Economists's Problems In Economics

Economists are required to derive solutions to problems through policy recommendations and the irony is that these problems have emanated by the policies provided by them. This irony has been addressed by Nobel Laureate F.A. Hayek. He stated that economists adopted a ‘scientistic’ attitude for treating economics like physics which had culminated into policy failures. But in reality economics is not similar to physics because of three reasons.

Firstly the independent and dependent variables economists use to measure an economic theory may not necessarily be the important variables or rather even correct. But this is not the case for natural sciences like physics, chemistry or biology. Though this fact is known economists stressed importance

Economists are aware that unemployment is a sign of relative prices and wages being contorted and a shift will be required to lessen unemployment. Unfortunately economists can render the desired quantitative proof for the optimum level of prices or wages to although we know in general the cause of unemployment, economists cannot offer specific quantitative evidence of the right prices or wages to heal that unemployment. This gap persists purely due to economists not being able to average out the variables studied by them. Hayek explains this concept with an example. When physicists are measuring the velocity and acceleration of a swinging pendulum they don’t have to undergo the cumbersome process of measuring every atom. They can measure the mean of all the atoms, thus decreasing a huge quantity of independent variables. But in economics and other social sciences like psychology it is the exact opposite. Economists study human behaviour and other complex structures whose essence lies in the relationship that the independent variables have together and one cannot infer or extract meaning through this complexity without knowing that you are sacrificing some important

But other fields which are complex to understand and have many variables, we cannot design theories to explain it. The reason being a lot of facts need to be collected to actually test the theory. Suppose we were trying to predict the score of ball game then we would need to know the all the rules of the game and the mental and physical state of the players at the exact time the game was being played and their individual level of skills precisely at every moment. In reality we cannot possible know the exact facts. But a theory could be created to ascertain the score with the information available to us but the exact score cannot be predicted because all the necessary facts cannot be acquired. We could easily predict knowing the rules of the game if it is a soccer or basketball game and whether the team of player would score 20 points or more.

Scienticism of Economics is detrimental because predictions are made based on information we cannot ascertain or do not have and this claim by economists is likely to harm people. Any economist who propagates such claims will be bestowed with the intellectual power to solve complex issues plaguing society. This silent centralized approach indirectly creates blockages for solutions to emerge on their own through interaction between individuals; a basic feature of free