Ceteris Rectis Laws in Economics
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Uniwersytet Warszawski, Wydział Nauk Ekonomicznych
Publish date: 2018-03-31
Submission date: 2017-08-14
Acceptance date: 2018-01-24
Gospodarka Narodowa 2018;293(1):9–31
This paper endeavours to interpret laws of economics as statements that are only valid under “normal” conditions. It starts out by referring to various problems in understanding scientific laws, including those governing economics, in ceteris paribus terms. Next, the author tries to demonstrate that difficulties in completing antecedents of these laws, i.e., specifying all factors that are either absent or constant, should result in a “normality” approach to ceteris paribus laws. In such an approach, instead of claiming that “ceteris paribus, if A, then B,” we would be stating that “ceteris rectis, if A, then B,” with ceteris rectis implying that “the nature of A is to produce B.” However, the clause would have to be placed in the context of the more encompassing definition where ceteris rectis originally means simply “other things being right.” Such reflections, deeply rooted in the general philosophy of science, are illustrated by various examples taken from economics, including statements on the relationship between the cost of money and investments, as well as some insights into the law of demand. The paper concludes by asserting that economic laws not only carry implicit or explicit ceteris paribus clauses, but also consist of the ceteris rectis clause. This appears to rule out the possibility of formulating universal laws of economics.