Modern Economics: Natural or Social Science?

Modern Economics: Natural or Social Science?

Economics is a natural science because natural science is about the study of objects rather than subjects. Labor, land, and money, the basic elements of economics, are all commodities of modern economics (objects of commerce), i.e. humans are reified (made into objects) thus losing any consideration as subjects.

“A market economy is an economic system controlled, regulated, and directed by market prices; order in the production and distribution of goods is entrusted to this self-regulating mechanism.”

Such a system contains the following assumptions:

  1. Human behavior is such as to seek maximum money gains
  2. The supply of goods and services are available based on demand at market prices
  3. Money, functioning as buying power, is in the hands of prospective buyers
  4. Nothing beyond prices must interfere with markets
  5. All incomes are supplied through markets
  6. Prices, supply, and demand respond only to market forces

Production and distribution will thus depend upon market prices alone. “Self-regulation implies that all production is for sale on the market and all incomes derive from such sales.”

Under feudalism and the guild system land and labor formed a part of the social organization: the status and function of land were determined by legal and provincial rules, all questions about land were removed from any organized market of buying and selling and subjected to various institutional regulations; the same was true regarding matters of labor, the relations between journeymen and apprentice, the terms of craft, and the wages were regulated by the custom and rule of the guild and the town.

“The self-regulating market demands nothing less than the institutional separation of society into an economic and a political sphere…It might be argued that the separateness of the two spheres obtains in every type of society at all times. Such an inference, however, would be based on a fallacy…normally, the economic order is merely a function of the social order…Nineteenth-century society, in which economic activity was isolated and imputed to a distinctive economic motive, was a singular departure.”

A self-regulating market cannot exist unless society is subordinated to its requirements; a market economy can exist only in a market society.

Quotes from The Great Transformation: The Political and Economic Origins of Our Time by Karl Polanyi