Economic theories tend to be overly simplified and abstract, he argues, and they depend on a model of human behavior drawn largely from folk wisdom.
After studying different aspects of the Indian economy for four decades, the author utilises the experience to critically examine the basic presuppositions of
economic theories, including the utility-maximising individual as the primary unit of analysis and the centrality granted to the notion of equilibrium, pointing out that these ignore spatio-temporal specificities and the social relationships that contextualise the individual.
There is no laboratory in which
economic theories can be tested.
Economic theories are models put into practice by filling in economic data as initial conditions and by deducing predictions that are open to testing.
This fact does not lend itself to the glamour of tough-minded "cutting edge"
economic theories, but it offers some hope to the animals themselves.
The argument proceeds from finding an apparent connection between the
economic theories that informed legal decisions and the legal ideas that filtered into economists' analysis of the industrializing economy, to the ultimate conclusion that judges incorporated contemporary economic theory into their decisions.
Chapters 8 and 9 lay down the fundamentals of
economic theories and models of Robert E.
Friedman's ability to explain complicated
economic theories has had a profound impact beyond the university.
He covers developing Islamic
economic theories; whether Western scientific
economic theories are a proper source of inspiration for Islamic economics; Islam, science, and the "absolute truth;" an alternative approach to value and price theory based on mental labor and technological change; the Islamic theory of trade; Islam and interest from the perspective of an economist; and interest, surplus, savings, and rent.
Economic theories are not just some pie-in-the-sky, ivory tower academic exercises.
