Abstract

Economics is a science - at least positive economics must be. And science is in part applied mathematics, in part empirical observations and tests. Looking at the history of economics, one cannot find much testing done before the twentieth century, and even the collection of data, even in the manner Marx engaged in, was not common in his day. It is true that economic policy is an older field, and in that field much information is deployed for the purpose of prescribing a course of action. But this is not to say that the information procured for that purpose is either based on observation or has been tested. In the seventeenth century some alchemists and economists hoped to boost the economy by manufacturing gold, others feared inflation; and the British Parliament legislated against manufacturing gold. David Hume proved in the eighteenth century - quite a priori - that doubling the quantity of gold will only double the price of each commodity and he thus set things at rest for a while. Later the question was opened again when Marx, for example, showed historically how the gold robbed from the Americas started Europe's boom. Yet the theory - the quantity theory of money, as it is called - which Hume proved a priori, is still contested and still hardly tested to economists' satisfaction: is the price level fixed mainly by the amount of available money? Some economists answer yes, others no.