Economics as Technology: Rough notes

Economics as Technology

Economic ideas can evolve over space and over time. This evolution is evidently non-linear. The paths of spatial and temporal evolution taken by economic ideas are diverse and there exists no single unified theory to explain this dynamic behavior of economic theories. 

Ideas are many and some of them produce meaningful insights into the workings of the chunks of reality one is trying to understand. Some don’t. One may adhere to a certain idea of how the world works because of several motivations, particularly because one feels that that’s the way things should work and a given idea gives hopes of such a world. A normative outlook is evident in this argument. One may also believe in a particular idea because she feels that it explains how the world actually works. This is a positivist belief in an existing or a potential economic idea. 

Such an argument can most correctly be applied to not only social sciences but to the yet-to-be-discovered sections of perceived physical reality. There too one may have strong notions of how the unknown reality would be once it is discovered. Of course, this would mount to metaphysical speculations but nonetheless they hold some degree of authenticity at least for the believer.

Economic speculations become more refined as time passes by. Subjecting the ideas to more and more “prediction tests” as stated by several writers such as Friedman (See for example Milton Friedman’s “Essays on Positive Economics”) results into a body of knowledge that we now call Economics. 

These scientific collections of interrelated notions, theorems and behavioural realizations about the economic sphere of existence culminate into an exotic tool that can shift the ability and efficiency of production of commodities across households, firms and their macro aggregates. Economics becomes a technology.

The idea that ideas are technologies is perhaps not new on the intellectual landscape of human curiosity. Among many, J .S. Mill was probably one of the first theorists who could capture the benefits of economies of scale and scope that trading of ideas could produce. We now see the remnants of such theorizing in the large scale transfers of technologies across nations not only in their physical forms, but also in the form of technical knowledge flowing across borders.  Knowledge is now produced, distributed, exchanged and consumed at scales never imagined before. 

The embodiment, in our shared experiences, of the fact that Economics as an organic body of ways of thinking about the world, helps shift our production capabilities to larger levels than before despite our efforts remaining the same, may elicit the role of economic thinking in increasing welfares of people who utilize it as well those who are reap the gains from positive externalities of knowledge.

The core of this theme is to point out that by learning and applying the kind of behaviour that Economics teaches, all economic agents can improve their capacity to extract maximum possible benefits from the given means that they possess in order to achieve their various ends.

As an illustration, the understanding that an equal distribution of production time devoted between market and home goods among the male and female members of a household can help it shift its production possibility frontier to larger levels emerges from a careful analysis of social/institutional economic ideas about household behaviour. Here, the total production time devoted remains the same as before, only the change in distribution of total work time induces such gains.

At an aggregate level, the policy makers can increase their output (in terms of achieving successful and socially useful macro and sub-macro outcomes) with a given amount of input (time resource devoted in policy making and public funds utilized in the process) by better appreciating the insights derived from Macroeconomics and its various branches. Monetary ideas for illustration, that are embedded in major theories and empirical works, can and do help policy-makers to shift the production function of their output to higher levels with inputs constrained to the previous levels.

It thus emerges from our elementary approximations that Economics as an amalgamation of complex and heterogeneous ideas is not merely a discipline meant for consumption to participate and survive in the labour market. It is an organic entity, in all its diverse forms, that helps us make better consumption of our scarce means to produce more means and also to achieve more ends.

It might appear that the same argument can be applied to other branches of the social sciences such as Sociology, Political science, etcetera. Yet, it remains open to debate as to what advantages do these other brilliant disciplines directly supply to help choice-making entities increase their capabilities in achieving more outputs in terms measurable in an economic sense. It is to be borne in our understandings that the concept of technology depends critically on the concept of productivity and to be able to relate the benefits from ideas of other social sciences to this economic concept of productivity will require further detailed scholarly analysis. 

These modest and rough speculations presented in this article can only hope to motivate further analysis of such issues and nothing more. This is a rough version and further changes will be made with time.

- Bhagirath Baria.