I was wondering if the free market works only in ceteris paribus assumptions. For instance, it is perfectly true that for any person x, that person is provided with more goods under free trade than restricted trade but as a matter of historical fact, if for instance, the current subsidization of businesses is ended wouldn’t businesses receive less goods.
And if this is so, wouldn’t economics need an empirical approach too -to settle problems of degree and not kind?
I’m just speculating so a discussion of this will really help me understand this problem better.
Businesses (and I am talking about the people in them) would suffer and may go out of business when goods aren’t subsidized, but they benefit in the long run from increased efficiency, less taxation, and better goods and services.
Could you flesh this out? Because it doesn’t really make much sense as it is. Ceteris paribus is not usually something that works in favour of “empirical” approaches…
my post is confused mainly because I’m confused on this so hear me out: say that of two nations one is free and the other is regulated. Can the regulated one still be superior in terms of quantity of goods produced and (although this is too subjective maybe) quality of life attained if it funds this regulated society on past capital, free development, etc. while the other free nation is inferior because it has only begun recently, perhaps with less natural resources?
And if this is true, then should economic statements be qualified with ceteris paribus?
PS: I thought ceteris paribus was empirical because it implicity assumes that one can know things through data, which is why data is manipulated and variables controlled in such a specific way as to measure only the x and y variables?
Well economics already applies ceteris paribus reasoning. It does so because the facts it deals with are complex and often difficult to single out, and there may be facts in operation hitherto undiscovered. This is a vexatious problem in the social sciences, which is partially what motivates Mises’s methodology. The problem here is that the “failure” of a theory due to alleged empirical disconfirmation may in fact be an illusion (some other cause may have been operative), and to avoid theories being “refuted” by every little recalcitrant fact (this does not happen in the natural sciences even) ceteris paribus clauses need to be appended. All theorems try to explain the data at the very least in economics, so it’s always relevant; the way in which it figures in praxeology is whether a theorem applies or not (basically a thymological question.) That’s different to whether the data alone is sufficient to generate theorems of any kind…
If it is known that statements like “increases in money supply cause inflation” or “minimum wages lower the supply of workers” or “free trade allows gains to both parties” are subject to ceteris paribus conditions, then don’t economists need to examine each particular instance to see if their condition holds or not in this instance so as to determine the true nature of an economic phenonmenon? And if ceteris paribus conditions make economic analysis ambigous as to what the effects of policies are, what would that imply, if anything, for the study of particular economic events (like minimum wages, taxes, payment, etc.)?
So if there is price control on wages we know that it is appropriate to apply the theory of price controls but if at the same instant prices are kept too high because of inflationary pressure, is there no room for statistics in trying to figure to what degree each theory acts on wages?
The theories don’t “act”. They identify the causes of phenomena and their consequences. I don’t see any problem with using statistics to try estimate to what extent a given factor influences the economic outcome as a matter of economic history, so long as its limits are recognised.