One question, which always arises in economics when observing it from the philosophical side, is “How do we know? Can we be sure about the findings our developments reveal? This also leads to an even wider range and is applicable to our day-to-day live. How do we know what we are or that we are? Obviously this leads to a never ending circle with no chance of a useful way out. For this reason I would like to ask in how far it is necessary to know that we know.
The problem with economics as a science lies in itself. Different views and opinions about whether economics is a science or not do exist. Some scientists state that it is a science but at the same time others claim that it is no science at all. “It’s all discourse. It’s all opinion.” (Richard Rorty). Since already discrepancies occur in the very roots and nobody exactly knows if economics is a science, it is more a question of definition.
But the problems go on when observing the results economists can deliver with their work. Looking back to the history countless economists have made huge amounts of empirical research, but where can we monitor proofs for their theories? Almost never can evidences be found which are 100% valid in every circumstance. Therefore “economists fail famously to predict what will happen in the real world” (Klamer). So in economics it is impossible to know, in comparison to for example biology where loads of proofs for different theories have been found, which effects diverse conditions will have. More important are the predictions economists make and their degree of validity. That is from what an economist`s quality is often drawn.
It is even worse. The world of economists is split up in two main parties. One follows the Keynesian economics. Supporters of this group believe in government intervention to regulate the business cycle and the market. This includes influences through changing in governmental spending or altering the tax level. In opposite to them advocates of the neo classical economics recommend not to disturb the market forces but let them act free to achieve an optimal level of regulation and equilibrium.
So how can we ask “How do we/they know?” when even people with the biggest profession and wisdom in this field have numerous disagreements. We can only try to understand the different possibilities and to imagine their consequences but it is not possible to really know.
After my first course of economics I was impressed on the one hand by the simplicity with which real world is often represented in economic models and on the other hand how complicated it can get if the models try to get as close to reality as possible. As a fact these models never reach to mirror reality exactly because of the complexity the world contains. Frank and Bernake (2001) state that an economic model is taken valid when it gains professional acceptance. This shows that the economists do not really know but they agree on a level from which they can speak about knowing. It is more important to find a consens. This is another hint that we do not need to know in economics. The whole economy works fine without really knowing.
Another important inside gives a look at economics as a “science” in comparison to economics as it is treated in journalism. Significant differences become obvious. The economic science deals most of the time with analyses in a very systematic way. We can read about abstract formulas which try to solve theoretical problems. Journalism does not have much to do with that anymore. Here we examine dramatic stories about the bad going economy. Its more about people and explicable translations of the theory the science delivers. I interpret, the journalists try to make understandable what the economists do not really know.
As examined it is not possible to really know in economics. Now I state it is not necessary that we know, with respect to economics. Important is that we know that we do not know. The not knowing is a self regulation with which the market works since the very beginning. It can be seen as a determination to make the world function. If perfect forecast in economics would have been possible in the last century, a one dollar investment at the right place to the right time during all this time would have led to an amount called quadrillion (Klamer).
I claim that the availability of amounts like that would not have been helpful for our economy. For me it is unimaginable what would have been happened but I do not expect something good. For that reason it is not necessary and even better not to know and forecast economics.