The Modern Economy and its Operations: A Critique of Today's Practices - Essay Example

The Modern Economy and its Operations: A Critique of Today’s Practices In the world today, where progress and success are measured in terms of both personal and public economic growth as well as of other related aspects, one may wonder why we have developed these notions and principles in the first place. As compared to the times when the tricks of the trade are simpler, modern situations dictate complexities that only now we fully understood resulting from acquired knowledge in the past as well as of learned principles introduced to us by various philosophers. In this paper, I would like to elaborate more and examine these complexities that most people tend to consider irrelevant but I believe mostly significant in order to fully comprehend the standards of the era we are living right in. I would want to examine and expound more of the modern practices that various economists of today have been doing so as to provide and present a clear illustration and brilliant depiction of an intermingling global economic viewpoint. Doing this, I shall be indulging and expounding more of the different approaches, methods and technical procedures that recent philosophers have used in various investigations and explanations of economic concepts and theories. As for this paper, I would not only be elaborating further on how these economic concepts affect the people’s mind-set, but I shall be of critique as to how these theories have shaped the contemporary practices that we can observe today. Having said this, I should note that economics, as a whole, as what Pheby has said in Methodology and Economics is not exactly similar, in fact very different, with other behavioural sciences and physical sciences like sociology, political science, physics and chemistry respectively. This is since economics is a very strange branch of science that is somehow dependent on human actions and on how these actions are deemed important as to the evaluation of results and analysis of consequences and outcomes (Blaug 1980). To start my observation and analysis, I would want to give and make sense of the technical definition of empirical research as the basis of my fundamental argument. As lifted from a journal article entitled Empirical Research published by the Norfolk State University, empirical research has been defined as the systemic research process which only involves predetermined observations and measured phenomena. It reports and publishes facts and figures based on observed results and actual experimental quantifications in order to generate a relationship and draw numerical conclusions involving two or more set parameters and controlled variables (Empirical Research, 2010). Nowadays, empirical researches are mostly used in providing viable and up-to-date projections of different economic elements. Most empirical researches involve the use of mathematical models and statistical data in order to carefully interpret and make sense of the situational characteristics of both the local and global economy (Epstein et. al 2005). In my opinion, doing such is a very good practice. Having said the said facts, I would want to emphasize that the fitness of these mathematical approaches and statistical analyses, which I have said a while ago, are carefully evaluated and examined even before they are used in the field. As they are deemed fit, they will be used in quantifying various parameters which may dictate how we see the world economy operates and affects our lives. In relation to that, I would want to connect the concept of critical rationalism as popularized and believed by a Marxist philosopher in the name of Karl Popper. In an article entitled Falsification and the Methodology of Scientific Research Programs previously published in the Readings of Philosophy of Science, it can be read there that believers of critical rationalism consider that scientific claims and any other forms of theoretical knowledge should be thoroughly rationalize and seriously criticized without having bias to it, and that it should stay as critical and unbiased as possible. This is since these theories, especially when they have empirical and qualitative contents, can be subjected to tests and other experiments which may falsify their claims, meaning they could be interpreted differently and contrastingly or evaluated normatively opposed to the conventions (Popper 1934). As implied by Popper regarding his concept of falsification, the bodies of knowledge which are of great potential to be candidates of falsification can be considered as empirical science. The said body of knowledge could be categorically differentiated into retained or falsified. Having said this, one should notice that even when facts are already predetermined or collected beforehand, there shall be a standing chance that there are potential sources of falsifications and errors in the process. Therefore, Popper is very keen in his advocacy that knowledge’s falsifiability, or the ability to be falsified, shall be included in the set of criteria in relation to the demarcation of what is science and perhaps of economics. As what is emphasized by Popper in his book, he notes that there are no set of particular unique ways in order to provide a solution of proof to various kinds of problems. As Popper points out firmly, there is no certain kind of methodology that which may give a solid framework and complete solution as to resolve a given situation, say perhaps an economic situation like global meltdown, lay off or recession. No single procedure functions completely as designed and schemed in accordance to a single scientific theory only; in most cases, procedures and scientific methodologies are a collaboration of many other steps involving different methods. The said understanding is somewhat shared by the famous scientist of the 20th century in the name of Albert Einstein who believe and affirms that there is no single particular logical path which could lead to physical science’s higher universal laws. In Popper’s viewpoint, he asserts that science as a whole, inclusive of its various derivatives and integrations, is a world where problems are of great number. It is science’s nature to be vague and problematic. Rather than with observations, Popper believes that the development of science resides with the proper recognition of the vagueness, problems and inquiries associated with each scientific principle. Having said such, it is precisely within the acknowledgement of a problem that researchers and scientists start to have observations regarding the situation they are dealing with. Observation is the product of problem recognition, and man’s observations and hypothetical guesses are designed in selective to the inquiry he has (Pheby 1988). Meaning, observations are like responses to a particular stimulus designed to be tested extensively until a satisfactory solution will be formulated. In relation to modern economic practices, it is still true that researches shall begin upon when a need arises because there are problems at hand. As can be read from the book entitled Economic Methodology: An Inquiry authored by Shiela Dow, scientific researches, involving physical sciences and other behavioural sciences inclusive of economics, follow set-ups which observe scientific method. In my opinion, the use of such procedures has been so much effective ever since they have been developed and used. Mainly because, scientific method is so systematic and organized that results should be logically making sense in the end of the experiment period. On one hand, I would like to look and examine further the development of theoretical economic symbols as well as of mathematical models, representations of real-time phenomena which play a very significant part in the success of empirical research. We know for a fact that before data are gathered, we need to first formulate questions that we think necessary in our research. These questions are needed to be answered so that the research may be considered valid and reliable in the end. This is since, most of the time, these questions direct the path we shall set to go; so that, excellent and proper observations could be possibly drawn (Blaug1980). Meanwhile, in order for these questions to be empirically tested, they shall be first transformed into theoretical models. As can be read in an article by Daniel Moody (2002), these theoretical models are consisted of theoretical constructs and latent variables having causal relationship contents. Also, various measures of observed variables are included in the construction of the said theoretical models in order to provide balanced results and outcomes. After which, the theoretical models are formed and developed based on the analysis of the questions first formulated in the beginning of the methodology. The said theoretical models form the basis both for the collection, analysis and modification of data results of the whole research process (Moody 2002).Having said all of these, we can notice how complicated and intricate the development of various theoretical models is, in order to come up with the best possible representation of any economic situation and phenomenon therein. I must say that this exercise of careful evaluation and thought regarding the used methodologies reflect mostly the efficiency as well as effectiveness that these devices, which include mathematical models, diagrams and charts, provide. Since in predicting various projections, we need to have excellent and fine possible illustrations first, I think that not only these methods should be just reliable and valid, they should be very well fit and purposely designed in order to attain best possible research results. Having said these facts, I believe that the global economic practices nowadays exceed expectations when it comes to reliability, validity and consistency. I think that in the history of both macro and micro economics, the predictability of research outcomes has never been this consistent and solid till now. However, I must take note that there would always be deviations and errors from these methodologies and procedures that we are using right now. Though, somehow we could be so sure that these developed methods have minimal forms of errors to account for. That is since these techniques and systems have passed standard quality control procedures employed extensively nowadays by econ practitioners. On one hand, I would like to look more and examine fully the economic philosophies which are very relevant nowadays that is being popularized in Thomas Kuhn’s The Structure of Scientific Revolutions. As said by Kuhn himself, scientific progress  is a product of accumulated events which happened through time (Kuhn 1962). Kuhn believed in the concept of development-by-accumulation, wherein present and current state of science is formed due to previously accepted theories and facts. Therefore, it is safe to say and conclude that Kuhn also believes that in order to understand more of the future as well as of the present situation, one need to first understand the past. As argued by Kuhn, there are categorical periods which govern the development of science like that of economics and other related fields. There are episodes in the course of history that likely hinder the continuity of science, including sits growth and full development (Kuhn 1970). The said episodes belong to the revolutionary period. During science’s revolutionary periods, various discoveries lead to the development of new paradigm shifts which change distinctly how things operate on the large scale. The new developed paradigms change how people see the over-all picture of things. Whenever there are revolutionary periods, there are also shifts as to how the game of trade is being played (Alais 1993). There are new research approaches which will be used by scientists in order to answer questions related to old procedures. Using the context of Kuhn’s explanations, we can then clearly see how things evolve from the past; as a matter of fact, we could somehow retrace happenings back to where it truly roots. Mainly because, what Kuhn is basically arguing is that the future of science lies to the understanding of its very history. As for economics, I believe that modern practices of contemporary men have its own basis in the past. Through time, practices evolve, but it does not completely change when compared to the previous ones. It is my belief that economic practices 50 years ago only change forms and faces in order to adapt with various situations. We cannot conclude then and say that a particular model or approach is entirely different with another, when in fact they can be just other forms and manifestations of old practices and models. Meaning, there is a great uncertainty that a given model or approach to a problem is not an original one; since most of times, economic models are just modifications of other approaches and procedures done previously by various philosophers and scientists. References Allais, M. (1993).Les Fondements Comptable de la Macro-Économie. Paris: Presses Universitaires de France. Blaug, M. (1980).The Methodology of Economics or How Economists Explain. Cambridge University Press. Boland, L.A. (2003). The Foundations of Economic Method. London, New York: Routledge. Boylan, T.A., and P.F. OGorman (2007). Axiomatization and Formalism in Economics. Journal of Economic Surveys. 21: 426-446. Dow, S. C. (2002). Economic Methodology: An Inquiry. Oxford University Press Dow, S.C. (2005). Axioms and Babylonian Thought: A Reply, Journal of Post Keynesian Economics. 27: 385-391. Kuhn, T.S. (1962). The Structure of Scientific Revolutions, 1st. Ed., University of Chicago Press, Chicago Kuhn, T.S. (1970). The Structure of Scientific Revolutions, 2nd. Ed., University of Chicago Press, Chicago Laidler, D. (1999). Fabricating the Keynesian Revolution. Cambridge: Cambridge University Press Lakatos, I. (1968): ‘Criticism and the Methodology of Scientific Research Programmes’, in Proceedings of the Aristotelian Society, 69, pp. 149−86. Lavoie, M. (1992).Foundations of Post-Keynesian Economics. Cheltenham: Edward Elgar. Mair, D. et al. (1992). A Modern Guide to Economic Thought. Cheltenham: Edward Elgar. Moody, M. (2002).Research Methods Class. Monash University, (Melbourne, Australia) Norfolk State University. (2010). Empirical Research Pheby, J. (1988).Methodology and Economics – A Critical Introduction. Houndmills, Basingstoke, Hampshire, Palgrave Macmillan Publishing. Popper, K. (1934): Logik der Forschung, 1935 (expanded English edition: Popper [1959a]). Read More