The Ultimate Foundation of Economic Science

A popular opinion considers economics as the science of business transactions. It assumes that economics is in the same relationship to the activities of a businessman as is the discipline of technology taught at schools and expounded in books to the activities of mechanics, engineers, and artisans. The businessman is the doer of things about which the economist merely talks and writes. Hence a businessman has, in his capacity as a practician, a better founded and more realistic knowledge, inside information, about the problems of economics than the theorist who observes the affairs of trade from without. The best method the theorist can choose to learn something about real conditions is to listen to what the performers say.

However, economics is not specifically about business; it deals with all market phenomena and with all their aspects, not only with the activities of a businessman. The conduct of the consumer—i.e., of everybody—is no less a topic of economic studies than that of anybody else. The businessman is, in his capacity as a businessman, not more closely related to or involved in the process that produces market phenomena than anybody else. The position of the economist with regard to the object of his studies is not to be compared to that of the author of books on technology to the practical engineers and workmen but rather to that of the biologist to the living beings—including men—whose vital functions he tries to describe. Not people with the best eyesight are experts in ophthalmology, but ophthalmologists even if they are myopic.

It is a historical fact that some businessmen, foremost among them David Ricardo, made outstanding contributions to economic theory. But there were other eminent economists who were “mere” theorists. What is wrong with the discipline that is nowadays taught in most universities under the misleading label of economics is not that the teachers and the authors of the textbooks are either not businessmen or failed in their business enterprises. The fault is with their ignorance of economics and with their inability to think logically.

The economist—like the biologist and the psychologist—deals with matters that are present and operative in every man. This distinguishes his work from that of the ethnologist who wants to record the mores and habits of a primitive tribe. The economist need not displace himself; he can, in spite of all sneers, like the logician and the mathematician, accomplish his job in an armchair. What distinguishes him from other people is not the esoteric opportunity to deal with some special material not accessible to others, but the way he looks upon things and discovers in them aspects which other people fail to notice. It was this that Philip Wicksteed had in mind when he chose for his great treatise a motto from Goethe’s Faust: Human life—everybody lives it, but only to a few is it known.