Wednesday, June 08, 2011

These three swashers

There are three types of economics:

1) The philosophical study of what kind of economy it is morally right to have. For lack of a better term, this is usually called "political economy."

2) The science of economics. This includes a broad spectrum of topics: with the study of mathematical optimisation at one end, and the sociology of market microstructure at the other. It is concerned with the objective (insofar as it is possible) study of the economy as it is (or of abstractions of same).

3) The practical discipline of applying the lessons learned in the science of economics (2) in the pursuit of the ends identified in the philosophy of political economy (1).

Too many "economists" do themselves a disservice by doing (3) without having the honesty to admit they do (1), or that doing (1) is even necessary or possible. This means that they do (1) badly and (2) even more so.

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