Science as human behaviour

Science, in fact, reflects a basic drive to examine nature, seek knowledge and search for the logical consequences of reasoning. It is a collective endeavour spanning generations and, as such, its practice and ability to flourish largely depends on the social and cultural contexts in which it is pursued.

To different degrees, all societies have practiced science, perhaps because the scientific method, despite its imposing name, is the simplest, most natural and universal way of acquiring knowledge and applying it for survival and a better life. It is the extension of our innate instinct to discover regularities in the world surrounding us. Our brains are pre- wired to build models where assumptions of regularity are encoded. Our brains are also pre-wired to detect exceptions. Fundamentally, all fields of enquiry, whether in poetry of engineering researchers are driven by one of two questions; how something has come to be, that is the question of genetic or historical development; and what something is like, how it is constructed, how it functions. Both these questions, namely, what something is like, and how it came to be what it is, are perfectly legitimate with reference to any subject-matter.

Component economies
In a nutshell, the human production system involves setting apart nature and human-made processes while viewing the natural system as a domain in which we have a given right to exploit
It relates to a linear process of
  • getting stuff-- anything, anywhere at the lowest direct price;
  • making stuff--getting it out the door as quickly as possible;
  • and dumping stuff--delivering shoddy products in the marketplace, waste in the garbage and pollutants into the environment.

This process is driven by the rate of formation of biological inputs originating from the capture of solar energy by plants energy which underpins all human production. It maintains the material connections between people and the cosmos.

Biological productivity is therefore of great importance as a focus of human ecnomics. It is a consistent feature of human adaptations to environment that cultures have to strike a balance between their command of natural resources as inputs to communities (natural economy), and the primary production of biological materials and energy that is driven by planetary and solar forces (planetary economy). 'Natural economy' defines the organanisation of resources from the planetary economy for production. 'Political economy' defined the organisation of people for production.

Economic activity
The main purpose of economic activity is to satisfy the wants of people for food, clothing, housing, and all the other commodities and services which they consume and which constitute their standard of living. The central economic problem for any community is how to make the best use of its labour and resources. All wants cannot be completely satisfied. The problem is to satisfy them as fully as possible from the means of production available. These means of production—labour, land, and capital (physical assets)—are limited in amount. Many of them are capable of alternative uses. Youths and girls can enter any one of a number of occupations, some workers can move from one industry to another ; some land can grow any one of several crops or can be used for pasture, or for building sites ; and many buildings and machines can serve any one of several purposes. The community must, therefore, choose what assortment of goods and services shall be produced out of the infinite number of assortments which it could produce. In this sense economics has been defined as " the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

Methods of organisation
One method of dealing with this problem is by complete central planning, as in old Soviet Russia. A good deal has been written on the merits and defects of this form of social organization. But most countries have now moved towards the retention of the institutions of private property, freedom of enterprise, and freedom of choice by consumers, all subject to greater or less control by the state. Hence most economists writing in English assume the more common framework of social institutions.

Under these conditions, the problem is solved mainly through the price-system. A large part of economic analysis deals with the formation of prices, and the relations between prices: in other words, with the theory of value and its applications. Everything which can be exchanged for money has a price : for example, wage rates in different occupations and rates of interest are prices, and form part of the price system. The price of a commodity or service tends to equate the demand for it (the amount which buyers are willing to take at that price) with the supply of it (the amount which sellers are willing to sell at that price). Demand reflects the preferences of consumers and the relative spending power of different consumers; supply reflects the relative scarcities of the various commodities and services. The demand for means, or factors, of production, is derived from the demand for the commodities and services which they help to produce. In the absence of monopoly, the price of a factor tends to equal the value of the addition which an extra unit of that factor would make to output (known as its marginal product) and the price of a commodity tends to equal the extra money cost of producing a further unit (known as its marginal cost).

How the Price System Works
In the absence of monopoly, therefore, the central economic problem would be met in the following way. An increase in the demand for a commodity would tend to raise its price; that industry would become a specially attractive field for investment; labour and other factors of production would be directed towards that industry, where they could now earn more; and so more of that commodity would be produced in response to the increased preference for it of consumers. An increase in the supply of a commodity, due perhaps to a big harvest or to an invention which reduces costs of production, or to the movement of labour and capital to an industry in excess of the limits of demand at a high price, tends to reduce its price and thereby to expand its sales. The converse happens with decreases in demand or supply. Costs represent alternatives forgone, for they are sums of money paid to attract factors away from other industries, where they could contribute (nearly) the same value to output.

But the price system does not work perfectly. While 19th century industrialists considered it good policy to make a small profit on a great many items, in the 20th century it was found to pay a monopolist deliberately to keep down output in his field in order to raise prices and increase profit on each item. Economics studies these phenomena of monopoly and imperfect competition, associated with trade marks and advertising. It is generally agreed that the state should supplement the price system by preventing or controlling monopoly and by paying for services such as defence and public health and education which private enterprise would not provide adequately.

Economic activity under free enterprise has large swings up (booms) and down (slumps) ; mass unemployment often occurs during the slumps. Hence economics studies the nature and causes of this " trade cycle" to discover whether general economic depressions, or slumps, can be avoided.
An important contribution to economic theory in general, and especially to this branch of it, was made by J. M. Keynes who published in 1936 'The General Theory of Employment, Interest, and Money'. He showed that if people spent less, in order to save more, this tended to create unemployment unless it was offset by increased expenditure on "capital goods" such as buildings, ships, plant, and machinery. Much has been written, largely inspired by this book, on methods of preventing mass unemployment. Suggestions include public works, control of investment, and deliberate budget deficits when slumps threaten.

Fluctuating Value of Money
Industry and trade on the modern scale would not be possible without the use of money. Money is a generally acceptable purchasing power. A man will take it in exchange for his goods and services because he knows that others in turn will take it from him in payment for what he wants to buy. The purchasing power of the monetary unit may change from time to time. If it falls (in other words, if the general level of prices rises), this hits people on fixed incomes and creditors due to receive fixed sums of money, for the money buys less than it used to do. On the other hand, the prospects of a rising price level often stimulate borrowing and economic activity, although sometimes firms embark on enterprises which do not survive after prices cease to rise. The theory of money and banking deals with these questions, and also how changes in the amount of money and in the desires of people to hold money rather than income yielding securities (" liquidity- preference ") may affect the rate of interest.

The theory of international trade explains why a country specialises in the production of certain commodities which it exports in exchange for others, which it imports ; and discusses " the terms of trade "—what forces determine the volume of imports a country gets in exchange for a unit of exports. A country also engages in other transactions with the rest of the world. It may receive payments as interest or profits on its foreign investments, or for shipping and other services which it renders, or from tourists. All the various payments which it makes and receives together form its balance of payments. Equality between its payments and receipts can be attained in various ways. These include changes in the rate of exchange between its currency and other currencies ; restrictions on imports and subsidies on exports ; and, under fixed exchange rates, inflation or deflation of the national money income. The money income of a person for a year is his total receipts, including the value of any items such as farm produce which he produces for his own consumption, less his business expenses. The national income for a year is the net sum total of all incomes of persons, firms, and institutions for that year. It must be measured net. For example, dividends paid by companies must not be counted in the incomes of the companies as well as in the incomes of the shareholders ; income tax must not be counted in the incomes of both the taxpayers and the government.

National Income
The national income of a country is probably the best single measure of its economic position, but for comparison, with other years or with other countries allowance should usually be made for differences in population and in the purchasing power of money. The latter allowance can be made by taking some year as the " base" year and then altering the money figures for other years to make them represent money units of the same purchasing power as in the " base " year. The result gives a comparison of " real," as opposed to " money," income. For example, if in the year 2000 the price level should be twice as high as in 1950 (taken as the base year) the actual national income of 2000 should be divided by two in order to compare it with that of 1950.

The main determinant of real income is the volume of production. This is influenced by many factors. These include the natural and acquired capacities of the people, and the natural resources and other assets (the size of the population relative to these resources, the amount of specialisation, and the state of technical knowledge) of a country. Part of the economic activity of a country is devoted to providing for the future by increasing productive equipment, and improving health and knowledge ; this investment keeps down current consumption, but tends to increase future output.

Technical Knowledge
The great economic progress which has taken place in the western world over the last hundred years or more has been due to the continued growth of technical knowledge combined with increased investment and greater specialisation, including large-scale production. But technical progress may be offset by over population, by wars, or by natural catastrophes.

The study of economics is an aid to clear thinking and is useful to the citizen as well as to the statesman. Economists do not always agree among themselves on practical issues. This is usually for one or both of two reasons. In the first place, these issues may involve personal judgements about the extent to which one aim (for example, greater output) should be sacrificed to another aim (for example, greater equality or social security). In the second place, they usually involve forecasts about how people would respond to the proposed measures. But the citizen should know enough economics to form his own judgements on these issues of policy.

Economic history
Human history is a minute fraction of the millennia that have elapsed since talkative animals with the trick of using tools began to people our planet. In the broadest sense of the term, history should acquaint us with the record of human achievements and failures. These are a guide and spur to the exercise of human reason directed to the survival of human life on earth. However, history is not just "past politics" nor even is it merely politics diluted with economics. It is the story of the life of mankind, the natural history of an animal species with habits so peculiar and a record so unique as to justify a science devoted to its own past.

Each new generation makes new demands on the scientific study of the past, and faces new problems which should encourage the exploration of new facets of the human record. Much of dynastic history is irrelevant to the problems which we now face in the age of semiconductors and globilisation. Historians of the Victorian age had other preoccupations. Legal and constitutional issues, the rise of nationalism and religious controversies inescapably circumscribed their approach to the political set-up of their time. History today has to display the past as a balance sheet of our increasing command over nature by advancing knowledge and applying new social technique to the multitudinous activities of practical life. Our own century calls for a new kind of ecological history, a history of human life in its entirety focused on environmental management.

Britain is a small patch of earth; a small island off the coast of the smallest of the five continents. To know something about its comparatively recent past is a paltry substitute for knowledge of the historic record in its entirety; but for those of us who belong to the Anglo-American speech community, the record has a peculiar interest. We are bound to it in a special sense which extends beyond its laws, its conquests, its trade or even its inventions. Its story is the clue to why we do things in our own way.