CC BY
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SOCIAL SCIENCE AND ECONOMICS
© Khadartseva L.S.* *, Dzakhoeva S.L.*
Financial University under the Government of the Russian Federation, Moscow
This paper considers the actual problem of correlation of economics with other sciences, and namely with social sciences. The evolution of processes to solve the provisioning problem takes place in a social context. As a result, the economy is a subsystem and is interrelated with a variety of other social subsystems. These subsystems include economic, political, religious, social, geographic, demographic, legal, and moral systems. From the ancient times economics was treated as part of philosophy and religion.
Keywords: human wants, provisioning, social science, exchange, social interaction, technology, specialization.
Archeological and written proofs of human existence propose that attaining the material resources to suit wants has been an everlasting problem. Food and refuge are conditions of human life. Other goods satisfy a variety of human wants and give pleasure or usefulness to human beings. The study of approaches that humans deal with these problems of provisioning is called «economics». The development of processes to resolve the provisioning problem takes place in a social context. As a result, the economy is a subsystem and is interconnected with a range of other social subsystems. These subsystems include (but are not limited to) economic, political, religious, social, geographic, demographic, legal, and moral systems. The psychology of individuals is also basic to the social system. From the time of the Greeks through the Classical economists economics was treated as a part of philosophy and religion. In the 19th century, social science came out, and separate disciplines were shaped out. Economics, psychology, sociology, politics, anthropology and other branches of social science grew as separate fields of science. In the second half of the 19th century, «political economy» became «economics». Since that time, economics has been often described as «the study of how scarce resources are distributed to satisfy limitless wants». As a professional discipline, economics is often looked upon as a science that seeks most favorable solutions to technical allocation problems.
Provisioning treats economics as a social science. Economics as a study of provisioning embraces the historical and philosophical foundations and background of economic behavior. The exchanges between the economic and noneconomic objectives are considered. The interactions between economic life and justice, ethics, morality, creativity are of concern. Human societies have tried a wide range of other systems to cope with the problem of provisioning. Some have
* Doctor of pedagogical sciences, professor.
* Student of the financial-economic faculty.
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been more flourishing and other less so. Some systems have lasted for thousands of years with only some changes. Other systems have come and gone quickly. In some cases ecological problems have caused the downfall of societies. In other cases, the societies ended unexpectedly with social revolution or the societies got used to altering circumstances and advanced over time. Archeological studies repeatedly find proof of societies that did well but finally failed. In some cases they were ruined from outside forces. In other cases, the reasons were ecological: there is a hypothesis a drought is to blame for a dramatic change in the Mayan society. Economics is concerned with the ties among individuals, between individuals and the community, and between individuals, society and environment. It should be noted that humans have the ability to change their environment both in positive and in negative ways.
From a technical viewpoint, economics is the science of how diverse choices or options are assessed to attain a given aim. The sphere of economics is the study of procedures by which scarce resources are assigned to satisfy limitless wants. Preferably, the resources are distributed to their highest valued uses. Supply, demand, preferences, costs, benefits, production relationships and exchange are tools that are used to illustrate the market practices by which individuals allocate scarce resources to satisfy as many wants as possible. This increasingly contracted focus is the area of modern, «neoclassical», microeconomic analysis [2].
There is substantial evidence and general understanding that human beings live in social groups. The Western tradition considers that humans are social animals. In economics (and social sciences more generally), the nature of the role of the individual in the community or state has been a constant question. Every society must address the question (either utterly or openly), «How can the autonomy (or freedom or liberty) of an individual be maintained and at the same time provide for the commonweal (social welfare)?». In some societies, the individual is regarded as more significant than the community. In other societies, the community has priority over the individual. From a realistic perspective, the problem is to balance the rights and freedom of the individual with the roles of the community. There are quite a few perspectives about the most suitable ways to achieve that balance. While dealing with this balance, the allocation or provisioning problem must be resolved. Humans have sought to solve the problem of provisioning through social interaction and the use of technology.
Social interaction is used to refer to the relationships between two or more individuals. In this background, an «individual» has the aptitude to make a decision and carry that decision out. In legal terms, this individual is called an «agent». (One of the main concepts in law and economics is the association between a principal and an agent.) An agreement between two individuals or agents is a contract. Marriage is an example of a social institution. It is a contract between two people. The form of that contract is influenced by commonly held social values and laws of a society. Nearly all societies have some form of marriage. Marriage
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is a social conception that provides a solution to the problem of upbringing children. As a social institution, it may change over time as social values, technology, work and environment transform. These institutions may vary from place to place. Money, law (or the legal system), property rights and markets are examples of economic institutions. Institutions simultaneously facilitate and constrain human activities. Technology is the knowledge about the individuals’ relationships with the natural and artificial environments. This knowledge can be used to change the elements in the environments to satisfy human needs. Technology entails knowledge about different ways of solving the problem of provisioning.
Society is confronted with a finite set of resources and a given state of technology at any certain point in time. Consequently, there is a finite amount of goods and services that can be produced in that time frame. Given human desires and need for food, clothing and shelter, it is not always possible to produce everything that everyone would like to have. When individuals want more than can be produced they have the economic problem of scarcity. The problem of scarcity might be resolved by reducing individuals wants or by increasing the output of goods and services. If the solution is to reduce wants, which wants should be eliminated and which should be retained to be satisfied? The individual would necessarily be required to make a choice. If the solution was to produce more goods, which goods should be produced and how are they to be produced? Again, the individual must make choices. In modern, neoclassical, economic analysis the problem is structured so the wants are taken as given and the problem is to produce the goods that satisfy the greatest wants. Scarcity requires that the individual or agent make choices.
In a society, the behavior of the individuals must be coordinated through social interaction. This social interaction takes many forms ranging from cooperation to competition. In the process of resolving the allocation problem through social interaction, a set of institutions, organizations, beliefs, principles, perspectives and commonly used meanings are generated. Society, directed by these values, ideas and principles and limited by institutions, technology and resource donation, must answer the problem of provisioning. The specific uses of goods and resources must be established. These choices involve what resources to use, what goods to produce, who will tolerate the costs and who will profit. The indispensable problem is the organization of the choices and behavior of individuals. Discovering a way to protect the autonomy of the individual and at the same time coordinating their actions has been an important goal of most great writers on social topics.
Specialization and the division of labor are two imperative forms of social communication that permit two or more individuals to do what an lonely individual cannot do. Mutually they are means to boost the production of goods and services. Specialization is the case where an entity (firm, organization or country) concentrates on the manufacture of a specific good (or group of goods). It can amplify the total of goods that can be produced. It also requires some form of so-
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cial institution to manage the process. If one entity produces food and the other clothing, these two must act together if both are to have food and clothing. This cooperation may be facilitated through an institution such as the market or a transfer based on association, religion or government authority.
The division of labor is another form of social interaction that lets individuals to do what the isolated person cannot. In the division of labor, the manufacture of a good is broken down into individual stages. One person then carries out one stage in the process. No single person produces the good single-handedly. The efforts of each individual in the production process must be coordinated. In modern industrial societies, production often takes place in a business company. «Management» is considered as the process of coordinating the activities of the individuals in the production process. A precise application of microeconomics to the process of production within a firm is called «managerial economics». The division of labor is the process of dividing a task (work) into its constituent parts.
If people use the division of labor and specialization, it is essential for them to coordinate their efforts. They must cooperate on a range of levels. Society is a intricate set of interactions among groups and individuals. These interactions give rise to social institutions. Human contact can be studied from a diversity of standpoints. Sociology, political science, law, history, psychology, religion, anthropology and economics are instances of social sciences. John Stuart Mill [18061873] divided economic activities into three categories: production, distribution and exchange. Production is the process of changing contributions to increase their ability to satisfy human wants. Inputs are sometime called “factors of production” or resources. Normally, economists will classify inputs as land, labor and capital. Apparently, labor is described as human effort used to produce goods that suit human wants. Capital is usually regarded as an input that is produced by labor but is used for the additional production of goods and services. Entrepreneurial aptitude was the last category of contributions to be added as a factor of production in market oriented economies. It is usually associated with the practice of creating and innovating of new processes.
Distribution generally describes the process of allocating the goods and services that have been produced. Societies have used market exchange, reciprocity, eminent domain, inheritance, theft and philanthropy to distribute goods and services. The most important means of distribution that are used in most societies are market exchange, reciprocity and eminent domain [4].
Market exchange engages a quid pro quo, i.e. an exchange of private property rights between individual mediators. The conditions of the exchange are clearly specified: «I will give you this on condition that you will give me that». The goods to be exchanged are apparently particular, as are the terms of the exchange. The members in the exchange do not need to know each other: they just need to know the terms of the exchange. In many cases, the exchange may be made easier by social institutions. Laws that protect buyers and sellers may help the exchange.
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Trust may be an important element as well. The final objective of economic activity is to offer goods and services that can be used by human beings to satisfy needs and wants.
References:
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2. Maki U. Bo Gustafsson and Christian Knudsen. Rationality, Institutions and Economic Methodology, Routledge. - London, 1993.
3. Marshall A. Principles of Economics. - 8th ed. - Porcupine Press, 1920, reprint.
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5. Reynolds R.L. Boise State University. Basic Microeconomics. - Boise State University, 2011.
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