I’m not talking about math-heavy econometrics. I’m not even talking about much of the stuff one learns and forgets in a basic Macro- or Microeconomics course. I’m not talking about the ideological and political assumptions that various economists make. I’m talking about that collection of basic analyses, clarifications, arguments, ways of reasoning, and discoveries we’ve made about the economic realm in the last few hundred years. We might call them the core descriptive truths of economics. These would include those things that many economists across the political spectrum would agree on, such as:
The intended purpose of a policy or
an action, and the consequence of the action, are two different things.
There is a well-understood
relationship between the price of a good or service, and its supply and demand.
Free trade doesn’t create utopia,
but it is a win-win exchange.
It’s possible for someone to get
wealthy, not by extracting wealth from others, but by creating new value and
Well-developed property and titling
laws promote economic growth.
Specialization allows for much
greater economic growth than the alternative.
There is a high correlation between a society’s
economic freedom and its economic growth over time.
Strong central economic planning
tends to cause severe economic distortions such as shortages and
There are surely dozens of these truths. Notice that none
require any hard math. Some of these can be understood, even known, simply by
reflecting carefully on the matter. Many can be and have been confirmed
Anyone who reads say, Thomas Sowell’s Basic
Economics, as well as books such as Common
Sense Economics, Economics
in One Lesson, Wealth
and Poverty, Money,
Greed, and God, and Indivisible,
can learn most of them, even if he never takes a course in economics.
Alongside the well-established truths are hypotheses that,
while not certain, are reasonably well established or at least worth
considering. The Environmental Kuznets
Curve is controversial, for instance, but it seems to me to capture an
important truth. And the subjective theory of economic value is a profound
improvement over the earlier labor theory of value.
Now economics truths, whatever they are, are descriptive truths. They tell us what a
certain segment of reality is like, namely, that part of reality involving
human beings and the way they organize themselves and exchange various scarce
goods and services.
Of course, different areas of study deal with different
truths. Physics, chemistry, geology, and arithmetic, for instance, involve
truth claims of a certain sort. Economic truths are not the same as the truths
of chemistry, but they are, nonetheless, truths.
What makes economics peculiar is that most people feel
perfectly capable of making judgments on economic matters without knowing
anything about it. Mature adults normally hesitate to issue pronouncements on
most subjects of which they are ignorant. Few adults who have completely
forgotten the periodic table of the elements, for instance, would venture to
say with any confidence what would happen if they were to mix mercury and
Not so with economics. People offer opinions on economics
with little awareness that there is anything they might need to learn
beforehand. I’m convinced that part of the reason for this is that many people
think economics is intuitively obvious and is more or less the same as ethics.
These assumptions are both wrong. While one can learn to “think economically,”
most of us first have to learn certain counterintuitive truths of economics. We
also have to overcome certain “myths” that we tend to pick up from the ambient culture.
The confusion of economics with ethics is subtle. Some
people might argue that we shouldn’t make moral judgments about the “science”
of economics. I’m not one of those people. On the contrary, we have an
obligation to apply ethical truths to our individual and collective actions in
the economic realm, and to the economic policies we support. To do that,
however, we must understand some rudimentary economics. Otherwise, our moral
convictions are very likely to lead us to support policies that either backfire
or actually harm those we hope to help.
To see the difference between a normative truth of ethics
and a descriptive truth of economics, notice that economic truths often have
predictive value, as in other areas of study including the natural sciences. If
you understand the relationship of price, supply and demand, for instance, you
can predict with confidence what will happen if a government puts stringent
price controls on a product that is in high demand. Economics, however, as
economics, won’t tell you whether a government ought to do that. That’s the job of ethics.
In short, to think clearly and act prudentially in the
economic realm, we must learn to integrate the descriptive truths of economics
with the normative truths of ethics. That’s easier said than done, of course;
but Discovery Institute’s Center on Wealth, Poverty, and Morality is committed
to precisely this endeavor.