Law of nature in economics

Answer 1

In brief, yes.

It is more accurate to say that economics describes nature's law in the field of human exchange. Insofar as the human mind comprehends and verbalizes the limited spectrum that encompasses human exchange, it is possible to deduce the science a priori through logical deduction. It is valid at all times under all conditions.

An example serve to illustrate:
Skipping initials deductions, we can define wages as income derived from work and an individual income tax as an cost of working imposed by a third, otherwise uninvolved party. Furthermore, we can define revenue as the money that a business brings in through its exchanges in the marketplace, and profit as the net of revenue and costs. Finally, we can define a business income tax as the tax on business profit.

We know that a business has an operating budget and an investment budget. It pays this out of its profit (net tax). If an additional tax is levied on a business, ceritas paribus, its layouts to wages and investment decline. Therefore, one valid conclusion that is to assert that taxes on business must necessarily increase unemployment, decrease wages, or both, EXCEPT in the event of all the additional costs being absorbed by reducing the investment budget, OR in the event that the costs are paid out of savings.

When deduced correctly, controverting the law amounts to logical contradiction, and is not possible in reality.

There are also normative statements routinely made in the economic field that while and absolutely true, are so generally true that they are regarded as valid statements. One such example is the assertion that an income tax leads to less work getting done throughout society. While it is indisputably not valid under every circumstance - for example, imagine you were taxed an additional 12 cents per day but also received a 20% raise; you may very well choose to work more - the public policy analyzed present scenarios where such an event is highly unlikely. Strictly speaking, we cannot consider this natural law, although it is nonetheless warrants the classification as natural tendency.

A note on the nature of economic laws: They are descriptive and, unlike physics, not quantitative. Another example will illustrate. Gravity is a force in physics - one force, in fact, in four. The law of gravity applies everywhere, but that does not mean it will manifest significantly enough to be noticeable in observation. For instance, observing the overwhelming power of another physical force, would suggest that gravity no longer seemed valid. That is, of course, not the case; it was merely subsumed by the higher magnitude power of a third force. In physics, we can know something about these results and predict them if we are able to quantify the physical properties of the objects in question, and physicists do this through measurement and estimation.

Unlike the natural objects which constitute the source of numerical information in physics, the nature of value - what gives rise to the price system - is unquantifiable. The reason for numerical expression of the price lies in the fact that humans can process numbers in an ordinal fashion, and hence margins are established by virtue of mathematical addition. Just as it is impossible to know people's preferences without reading their minds, it is impossible to quantify economics with any precision. All attempts at prediction predicated on quantification are properly classified as speculation, though some may well prove more accurate than others.

See more here:
http://mises.org/story/2025
http://mises.org/story/2674
http://mises.org/epofe.asp
http://mises.org/esandtam.asp