Economics

What is Economics? What subject does Economics study?

The most influential definition of economics is

Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses[^robbins1932].

Among versions of other definitions, Samuelson settles on the one below:

Economics is the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals[^samuelson2010].

Resource allocation is eventually accomplished through human behavior. Thus, economics studies human behavior.

What scientific approach does Economics use?

Economics uses an axiomatic approach to study human behavior. Axioms are postulates that require no proof. Anything else is built upon them. What are those axioms?

Macroeconomics Branches Off

Economics has been one unified theory until the Great Depression in the 1930s. Keynes's 1936 General Theory gave rise to macroeconomics as a distinct study of the economy as a whole—and, in turn, to microeconomics as a retronym for what economics had previously meant.

One would expect the macroeconomics be grounded in microeconomic principles. However, the mainstream macroeconomics contains many inconsistencies and sometimes relies on assumptions that conflict with one another.

Theory is an instrument for economizing thought. Among competing theories, the one that is logically self-consistent stands apart from the rest. Among those that are self-consistent, the one that is simpler and has greater explanatory power is the better theory. The book Macroeconomics Has No Clothes makes this case in full, offering a framework that unifies macroeconomics with microeconomics while exposing the shaky foundations on which mainstream macroeconomics is built.

Rebuilding Foundation of Economics

Microeconomics is no exception: different schools of thought frequently compete to explain the same phenomena, often from incompatible premises. A better scientific theory resolves this by tying its principles together into one self-consistent, economical framework—rather than leaving rival explanations to coexist unreconciled. Zuoshi Xie's The Road to Truth: Rebuilding the Foundation of Economics takes on exactly this task for economics as a whole.

Note

This is an ongoing project to bring Prof. Zuoshi Xie's work to English-speaking readers, so they can draw their own conclusions. Additional articles and translations will be added as the project progresses.