The Importance of Interdisciplinary Research on Economics
Economics are often viewed as mechanistic for the use of simple model and mathematical methods to capture the operation of the economy. von Hayek (1974) argues that quantitative data could scarcely achieve comprehensive picture of the mutual interdependencies of the different events in a market and hence, complex phenomena like imperfect facts and knowledge should not be ignored. Myrdal (1975) advocates a widen perspective of a whole political, social and economic system to deal with problems in a world setting. It shows that interdisciplinary research is very important on economics decision-making and development.
Conventional economics provide explanations for specific expressions of development. They are insufficient to account for the variety of different results or to formulate policies appropriate for each particular circumstance such as the recent Asian and Argentina economic crisis. Experience from other fields offers advantages of conscious knowledge that can increase the speed and efficiency of any decision-making and activity.
Jacobs et al (1997) and Hodgson (1993) view society as a complex organism in a biological perspective. It is because there are multiple systems and subsystems (individuals) work together to maintain the health of the community and support growth and development. Modern biology provides a rich source of ideas and approaches from which a revitalized economics may draw. Hodgson (1993) calls this an evolutionary approach because it prompts the economists to consider the many meanings and ambiguities to the extensions and facets of the implicit analogy between natural and the social worlds. This confirms the importance of interdisciplinary research on economics as the decisions are long-run development rather than short-term marginal adjustments, and are more complex and difficult than a mechanic theory would suggest.
Polanyi (Nagarajan, 2002) sees economy in its social and political embedding. It implies the guiding interest of policy makers should be in the sense that a specific social problem was recognized rather than merely economic and political concerns (Wiseman, 1986). It involves addressing the fundamental issue to achieve Quality of Life (QOL) in the world. According to Stiglitz (1998), sustainable economic development depends on better health and education, protecting environment, egalitarian development, and democratic development.
Myrdal (1975) argues that true QOL should be about equality problems. The economists of developed countries should aim at instigating development and provide economic assistance in the underdeveloped countries. He advocates the cutting down of consumption and production for home consumption of many other items besides food in all the developed countries. This should release resources for aiding the underdeveloped countries on a much larger scale and to begin with for solving the acute food crisis. Myrdal (1975) also criticizes the developed countries commonly view the aid in terms of their national interests, so they tend to offer less on political, strategic and military advantages.
Political decision should be dealt with social and ethical concerns; otherwise it would hurt and hinder economic growth and stability, for example the recession after World War II. War is a destroyer of development as it physically demolishes what society has accomplished. According to Jacobs et al (1997), world military expenditure has fallen by about a third, $400 billion since 1988. They view that if the current peaceful status is sustained, it could free up even more capital for investment and reducing the inflationary pressure of burgeoning government deficits. Myrdal (1975) also asserts this argument. He states that the costs for armaments are calculated to exceed total production in all the underdeveloped countries taken together. Therefore, Myrdal (1975) advocates that these huge expenditures belonging to the unnecessary and exceedingly harmful use of resources should be cut down drastically. Unfortunately, the United States is shrugging off growing vocal opposition by its allies to a possible war on Iraq. In order to pay for the huge military expenditure and deficits, the US has already announced the reduction of economic assistance to the underdeveloped countries.
Jacobs et al (1997) also view human beings as the source and primary motive force for economic development under sociological perspective. They argue that the extent of people¡¦s education, the intensity of their aspirations and energy, the quality of their attitudes and values, skills and information are crucial determinants of the process. Economics is very much concerned with the scarcity of resources. But when viewed from a wider perspective, it becomes evident that the quantity of physical resources may be inherently limited; while the social, mental and human resources have continued to expand the productivity frontier.
From the green perspective, Fordvary (1999) argues that the environmental effects, keeping other things equal are largely negative for two reasons. First, human populations crowd out wildlife, destroying its habitat and competing for sites and food. Secondly, with more people there is greater competition for areas of natural beauty, which is mostly fixed in supply. Malthus (Fordvary, 1999) stresses that unrestrained population growth leads to poverty and hunger. It is because the growth of agriculture cannot chase the speed of population growth. Therefore, without birth control, population runs into the limits of natural resources and gets controlled by deaths.
Psychological mechanisms causing expectations to change constitute an independent cause of economic fluctuations (Melberg, 1998). It also touches behavioral sciences, for example the underlying motivation for business investments and expectations. Hence, modern business cycle cannot be accused of ignoring real or monetary impulses. To justify the inclusion of psychology, Pigou (Melberg, 1998) quotes an example of which psychological interdependencies among businessmen may create herd-behavior. Peet (1992) explains it has long been known by anthropologists, sociologists, and psychologists that in most societies, group behavior is markedly different from that of individuals. Long-term goals of families and communities take into account factors that seldom enter into the decision-making of isolated individuals, and this is nowhere more important than in the context of relationships with the environment.
Finally, economists should study law because this may enable them to draw their models closer to reality. Van de Bergh (1996) argues that economic theory should not operate in an institutional vacuum focusing on production, distribution and consumption. This disciplinary divide between law and economics is harmful. Example from Van de Bergh (1996) includes the value of the traded goods crucially depends on the bundle of rights that is transferred. Property rights theorists rightly stress that economics should study how variations in bundles of property rights affect prices and the allocation of resources. Moreover, legal knowledge is also indispensable for economists wishing to conduct useful policy analysis of real world phenomena.
Economics is not just about supply and demand or inflation and monetary policy anymore. Rather, economists should understand the interdependence of interdisciplinary research that has important insights for economic decision-making and development. Anyone who ignores the importance will only see the facts of the issues from one side and neglects the other interrelated facets from a widen perspectives.
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