Elements and Evolution of Economic Theory

Economics mainly studies the allocation of resources and modernization, and is a subject of social enlightenment and social design. A complete economic theory includes three elements: basic assumptions, basic propositions, and research methods, from which we can understand and analyze economic theories. The basic assumptions generally answer the question of “for whom”; The basic propositions generally answer what kind of system and resource allocation method can achieve what kind of goals, which also corresponds to the three research levels of “people, goals, and systems” in economics; In terms of research methods, economics requires a comprehensive application of empirical research and normative research methods. In terms of the question of “for whom”, economics faces ethical conflicts and choices. In terms of goals and systems, economics has diverse goals and systems, and therefore faces conflicts and choices between different goals and systems. Due to the continuous development and changes of these conflicts, abundant economic theories have evolved and emerged. History, theory, and statistics are the three magic weapons of economists, and the comprehensive application of these three methods makes economics known as the “Shining Pearl on the Crown” of all social sciences.