The Nature of Economic Laws
Economics has its own set of principles like other sciences, which are called the laws of Economics. Economic laws are nothing further than cautious conclusions and inferences drawn with the assistance of reasoning or by the help of observation of human and physical-nature. In everyday life, man is always busy in satisfying his unlimited wants with limited means. The principles which an average man usually follows when he is engaged in economic activity are named as, Economic Laws. Within the words of Marshall, "Economic tendencies are those social laws which suggests to the branches of conduct, in which the strength of motive chiefly concerned can be measured by money prices".
The nature of economic laws is less exact as compared to the laws of natural sciences like Physics, Chemistry, Biology, etc. An economist cannot forecast with surety as to what will take place in the near future and in the economic domain. He can only suggests or advise as to what is likely to happen in the near future. The reasons as to why Economic laws are not as exact as that of natural sciences are as follows.
1) In economics, we are concerned with man who has a freedom of will. He may act in whatever manner he likes, but in natural sciences he deals with matters. So the prediction of certainty in future actions is not possible. The element of uncertainty in human behavior results in making the laws of Economics less exact than the laws of natural sciences.
2) Economics is very difficult to collect factual data on which economic laws are to be based. Even if the data is collected it may change at any moment due to sudden changes in the tastes, trends, attitude of the people.
3) In the words of Marshall, the laws of economies are compared with the laws of tides writes rather than with the simple and the exact law of gravitation. The reason comparing the laws of Economics with the laws of tides by Marshall is that the laws of tides are also not exact. The rise of tides cannot be accurately predicted, It can only be said that the tide is expected to rise at a certain time It may or may not rise Strong wind may change its direction to opposite side. They instead of rising may fall, so it is the case with the laws of Economics. So it means there are many factors which can affect the expected course of action and thus can easily reject the economic predictions.
Economic laws are essentially hypothetical. They are true under certain given conditions. If these conditions are fully achieved, the results drawn from them will be true and exact as the of the laws of physical sciences from this statement that laws of Economics are hypothetical; we should not conclude that, they are useless or unreal. The hypothetical element is also there in the laws of physical sciences. If the utility of a person increases with the additional units of sudden change in because of fashions or taste, the only difference between the laws of Economics and the laws of physical sciences is that the theoretical components in the former is more permanent as compared to the later.
The laws of economics are more exact than the laws of other social sciences. The laws of economics are qualitative not quantitative in nature. They are not exactly stated in quantitative terms. The economics laws tell us only about the change which is expected not about the specific amount of change. Economic laws do not deal with any certain individual, firm, commodity etc. It lay hold of an average economic unit and lays down its economic activities.
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Economics