Economic Theory and Final causes

CRESPO, RICARDO F.

Pilar

Seminario; Seminario IAE; 2019

IAE Business School

I start from the account, stressed in the previous chapters, that economists want to know the causes of economic phenomena and that economic theory is the part of the economic sciences that looks for the causes of economic phenomena. In the previous chapter I have dealt with positive economics showing how it tries to detect the economic causes of economic phenomena: for example, what are the economic causes of the last economic crisis or of today?s price inflation. However, there are not only economic causes of crises or inflation ? a set of fiscal or monetary inadequate actions ? but also, for instance, psychological or sociological characteristics of the people or nations concerned that greatly influence the phenomenon considered. Overconfidence before the crisis and panic during it are crucial causes of it and are not economic causes. Economic theory would have to consider these non-economic causes if it is to explain adequately and accurately predict.