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Economics 309
the three, as the classics of political economy were aware. Nevertheless, eco-
nomics, as it developed, tended to accord far-reaching autonomy to all three,
and their practical unification - as desired by the classical economists - calls for
a more thorough study of the inter-relationships, and wil probably depend on
further progress in the general mathematical theory of systems which, in econom-
ics as in other branches of science, attempts to explain functioning and devel-
opment through a single system of equati0ns.4~
The prospects, unfortunately, seem remote, economics in this respect being
more complex than biology or psychology. In biology and psychology, the
process of growth and the development cycle are determined and, so to speak,
built-in in the phenomena studied, whereas in economic history, all schemes of
unilinear development (which is what all schematic theories of socio-economic
development finally amount to) seem inadmissible simplifications. No studies
appear to have been made, and metastatics (comparative statics) often continue
to be used instead of a truly dynamic approach. It should also be borne in mind
that in Rapoport’s own view, the general systems theory represents an important
addition to the conceptual repertoire of the scientist rather than a method.
I. The theory of the functioning of the economy
As long as free competition capitalism was considered to be the ‘normal’ econ-
omy, the theory of the functioning of the economy was concerned mainly with
two problems:
a. In micro-economics, it concentrated on the analysis of market mechanisms,
taking for granted certain assumptions regarding the behaviour of ‘economic
man’ ;
b. In macro-economics, merging with the theory of dynamics, it was concerned
with describing the state of equilibrium, and deviations from the ‘normal’. Busi-
ness fluctuations were treated as pathological phenomena. More often implicitly
than explicitly, resort was often had to comparisons with living organisms;
hence the common expression ‘healthy economy’.
The confrontation under (a) of the general laws of the market formation of
prices with actual conditions led to a more precise formulation of these laws as
the conditions under which they apply were analysed, and then adapted to other
sets of conditions, i.e. imperfect and monopolistic markets. This provides a clas-
sic example of the application of the deductive method and the mathematization
of the argument. The refinement of the initial assumptions, however, not only
helped to make the market model more explicit, but also oriented research to-
wards the motivation of the economic agents taking part in market exchanges.
This research led to a blind alley - the psychological theory of value, based on
the hedonistic interpretation of utility - but it encouraged a more rigorous for-
mulation of the general praxiological principle of economic behaviour, which
is a corner-stone of contemporary theories regarding decision-making and of
operations research.
The introduction of stochastic relations into economics (apparently under
the influence of a similar development in the natural sciences, and particularly
in physics) marks another important stage in the evolution of market theory.