary markets are more competitive than fifty or a hundred years ago in the sense of atomistic price competition.
7 Similarly, Marxism has been unable to account for the behavior of contemporary non-Soviet industrial economies, which have fulfilled few, if any, of Marxism's characteristic expectations. These expectations, it should be noted, follow rigorously from Marx's original psychological and sociological assumptions, some of which are quite similar to those of the classicists—e.g., the inescapable impulse of the capitalist class to maximize money incomes—and some quite different—e.g., the assumption that economic classes rather than individual economic men are the significant social units. Moreover, Communist tactics of ideological competition and political subversion constantly belie the central dogma of Marxist social theory that a change in the mode of production is the sole efficient cause of changes in social thought and in the locus of political power.
8 In mathematical terms, models deducible from the classical and neo-classical assumptions are modified by the introduction of parameters, obtained by empirical observation, reflecting “non-economic” factors. Keynes' propensity to consume is the most familiar example of such a parameter.