A reasonable way to think about any subject — science, engineering, technology, economics, etc etc — is to base the analysis on fundamental principles. It’s like using maths, starting with axioms and logically deriving theorems that can then be said to be true within that axiomatic system. If you know the underlying bits, you can work out the rest yourself — or rely on the work of others who have worked out the maths.
We know that there are fundamental principles, whether we know them or not. Some people do know, and they use that knowledge to make stuff that we find useful. I know precious little fluid dynamics but I know that those who design airplanes understand fluid mechanics, and I fly around in airplanes that are the result of various people’s understanding of various different scientific principles or truths.
Economics also has discovered certain “truths”. These relate to property, division of labor, exchange and subjective theory of value. These ideas are not generally known by people, and understandably so. They don’t need to. They get by very well without knowing them, thank you very much.
Continue reading “Economic Principles and Immunity from Silly Ideas”