I'm afraid of the latter. If economics is considered a science, there will not be debates about the validity of economic theories, and the application of these theories will be considered the only truth. This, in the same way as biology and mathematics, will lead to apply theories as tools with out considering their epistemology.
Some students of economics, and myself once, think that there should not be debate about the history of economic analysis, or that identifying each school of thought is unnecessary; "we should focus on the application instead of ideological debates". If this happens, if we do not consider ideological debates in our analysis, we may be considering mistaken conceptions about the functionality of markets.
Supply and demand is prevalent among student of economics and trained economists. It is a very simple idea that embodies almost any kind of action in a society. If there's more supply than demand, we have excess of supply then price falls. If there's more demand than supply, we have excess of demand then price raises.
On this path of thought, economists and almost everybody apply this kind of analysis to real life events. The acquisition of a new car, flirting somebody, and even hipsters devaluate fashion tendencies when "they become too mainstream": it's supply and demand, dude.
Yes, I'm simplifying. However, I've heard these commentaries among economists and
We stopped questioning our habits of thought to offer a simple question to everything. In the same way as religion, it is very comfortable to explain everything in God-terms than trying to find reliable explanations. "Have faith and markets will self-regulate." Like it happened in the 1930's.
On supply and demand terms, no ugly man would have a beautiful girlfriend. This is because ssuming ceteris paribus and that the only changing variable is beauty (the economy is study that way), there would not exist couples in which the woman is insanely beautiful (like you ;) ) and the man is close to a skinny Shrek (like me). However, the world is full of these inconsistencies that it results incorrect to assume that beauty is the only variable to consider.
We cannot simplify as much as the study of relationships in the same way as we cannot simplify the study of economics.
In the real life, all people take personal decisions based on multiple variables and create all posible scenarios although the outcome can be different to any of those scenarios.
Let's assume that simplifying the decision-making in life is an ideology, would you make the decision of choosing a parter based solely on beauty? Then, ideology matters in personal life.
Hence, up there, where everything happens, where the big discussions take place and decisions about the future of millions are made everyday, is ideology important?
Let me share with you this video before proceeding:
Yes, I know this videos oversimplifies how Walmart operates everywhere in the U.S. and other countries. But the issue I want you to focus is the following: this video assumes that the increase on wages will lead to higher prices, not higher unemployment. Actually, multiple studies suggest that this is what really happens [1].
This assumption is different to what the neoclassical tradition suggests. Neoclassical economists claim that an artificial increase on wage (floor ceilings) will lead to a situation of unemployment. This comes from the idea of supply and demand for labor. High prices of labor will lead to less demand for labor and viceversa.
Does it make sense? Of course, we have heard that so many times that somehow it has become a habit of thought already in the same way as stopping in red.
In contrast, the keynesian tradition assumes that nominal salaries are not as important to determine employment. What matters before hiring is the expectation of entrepreneurs. If entrepreneurs believe that they're having a good year, the will hire as much employees as needed to produce what they expect they're going to sell. Entrepreneurs are good with these calculation, they may hire you to do so.
Does it make sense? Entrepreneurs doing calculations on their costs and expectation to find profit?
According to this ideology, salaries are not as important when hiring like in the neoclassical tradition. What matters is expectations to the future.
Actually, this is closer to what really happens and some people avoid this idea for considering supply and demand.
For politicians using the theoretical frame of Keynes, they can advocate for higher wages.
For politicians using the theoretical frame of the Neoclassicals, they will not advocate for higher wages.
Then, ideology matters in the study of economics. Even so, we still teach economics as it is only supply and demand. People stop questioning the validity of theories and make decisions based on these ideas because they believe they are the only truth. They even vote for politicians who accept these conceptions and avoid politicians who question!!
Of course, I'm not claiming that Keynes is correct on everything he said or that the neoclassical tradition is incorrect completely. If you assume this from my writing, then you have a serious problem comprehension. The issue is that you have to question what you're told.
Endnotes:
[1] For the sake of this discussion (ideology matters), I will simplify: Walmart is, for instance, operating already with all employees it needs. Walmart would not close a store if its production costs raises unless it is for a considerable amount.
References:
YouTube video: https://www.youtube.com/watch?v=vAcaeLmybCY
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