1.2 – What is Economics?
Learning Objectives
By the end of this section, you will be able to:
- Define economics in three different ways
- Describe pluralism as it applies to the study of economics
- Discuss the interrelationships of economic theory, policy, politics, and ideology
If you were to consult a dictionary for a definition of economics, you’d probably get something like Merriam-Webster’s: “a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services.” But, if you asked an economist, she might reply with something quite different.
For instance, many economists will define economics as the study of the allocation of limited resources over unlimited wants. Others would be more inclined to say it’s the study of social provisioning, of the development of political economies rooted in social, political, natural, and cultural processes.
The next three chapters will use these definitions as part of an explanation for how different groups of economists do economics differently. For this chapter, it’s fine simply to accept the dictionary definition of economics as the study of the production, distribution, and consumption of goods and services.
But why, then, do we need other definitions? In short, because economics is not the unified theory of the universal laws of economic activity that many assume it is. Economics is not like physics, where the law of gravity and the speed of light are scientific facts to be discovered and understood as isolated and unchanging facets of reality. (In fact, that wouldn’t even be a good way of describing physics–not, at the very least, in the conspicuous absence of a Grand Unified Theory, or GUT.)
No, the field of economics is really a collection of different approaches, different methods and theories, and different policy prescriptions. Sometimes these may come into agreement with each other, and sometimes they may be fundamentally contradictory. And because of this it only makes sense that we should study the subject pluralistically. Pluralism, here, simply means the coexistence and participation of multiple theoretical perspectives economics. Throughout this text, you will learn about not one but two broad perspectives. We’ll call these ‘orthodox’ and ‘heterodox’, and you’ll come to learn more about what they mean as you progress through this book.
It can be disappointing to learn that economics can’t tell us the one right theory of how exactly the economy works and, by implication, what we should (or shouldn’t) do to make it better. But just because we want for certainty doesn’t mean we can’t make progress in our understanding. Indeed, if we take a step back from our desire for definitive universals, we can see that there is value in the process of learning and advancing our admittedly limited knowledge about the economy.
Astrophysicist Carl Sagan famously observed: “we are a way for the cosmos to know itself.” Sagan may have read the