I. Definition of economics as science
Economics as science about natural economic
Point of reference: natural economic order (system)
Analogy to natural/environmental system
Laws of economics as laws of market and competition
Capitalism (economy based on the market, private
ownership and free entrepreneurship) as the natural
economic order; the so called methodological monism
Capitalism versus other socio-economic orders
I. Definition of economics as science – cont.
2. Historical and institutional approach to
economics as science
Economics as sociology of economic life (phenomena and
processes) and changing over time socio-economic
orders (Marxian/Marxist economics, historical school in
Economics as the theory of evolution of economic system
Common developmant factor: key role played by the
science (in anglosaxon meaning of this word) and
technology in the economic development (technological
I. Definition of economics as science – cont.
3. Robbins’ definition based on the category of
 Point of reference: physical scarcity of resources and
goods versus unlimited (endless) character of human
Features of resources (production factors) :
 Physical scarcity,
 Diversified productivity,
 Possibilities of alternative use
I. Definition of economics as science – cont.
3. Robbins’ definition based on the category of scarcity – cont.
Features of needs:
 Unlimited character,
 Orderliness (consistency of preferences),
 Importance changing over time
Economics as an abstractive (pure) logic of choice, as
science on alternative manners of using scarce resources
for producing goods which satisfy unlimited (endless)
Economics deals exclusively with relations between goals
(needs) and means serving to achieve those goals
I. Definition of economics as science – cont.
4. Economics as a domain of applied mathematics
L.M.E. Walras’ approach
Economics as the theory of general economic qulibrium
Definition of T. Koopmans (activity analysis)
Economics as science dealing with optimal distribution
(allocation) of scarce resources which are at the
disposal of enterprises
Definition of P.A. Samuelson
Economics as science on conditions of equlibrium (in
different scale) and of stability of economic systems
I. Definition of economics as science – cont.
5. Attempts at widening the research domain of
economis as science (the so called economic
Economic imperialism: appriopriating by the science of
economics of domains (research areas)which are specific
for other social sciences; e.g. new institutional economics
Economic imperialism vs. cooperation with other social
and natural sciences (behavioral economics and finance,,
evolutionary economics, psychological economics and
II. Neo-classical concept of economic
science – main components of
methodological paradigm of ENC
Methodological individualism
Behavioral dimension (concept of homo
economicus , utility maximization hypothesis;
Cognitive dimension (necessity to identify, to
seek for the „microeconomic foundation” of all
economic phenomena and processes); relation:
microeconomics - macroeconomics)
Ideological dimension (economic freedom)
II. Neo-classical concept of economics – cont.
Methodoligical individualism – cont.
General neoclassical model of microeconomic behavior:
optimization of human beings’ activitties
Static and dynamic optimization – economic statics and
economic dynamics
Modifications of homo oeconomicus concept in
contemporary economics
H.Oe. as heuristic (cognitive) concept having the
stochastic character
H. Simon- concept of bounded rationality (satisftycing
instead of maximization or optimization behavior)
H. Leibenstein – a selectively rational men;
REMM- resourceful and evaluating homo oeconomicus
II. Neo-classical concept of economics –
2. Equlibrium concept in w NCE
Equlibrium as heuristic (cognitive) fiction and a
real feature of economic phenomena and
Economic statics and dymamics vs. static and
dynamic equilibrium
Microeconomic and macroeconomic equilibrium
(macroeconomic stabilization)
II. NCE concept of economics – cont.
2. Concept of equiulibrium in NCE– cont.
Market equilibrium: partial and general (on final
goods markets, intermediate goods and production
factors markets, financial markets)
General equilibrium: static and dynamic
(equlibrium growth)
Equlibrium vs. disequlibrium (controverses
between NCE and Keynesian economics)
Equlibrium as a stochastic category
II. Neoklasyczna koncepcja ekonomii c.d.
3. Critical rationalism (C. Popper)
Genesis: – philosphy of positivism as a
commonly accepted general science
Essence of the so called falsyphicationism as
criterion for appraisal of „scientific character” of
generalizations (hipothesis, models, theories etc.)
of economic science
III. Criteria of progress/development of
economic science
1. Criterion of capability to explain the nature of
economic phenomena and processes (criterion of
the so called scientific realism)
2. Social utilitarity criterion
3. Criterion of predictivity power (Friedman)
4. Mongin’s – Laudan’s criterion of effectiveness
(the so called instrumental realism): criterion of
higher (increasing with respect to „competitive
theories” ) effectiveness in solving scientific
IV. Main criteria of distinguishing streams
(schools) in economics
1. Interpretation of economic categories and laws
2. Market and state as mechanisms of economic
coordination and optimization (in macroeconomic
3. Manner of interpretation of value/price of
goods, of sources (origins) of social welfare and
economic growth factors
IV. Main criteria of distinguishing streams
(schools) in economics
Interpretation of economic categories and laws
a) Natural vs. historical
b) Deterministic vs. stochastic
c) Causal vs. functional
d) Economics as a science dealing with economic
models and theories and not searching for
objective economic laws or principles
e) Economics as a science constructing subsequent
research paradigms and programs
Market and state as regulation mechanisms:
paradigm of market vs. paradigm of state
The nature of paradigm of market
1. Economic entities take decisions based on
the observation of changing market prices
2. Markets are characterized by the feature of
alocative effectiveness
3. There occurs a constant tendency to market
4. Providing that the equlibrium is effective,
there takes place the maximization of social
welfare (Pareto optimum)
Market and state – cont.
Paradigm of market– perfectly competitive
(ideal) market as the point of reference
Real economic life: occurence of numerous
market failures
The very nature of market failures: impairing
(distortion) of conditions of (1) perfect
competition and (2) system of private
property rights
Most important and common types of market
failures: monopolies /oligopolies, external effects,
public goods, imperfect information (knowledge),
uncertainty and risk
Market and state … – cont.
Market failures – the need of public
Public regulation does not contradict the
paradigm of market
Normative and economic interpretation of
public regulation
Diversification of market failures results in the
necessity of diversifying methods and
instruments of public regulation
Market and state … - cont.
Point of departure for the paradigm of state:
permanent incapability of market mechanism to
maximize the social welfare due to (among
others) :
1. Lacking tendency towards the macroeconomic
equlibrium (Keynesianism)
2. Need for direct defining and implementing by the
state od important social objectives (institutionalism,
historical school, mercantilism)
3. Tendency towards „anarchy of production” and
waste of economic resources (marxist economics)
4. State regulation as quasi-market

of economic science