A Simple Model

Abstract

THE processes leading to the production and distribution of wealth which are going on around us to-day are intricate and the connections between various elements in the economy are interwoven with each other in a highly complicated manner. It is impossible to reduce economic theory to a set of simple hypotheses which can each be tested separately, like hypotheses about, say, the cause of a disease or the effects of a constituent of diet upon growth. Moreover, since human beings do not live, like the robins, in a timeless present, but plan their actions with a view to future consequences, most causal elements in economic life lie partly in the beliefs and expectations (often vague and emotional) of the actors and are very hard, if not impossible in principle, to pin down by any scientific observation. For these reasons it can be plausibly maintained that economics is not and never will be a serious scientific discipline, and that it properly belongs to the class of subjects, such as theology or aesthetic criticism, which use words to play upon sentiment rather than to investigate reality.