Biology is similar to Economics

Krugman gave a talk at the European Association for Evolutionary Political Economy in 1996. Some interesting analyses were drawn in this talk mainly the difference between economics and biology.

But for learning basic economics in comprehensive he says:

Economics is “Interactions among intelligent, self-interested individuals.”

• “Economics is about what individuals do: not classes, not "correlations of forces", but individual actors. This is not to deny the relevance of higher levels of analysis, but they must be grounded in individual behavior. Methodological individualism is of the essence.
• The individuals are self-interested. There is nothing in economics that inherently prevents us from allowing people to derive satisfaction from others' consumption, but the predictive power of economic theory comes from the presumption that normally people care about themselves.
• The individuals are intelligent: obvious opportunities for gain are not neglected. Hundred-dollar bills do not lie unattended in the street for very long.
• We are concerned with the interaction of such individuals: Most interesting economic theory, from supply and demand on, is about "invisible hand" processes in which the collective outcome is not what individuals intended.”

I believe many the libertarians will agree with me at least in the above lines.

Mises wrote in his masterpiece Human Action that “It is a mistake to set up physics as a model and pattern for economic research. But those committed to this fallacy should have learned one thing at least: that no physicist ever believed that the clarification of some of the assumptions and conditions of physical theorems is outside the scope of physical research. The main question that economics is bound to answer is what the relation of its statements is to the reality of human action whose mental grasp is the objective of economic studies.”(p.6)

Mises also argued that “The discovery of a regularity in the sequence and interdependence of market phenomena went beyond the limits of the traditional system of learning. It conveyed knowledge which could be regarded neither as logic, mathematics, psychology, physics, nor biology.”

But Krugman argues “…….economics and evolutionary theory are surprisingly similar. It is often asserted that economic theory draws its inspiration from physics”

Further Krugman says:

• “You will discover that our whole style of thinking, of building up aggregative stories from individual decisions, is not at all the way they think.
• Nature can often find surprising pathways to places you would have thought unreachable by small steps."