Economic Laws:
Introduction:
Like other laws, economics also has laws. In economics,
law refers to the uniformity of behavior of different human beings resulting
from the use of unlimited wants and limited means. In this way in economy, the behavior of one or two
individuals cannot be called a law, but the behavior adopted by the clear
majority of the society in any field is called law.
Characteristics of economic laws:
The characteristics or properties of the laws of economics are as follows:
1:-
Existence of assumptions:
Economic laws are
not as concrete and durable as physical laws. Economic laws are valid only in
the presence of few assumptions. If assumptions change, the law also changes.
This is the reason that after the text of every law of economics, a short
sentence is added and that sentence is, “in case that things remain the same”.
The law of wants is the basic law of economics. The assumptions of this law are
that there is no change in the consumer's income, population, fashion and
prices of substitute goods.
2:-
Economic laws reflect trends:
Economic laws do not represent a particular individual,
group or class, but they reflect the general trends of clear majority of
society.
All kinds of
groups with different incomes live in the society. Every group has its own
particular mood and preferences according to which they adopt a particular
behavior in society. Economic laws do not reflect the behavior of only the rich
or only the poor or only the middle class people, but they explain this
particular uniformity of behavior which is found in individuals more or less.
3:-
Economic laws are not final:
One of the characteristics of economic laws is that these
laws are not final, they are subject to change. The laws of physical sciences
are categorical and concrete, for example in mathematics it is said that two
and two make four, but the laws of economics cannot be stated with this
certainty.
4:- Economic laws are Qualitative:
A characteristic of economic laws is that they are
described in qualitative way rather than quantitative language. Economic laws
describe general trends in a descriptive manner e.g. that when the price of a
commodity decreases, its demand increases.
5:-Economic
laws are not universal:
Economic laws are not universal because they are applied
only to specific situations and events. And if those situations and events
change, economic laws also change.
6:-
Economic laws are quite live than that of
the laws of social sciences:
The economic laws are weak and inconclusive as compared
to physical laws because the core of physical sciences is the phenomena of
nature and the core of economics is human behavior. The laws of economics are
more vivid and more certain than the laws of other social sciences. Sociology,
political science, literature, history, psychology and citizenship laws are
inferior to economic laws. This is because we have a measure called
"wealth" to test the soundness of economic laws. No such standard
measure is available for other social sciences.
7:-There
is no control and coercion in economic laws:
One of the characteristics of economic laws is that they
do not necessarily need to be adopted in practical life. These laws are
completely optional. Anyone who wants can follow them and anyone who does not
want to follow has right to refuse.
8:-
Economic laws are deprived of predictability:
The weather forecast department has the ability to
accurately predict the expected weather changes in the next 36 hours.
Astronomers measure the sunrise and sunset to minutes and seconds, but in
contrast, the laws of economics lack the ability to predict the behavior of
consumers.
The methods to derivate economics laws:
There are two ways of deriving economic laws.
Deductive Method and
Inductive Method
DEDUCTIVE METHOD:
The deductive method of deriving economic laws means that we obtain specific results from a simple fact. Under this method we move from the "general" to the "specific". For example we examine a simple fact. We know that man is selfish, so Mr. A , B and C are also selfish. As we found a special fact from a general fact. Deductive method is also used in economics. It is a common observation that when the price of something goes down, people start buying more of it and when there is more buying the price increases. From this simple fact we get a special law the law of wants.
The flaw in this method is that if there is any flaw in
the basic facts, then the whole building raised on this basis proves to be
weak.
INDUCTIVE METHOD:
In this method we travel from the "particular to the general". According to this method, first some specific events or data are presented and after analyzing them, the general fact is found out. For example, when we see people buying more mangoes on a particular day because of low price we conclude that demand increases whenever the price of a commodity decreases. In this way, we take into account the conditions of the particular day of the market and derive the law of demand. So put a few statistical facts in front of and finding out the general fact is called inductive method. The flaw in this method is that if the facts chosen are not correctly chosen, the derived law also becomes invalid.
Conclusion:
Both deductive and inductive methods are used for
economic analysis. Where deductive method is not useful, inductive method can
be relied upon. Similarly, where inductive method does not prove useful,
deductive method is relied upon.
In the words of Dr. Marshall, it can be said like this.
“Both deductive and inductive methods are as important to
scientific analysis as the both feet to walking”.
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