“I’m a Total Believer In Gravity Too, Man!”
It is strange how politicized the general perception of science is. One issue is the “scientism” that permeates any discussion on knowledge and research, which claims that there is only The Scientific Method (inductive data analysis). This issue is quite problematic in its own right, but the topic of this post is another: the eagerness with which the ignorant public dismisses certain scientific disciplines and expresses support of others. This is as strange as it is unfortunate – if not harmful.
It is understandable that the social sciences are considered “soft” compared to the natural sciences. They are, so this perception is accurate. However, no one would think of simply dismissing sociology (though I probably would) or political science for being ideological opinion-making rather than scientific. Yet that is what happens all too often with economics, the so-called “queen” of the social sciences. It is difficult to understand why the oldest, most tested, and consequently most verified and reliable of the social sciences is commonly dismissed – by those who know close to nothing about it.
I have previously mentioned this strange view of economics among the general public, but of interest here is how economic truths are treated. What economists used to refer to as “economic law,” the indisputable truths about the functioning of the economic market system, are considered “relative” or rather “arbitrary.” While those ignorant of the discipline can have whatever opinion they like, it is strange that it has become and ideal and commonly shared perception of the discipline that it doesn’t matter.
Listening to an interview in a podcast recently, I encountered a fascinating statement by the interviewee. After discussing the impact of profits and similar incentives in a certain industry, this person exclaimed: “I’m a believer in supply and demand. Totally.”
I doubt this statement raised any eyebrows for most listeners, and it certainly didn’t for the interviewer, but I found it as fascinating as it is ignorant. That price is decided by demand and available supply isn’t an opinion that is open for support and/or interpretation. It is the truth, and it is a necessary fact. But that is obviously not how the interviewee sees it. He’s a supporter, a “believer” in supply and demand. (Of course, the discussion in which this statement was uttered showed little if any understanding for the concepts or the theory.)
What does it mean to “believe” in supply and demand? To me, as an economist in the Austrian school, saying one believes in supply and demand is about as relevant as stating that one “believes” in gravity. A belief isn’t a fact; it is a much weaker statement. People can believe the very opposite, and while we disagree with them it too is a possible and an okay belief.
But reality has it otherwise. If you don’t “believe” in gravity you are welcome to act accordingly. Try walking over the edge at the nearest abyss, and you will find that your belief was quite obviously wrong. Factually wrong. There is, in other words, no reason for you to cling to that belief. Reality will, to anthropomorphize, “punish” you for not believing according to facts.
The same goes for supply and demand, even though nobody seems willing to accept this or acting according to their belief. It is like stating one’s firm disbelief in gravity while acting in accordance with gravity. Because this is how people act – in accordance with economic law – even though they state their disbelief or even dismiss economics as “false.” If you truly believe economic law is inapplicable or untrue, then you are most welcome to act this way. All that is necessary is to sell or buy at prices that are non-market prices and thus unrelated to the “supply and demand” doctrine. In other words, set a price that is way too high or way too low (as compared to the market or equilibrium price).
The effect is obvious: you will very soon run out of resources (whether goods, services, or money) and go bankrupt. The applicability and truth in economic law is irrefutable.
If supply and demand is not your thing, you may try to allocate your resources in ways that are not maximizing. Though this is a practical impossibility (since values are subjective, and one cannot choose differently since this by definition reveals a real value ranking that is different from that stated), at least it is possible to act counter to the straw man by acting in such a way that is “obviously” not in one’s best interest. Yet this too seems to be something that those who do not “believe” in economic law avoid; instead, they act in accordance with economic law and speak the opposite.
One might not benefit much from holding the uninformed to their words, but it is indeed strange that those most vociferously opposed to anything economics-y are such hypocrites. This is very troublesome since it indicates a quite foundational disconnect between belief in speech and action. How can we make progress with such contradictory
Structured, rational thinking about community, cooperation, and the market