In my most recent column in the Pittsburgh Tribune-Review I argue that economics is indeed a science. And I insist that one of economics’s most important scientific findings – a finding made most famously and effectively by Ludwig von Mises and F.A. Hayek against the pretensions of ‘scientific’ socialism – is that no science of any sort can ever correctly determine what mix of outputs sold at what prices and produced by what means is best. That determination must be left to unplanned, spontaneous competition, within a regime of consumer sovereignty, private property rights, and freedom of contract in markets at least reasonably free. (And the freer are the markets, the more accurate the outcomes compared to the results of any feasible – as opposed to fanciful textbook – alternatives.) Here’s a slice:
Economics, for example, is no science like physics, but it is indeed a science. Its practitioners seek with open minds and unobstructed intellectual give-and-take to better understand the operation of systems of human exchange — including, of course, the operation of commercial markets.
One of the scientific findings of economics — a finding as firm as any conclusion of the hard sciences — is that the mix of what should be produced and made available for consumption cannot possibly be determined by science. That determination, if it’s to be remotely correct, can be made only by market competition in which everyone spends his or her own money.
The number and quality of sofas, MP3 players, automobiles, pairs of jeans, toasters, bulldozers — you name it — that is “correct” for the economy to produce is discovered only in an ongoing and unplanned market process. Suppliers spend their own resources in efforts to earn profits by producing goods and services that consumers willingly buy. Many of these efforts are competitive (for example, Amazon.com competing with Sears to sell retail goods) and many are cooperative (for example, Amazon.com using FedEx to deliver retail goods to consumers).