Chapter 5 Chapter 3 Economic Generalization or Economic Law

The first section of economics requires induction and deduction, but for different purposes, the proportions of these two methods are also different. The job of economics, like almost every other science, is to gather facts, organize and interpret them, and draw conclusions from those facts. "Observation and explanation, definitions and classifications are preparatory work. But what we hope to gain from them is a knowledge of the interdependence of economic phenomena. . . . Both induction and deduction are necessary methods of scientific thought, Just as the left and right legs are indispensable to walking." This double work requires methods not peculiar to economics, but common to all sciences.Economists must also employ all methods of seeking causality that are described in treatises on the method of science—no method of investigation can properly be called the method of economics; appropriate, either alone or in combination with other methods.As in the game of chess, the variations possible on the board are so great that no two games are ever quite alike; For what it's worth, never do it the exact same way twice.

But in some branches of economic research, and for some purposes, it is more important to study new facts than to explore the correlations and interpretations of the facts we already have.While in other branches it is still difficult to ascertain whether the apparent and first causes of any event are its real and sole Careful examination is more urgent than seeking more facts. For these and other reasons, it has often been, and I fear it will often be, necessary to have scholars of different talents and purposes at the same time, some devoted to the study of facts, some to scientific analysis. ; that is, the division of complex facts into parts, and the study of the relations of the parts to each other and to related facts.We want these two schools—the analytical school and the historical school—to exist forever; each doing its work thoroughly, and each making use of the work of the other.Thus we are best able to obtain correct generalizations about the past, and from them reliable guidance for the future.

Section 2. The nature of laws: the accuracy of various laws of natural science is different.The laws of society and economy correspond to the laws of the more complex and less precise natural sciences. The most advanced natural sciences, which go beyond the achievements of the brilliant genius of the Greeks, are not, strictly speaking, "exact sciences."But they all aim at precision.That is to say, they all aim at reducing the results of many observations to a provisional statement with sufficient precision to stand the test of other observations of nature.These accounts rarely have high authority when they are first published.But after they have been tested by many independent observations, and especially after they have been used successfully to predict future events or the results of new experiments, they become regularities.Science advances by increasing the number and precision of its laws; by subjecting these laws to increasing scrutiny; by enlarging the range of these laws until a single general law encompasses and replaces many of the more rigorous ones. narrower laws, and these narrower laws have proved to be many special instances of this broad law.

This is true of any science, for the scholar of science can, under certain circumstances, be authoritative—greater than he has any authority (perhaps more than any capable but by his own ability, neglecting greater authority than the thinker whose results were obtained by previous generations of scholars)—say what the result of a situation is, or what the real cause of a given event is. The subjects of certain progressive natural sciences cannot be measured quite correctly, at least at present, but the progress of these sciences depends on the extensive cooperation of many scholars.They weigh their facts and interpret their narratives as correctly as possible: each researcher can thus begin nearest to where previous scholars left off.Economics wishes to have a place in this class of sciences: for its measurements are seldom exact, and such measurements are never final;

But it is constantly striving to make this measure more precise, and thus to enlarge the range of things which the individual scholar can say with authority in his science. The third section continues. Let us then consider in some detail the nature of economic laws and their limitations.Every cause has a tendency, if not hindered, to produce some definite effect.Thus gravity causes things to fall to the ground: but when a balloon is filled with a gas lighter than air, gravity tends to make it fall, but the pressure of the air makes it rise.The law of gravitation says how two things attract each other; how they move toward each other, and if there is no hindrance, they will move toward each other.So, the law of gravitation is a statement about tendencies.

This narrative is a remarkably precise one—accurate enough that mathematicians can calculate the nautical almanac that shows the moment at which each of Jupiter's moons will fall behind Jupiter.Mathematicians have been making such calculations for many years; navigators take their almanacs to sea and use them to find out where they are.Now there is no economic tendency which acts so invariably and which is so precisely measured: therefore there is no economic law which can be compared with the law of gravitation. But let's study a less sophisticated science than astronomy.The science that studies tides explains how tides rise and fall twice a day under the influence of the sun and moon: how they are high during the half-moon; How to rise high like Severn; and so on.Thus, having studied the level of water and land around the British Isles, one can calculate in advance when on any given day the tide will rise highest at London Bridge or Grosseis; and how high it will be there.They had to use the word approximately, which astronomers do not have to use when speaking of the eclipses of the moons of Jupiter.For although many factors act on Jupiter and its moons, each of them acts in a definite way that can be predicted: but no one knows enough about the weather to know in advance that it will What happens.A heavy rain on the upper Thames, or a violent north-easterly wind from the German Sea, can make the tide at London Bridge very different from what is expected.

The laws of economics can be compared with the laws of tides, but not with the simple and precise laws of gravitation.For the activities of men are so varied and indeterminate that in the sciences of human behaviour, the best descriptions of tendencies that we can make must be imprecise and defective.This may be taken as a reason why no account can be made of human behavior; but that would amount to giving up our lives almost.Life is human action, and the thoughts and feelings that arise in action.Because of the fundamental impulses of human nature, all of us—higher and lower, learned and unlearned—are constantly striving, in varying degrees, to understand the direction of human activity and to make this direction For our purposes, whether self-interested or others, noble or ignoble.Since we have to form to ourselves certain concepts about the tendencies of human activity, we have a choice between forming these concepts hastily or forming them carefully.The more difficult the task, the greater the need for continual patient research; to make use of the experience gained by the more advanced natural sciences; to make as far as we can, considered or provisional estimates of the tendencies of human activity. law.

Section IV is the relativity of the term normal. The term "law" therefore means nothing more than a more or less reliable and definite statement of general propositions or tendencies.In every science there are many such statements: but we do not give to them all a formal quality, and call them laws, nor can we do so.We must choose; a choice to be determined more by practical convenience than by purely scientific investigation.If there is any general statement, which we often have to quote, so that we have more trouble to refer to it in detail when necessary, than to add a formal statement and add a new name to the discussion. If it is big, then give it a special name, otherwise, it doesn't have to be so.

Thus, a law of social science, a social law, is a statement of a social disposition; that is to say, a statement of a certain disposition of activities which we can expect under certain circumstances from the members of a certain social group. Economic laws, the description of economic dispositions, are social laws relating to a certain kind of behavior, and the strength of the motives with which this behavior is mainly concerned can be measured in terms of money prices. Thus there is no strict and clear distinction between social laws taken as economic laws and social laws not taken as economic laws.For from social laws of motives, which are almost entirely measurable in terms of prices, to social laws of such motives, which are of little importance, there is a constant gradation, which is, therefore, far less precise and correct than economic laws. , just as the laws of economics are far inferior to the more precise laws of natural science.

The adjective equivalent to the noun "regular" is "legal."But the use of this adjective is relevant only when the law is interpreted in the sense of a government order, not when it is interpreted as a statement of causal relations. The adjective used for the latter purpose is derived from the word "model," a noun nearly equivalent to "law," and which may be advantageously used in place of law in scientific discussions.According to the definition of our economic law, we can say: a certain activity that we can expect of members of an industrial group under certain conditions is the normal activity of the members of that group related to that condition.

This use of the word normal has been misunderstood; it may be instructive to say something about the unity that runs through its various uses.When we speak of a good man or a strong man, we mean the superiority or strength of those particular physical, mental, and moral qualities in the context.A strong judge seldom has the same attributes as a strong boatman; a good jockey does not often have excellent morals.In the same way, every use of the word normal implies certain tendencies which seem more or less fixed and permanent in their action to predominate over those which are more exceptional and intermittent.Sickness is an abnormal state of being human: but it is also abnormal to never be sick in a long life.When the snow melts, the water of the Rhine is higher than its normal level: but in the cold and dry spring, the river is not as high as usual, and we can say that the river is abnormally low (in a depending on the time of year).In all these cases, the normal results are the expected results of those tendencies referred to by the context; or, in other words, the results that correspond to the "statements of tendencies," the laws or paradigms appropriate to the context. . According to the above point of view, we say that normal economic activities are, under certain conditions (assuming these conditions are permanent), the members of an industrial group will finally take place in the economic activities.A bricklayer in most parts of the UK is willing to work for tenpence an hour, but if he works for sevenpence an hour, he will not work. This is a normal situation.Perhaps it is not uncommon for bricklayers in the district of Johannesburg to refuse to work for much less than a pound a day.The normal price of a really fresh egg, whatever the time of year, may be a penny a penny, but in a city during the first month it may be threepence; Twopence a piece may be an unnaturally low price if it is warm in season. Another misunderstanding to be guarded against arises from the notion that economic results are normal only if they occur because the effects of free competition are not hindered.But the term normal must often be applied to cases where perfectly free competition does not exist, or cannot even be assumed to exist; and even where free competition prevails most, the normal state of every fact and tendency involves Some of the important factors that are not even related to competition are included.Thus, for example, many transactions in retail and wholesale trade, and in securities and cotton exchanges, are normally conducted on the assumption that unwitnessed verbal contracts will be justly performed; Some parts of the doctrine of normal value do not apply.Secondly, the prices of securities on the stock exchanges are "normally" influenced not only by ordinary buyers but also by the brokers' own patriotic sentiments, etc. Finally, some people sometimes mistake normal activities in economics for morally just activities.But this can only be understood if the context implies judging the activity from an ethical point of view.When we consider the facts of the world as they are rather than as they should be, we shall have to treat many of the activities which we should try to prevent as being "normal" for the situation we are studying. ".For example, the normal condition of the poorest inhabitants of a large city is lack of enterprise and reluctance to take advantage of the opportunities of a healthier and less squalid life elsewhere; , spiritual and moral strength.Labor willing to make matchboxes for very low wages is in abundance and is a normal condition, just as crooked limbs are a normal consequence of taking Strychnine. This is a result—a sad result—of those tendencies whose laws we must study.This illustrates a feature that economics shares with several other sciences, that the nature of their data can be changed by human effort.Science can suggest a moral or practical lesson to alter that nature, and thus alter the workings of the laws of nature.For example, economics can suggest practical ways to replace those who can only make matchboxes with capable workers; just as physiology can suggest ways to improve the breed of cattle so that they will grow faster and be lighter and more fleshy.The laws of credit and price movements have been greatly changed by the improvement of forecasting power. Again, when "normal" prices are compared with temporary or market prices, the term "normal" refers to the eventual preponderance of certain tendencies under certain conditions.But this raises some difficult questions which will be discussed later. Section 5. All scientific doctrines implicitly employ conditions: but this element of assumption is especially prominent in economic laws.See Appendix IV. It is sometimes said that the laws of economics are "hypothetical".Of course, economics, like every other science, deals with the study of the effects of certain causes, but this causality is not absolute but subject to two conditions: first, ceteris paribus, second Second, that these causes are capable of producing certain effects unhindered.Almost every scientific doctrine, when it is carefully and formally stated, includes some proviso, ceteris paribus, that the stated causes operate in isolation; Certain effects, but presuppose that no other cause can be added than the clearly stated one.Nevertheless, the condition that a certain time must pass before a cause produces its effect is indeed a source of great difficulty in economics.For, if the time is too long, the material upon which the cause is based, and even the cause itself, may change;We will study this difficulty later. The hypothetical sentence contained in a law is not constantly repeated, but the common sense of the reader calls his own attention to this hypothetical sentence.In economics such statements need to be repeated more than elsewhere, because economic doctrines, more than any other scientific doctrines, are easily quoted out of context by those who have no scientific training and who may have only heard them indirectly.One of the reasons why everyday conversation is simpler in form than a scientific treatise is that we can safely omit hypothetical sentences in conversation, because if the listener does not pay attention to such sentences himself, we will soon find out If there is a misunderstanding, it should be corrected.Adam Smith and many other economic writers of previous generations, according to the habit of conversation, have omitted the hypothetical sentences, thus obtaining the apparent brevity.But this keeps them constantly misunderstood, and causes much time and trouble in useless disputes; the apparent peace of mind they gain is not worth the gain. Economic analysis and reasoning in general are widely used, but each age and each country has its own problems; every change in social conditions requires new developments in economic theory.