Economics is a branch of social science which is very complex in nature. It is not a science in that its laws or principles are so definite that they are determined in every circumstance, just like the physical sciences. For example, in math, two plus two always equals four. In chemistry, under certain circumstances, when we combine two elements of hydrogen with oxygen, it results in water, without respect to time or place.

An economy is made up of living, rational, individual beings having unique capabilities and interests. Individuals are totally different from nonliving things. They have diversity in their behaviour and the human mind is the basic reason for these differences. In the case of Pakistan, if we study its economy, we can easily realise that it is made up of its 200 million population whose economic decisions and activities actually design it.

As we know, human behaviour is unpredictable and so are an individual’s economic decisions. We don’t know when a customer enters into a shopping centre, which items she will choose to purchase. Every customer has a unique set of preferences according to her needs and wants, time and place.

The individual’s behaviour is not as fixed, as we see in the fields of physical sciences, like chemistry where each element has a constant set of properties. The knowledge and behaviour of each element and molecules in chemistry is also conclusively certain, whereas in the case of individuals, in economics, it is not, because the knowledge and behaviour of each individual is diverse. This is the reason we call economics knowledge of uncertain behaviours of economic individuals. To refer to this fact, Fredrick A. Hayek says about economics: 

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

That’s why many economists believe that economics is not just a science, but a major field of arts, based on some core principles (for some people, these are assumptions) which are very fundamental in nature. These fundamentals generally explain the distinctive behaviour of consumers and producers. Similarly, they also explain the consequences of private economic policies and public policies with respect to their performance in terms of the efficiency and effectiveness of resource allocation. For instance, as we economists believe, price system in the market is the best way to coordinate economic activities, and competition is the most efficient way to allocate resources. These fundamentals are the heart and mind of economics as a science or an art. Economist Ricardo Hausman explains their role as follows:

“Orthodoxy reflects history’s painfully acquired lessons – the sum of what we regard to be true. But not all of it is true. Progress requires identifying errors, which in turn calls for heterodox thinking. When all orthodoxy is thrown out the window, you get the disaster that was the Chinese Cultural Revolution – and that is today’s Venezuela. “

Thirdly, scientific enquiry mostly depends on how you perceive things, as in how you observe, examine and interpret them. Some people try to perceive economics as an engineer in order to design people’s economic activities. In this architectural approach, individuals are just like the bricks whose behaviour is supposed to depend on the architecture’s cognitive intellectual design. This approach is dominant in public policy nowadays, where experts are directing (or nudging) individuals’ behaviour in order to achieve their desired goals.

The opposite of this approach is to perceive economics as a gardener. The gardener lets the plant flourish while focusing on her duty to create the conditions most favourable for its healthy growth, applying her cognitive abilities to know as much as possible about its structures and the way they function.  The objective of this behaviour is to let the society freely decide what is best for its individuals. It is the liberal approach, which for most people is classical liberalism or libertarianism.

The economist (or state), as an architectural approach, has socialist, or fascist, or corporatist (corporatism in terms of Italian fascism) approach, which was popularised in the West, especially by John M Keynes.

In the liberal approach, the market is the result of 200 million individuals’ (in Pakistan’s case) unpredictable and unforeseeable economic decisions, which could be explained by economic fundamentals. While in socialist or fascist approach, the market could not be totally free – it is dependent on individuals’ economic decisions. So, according to this approach, some commanders must watch it and nudge it.

Fourthly, as we know, in every branch of social science, it is necessary to know in depth about four basic elements: individuals, society, state (and government), and market – especially, how they work. This in-depth knowledge is also very important in the field of economics.

Let me put some basic questions, which need the cohesion of these four pillars of social sciences.

Why is there more probability of economic loss and wastage of society’s resources when the government plans economic activities as compared to the private planning by free individuals in the free market?

How and why taxes reduce economic incentive and activities?

How does minimum wage restriction damage job market?

Why is there lack of economic coordination, with respect to time and place, when bureaucrats plan and design economy?

How do property rights play a central role as a catalyst for all types of political, civil, and economic freedoms?

What is the role of knowledge in society and economy as well?

How do different interest groups influence the government’s economic planning, especially in the case of market regulations and budgetary expenditures?

An understanding of these basic questions is only possible when we focus primarily on individuals’ economic behavior – voluntary exchange, cooperation and trust in society – status quo, lobbying, Game of Thrones type politics and exploitation by power in the structure of state – and the use of knowledge and price system in economic coordination, competition and society’s resource allocation, knowledge and planning, demand and supply and coordination of production, etc.

We cannot understand social sciences, especially economics, without deep understanding of the answers to these basic questions. In the words of Hayek:

“Advancement (in knowledge) could only come as we gained increasing intellectual mastery of the forces of which we had to make use.”

The biggest tragedy even in the modern world is that we talk about social issues without knowing comprehensively about individual, society, state, or the market. Social sciences are not being taken seriously. Economics is also facing many tragedies, as it is very sensitive and its seriousness as a topic of human affairs influencing all aspects of life is not being gauged. A lot of fallacies are dominant in the perceptions on the subject. In the modern era, the real causes of populism are these fallacies as well.

Interestingly, in the US, which is on the top in academic excellence all over the globe, the percentage of conservatives answering the basic question of economics incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%, according to a credible survey. So, we can imagine what is being thought about economic affairs in Pakistan, which is very weak in academic performance and public intellectual environment as well.

Our university graduates are so poor in economic understanding that they cannot even interpret the modern economic systems. I have talked with some MPhil and Ph.D. level graduates in economics when I questioned them over the role of knowledge in the economy and how economic knowledge is relevant to the time and place. Answers were so confusing and irrelevant that it was a painful experience for me. The majority of Pakistani intellectuals don’t even know that China is no longer a communist economy. The communist era ended after the late-1990s in China. Even many university professors of economics are ignorant about the real difference between free market economics and Keynesian economics.

It is necessary that we take economics seriously, and don’t put it merely on common sense or conspiracy theories promulgated by anti-market socialist propaganda. We must know that ideas have consequences. Wrong ideas mean faulty practices, which result in bad consequences.