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As students of economics, we are interested in things like taxation
and other sources of revenue and standard of living in the past.
In economics, we make use of historical data to formulate economic
laws. We make use of history in economics to study the material
conditions of people in the past. There is a separate branch of economics
known as “Economic History”.
We may say economics is the fruit of history and history in the root
of economics:
“Economics without history has no root;
History without economics has no fruit”.
Economics and Ethics
Ethics is a social science. It deals with moral questions. It discusses
the rules that govern right conduct and morality. It deals with questions
of right and wrong. It aims at promoting good life.
There is connection between economics and ethics. While
economics, according to Marshall, aims at promoting material welfare,
ethics aims at promoting moral welfare. When we discuss economic
problems, often we consider ethical issues. The government introduced
prohibition in many states for ethical reasons, though there was heavy
loss of revenue to it.
But Lionel Robbins strongly believes that an economist as an
economist should not consider ethical aspects of economic problems.
But many economists do not agree with him. They believe that
economics cannot be dissociated from ethics. Even Marshall considered
economics as a handmaid of ethics. He looked at economics as a study
of means to better the conditions of human life.
Economics and Jurisprudence
Jurisprudence is the science of law. The economic progress of a
nation depends to a great extent on its legal system. Good laws promote
economic progress and bad laws act as an impediment to growth. For
example, in the past when we welcomed foreigners to invest in our
country, they used to say our taxation was complex and not good. Of
course, now things have improved. So we must have simple and clear
laws in the fields of taxation and labour legislation to promote economic
progress.
Economics and psychology
Psychology is the science of mind. It deals with all kinds of human
behaviour. For example, we have child psychology, mob psychology,
industrial psychology and criminal psychology. But economics studies
one aspect of human behaviour. It studies human behaviour with
reference to unlimited wants and limited means. Of late, psychology
has become important in analyzing economic problems. To deal with
labour problems, we must understand industrial psychology. And a good
businessman must understand the psychology of buyers whenever he
wants to change the price of his good. Many important laws of economics
are based on psychology. For example, we have the law of diminishing
marginal utility. It tells that the more and more of a thing you have, the
less and less you want it.
Economics, mathematics and statistics
Among other sciences, economics is related to mathematics and
statistics. Statistics is the science of averages. It is the science of counting.
Many tables and diagrams used in economics are based on statistical
analysis. Mathematical methods are largely used in modern economics.
Now we have a new science called econometrics. It makes use
of statistics and mathematics in economics. The econometric society
was founded in 1930, and the first Nobel prize in economics was
awarded to Jan Tinberen and Ragnar Frisch for their contribution to
econometrics.
Static and dynamic concepts
Time element is very useful in studying the working of an economy.
There are two main lines of approach. They are 1. static analysis and
2. dynamic analysis. In the case of static analysis, we examine a problem