Economics is a social science. It is neither a branch of mathematics nor the study of nature. It is, instead, analysis of humans by humans. This makes it both exceptionally important and extremely difficult.
Economics is important, because the way we understand how an economy both does and should work will, quite rightly, change how we do and should behave.
Economics is difficult, because it does not study a demarcated sphere of behaviour. What we consider to be economic behaviour is but a part of the totality of human action. (Fischer et. al. 2018, xiii, [ https://a.co/12BcqIF ])
Psychologists, sociologists, anthropologists, geographers and historians also analyse the phenomena considered by economists. The assumption that it is possible to separate out economic behaviour and objectives from other forms of human behaviour and objectives is an heroic simplification and, like all such simplifications, it is fundamentally false. (Fischer et. al. 2018, xiii, [ https://a.co/cuyL9qB ])
This is not an argument against it. Simplification is often necessary if one is to make any progress in understanding. The neoclassical assumptions of individualistic utility-maximising behaviour and a calculable future are, for example, fruitful simplifications. They have often produced a better understanding of the behaviour we call ‘economic’. (Fischer et. al. 2018, xiii, [ https://a.co/fVqei31 ])
But the assumption of utility-maximisation is either tautological or untrue. Human beings are intensely social animals. The assumption that we are solipsistic egotists is false. Indeed, we consider such people to be psychopaths. Similarly, the assumption of a calculable future can be productive. But it, too, is false. The future is uncertain. We do not know what is going to happen. (Fischer et. al. 2018, xiii, [ https://a.co/5GaN8NO ])
The apparatus of neoclassical economics builds on shaky foundations. It violates norms of human behaviour. It is inconsistent with how humans actually behave. It does not even allow us to understand fully such important economic phenomena as bubbles and financial crises. (Rethinking Economics (p. xiii). Taylor and Francis. Kindle Edition.) [ https://a.co/6NcjoAK ]
(….) The economics that humanity will need will surely display the vigour of the mongrel, not the neuroses of the pure-bred. It will build on a better understanding of what humans desire and how they behave. It will abandon the assumptions that the study of humanity is a lost branch of physics, humans are desiccated calculating machines, a separate sphere of economic behaviour exists and economic outcomes have nothing to do with power. (Fischer et. al. 2018, xiii-xiv, [ https://a.co/1fKhqhj ])
Consider the obvious: the political and social institutions that economists mostly ignore also have economic purposes. They are part of the economic world, just as the economic world is part of them. (Fischer et. al. 2018, xiv, [ https://a.co/6nUdVbS ])
I would not recommend an ‘anything goes’ approach. Economists need just enough complexity to achieve a reasonable understanding of what is going on, but not more. Simplification is a necessary part of the study of something as complex as human social behaviour. Otherwise, it will collapse into mere description. (Fischer et. al. 2018, xiii-xiv, [ https://a.co/9PKto6e ])
At the same time, simplification can all too easily deliver falsehood. To avoid that trap, economists need to become aware of how the heterodox think. They need both to broaden their ideas and to show humility. As Hamlet would tell us, “there are more things in heaven and earth, economists, than are dreamt of in your philosophy”. (Fischer et. al. 2018, xiii-xiv, [ https://a.co/fU6O1Gy ])