Economics is Physics

On April 16th, 2009, The Businessline carried my letter to TCA Srinivasa Raghavan's opinion on 'Why Economics is not Physics'. The letter was however shortened. I am reproducing my original reply below.
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There is a major difference between Mathematical Techniques and Mathematics. I hope you will appreciate the idea that Mathematics is not about calculations alone. As a matter of fact, calculations are a means to comprehend the underlying logic and rationale mathematics embodies. So techniques are not science, they are just a medium through which science can express itself and what every individual comprehends out of it is completely dependent on the capabilities of an Individual’s mind.

Mathematics is also only indicative. The accuracy depends on the number of dimensions taken into consideration. Let me touch Pythagoras Theorem you have used as an example. The theorem holds good only in 2 dimensions. It is not tough to understand that there is no triangle in three dimensions. Of course you can have nonzero x-y-z values for all the three vertices, but a triangle is still a plane and a stand alone plane is only two dimensional. Unless we fix the number of dimensions the accuracy can always be disputed. But this cannot be considered as failure of Mathematics/Pythagoras theorem. Even in science our rules are based on dimensions. Say gravitation and there are principles of physics that hold true in an environment governed by gravitation. I would like to bring another example. A recent analysis suggests that the largest structures in the universe are about 200 million light-years in size. But scientists at the Enrico Fermi center in Rome argue that largest structures discovered so far are limited only by the size of the galaxy surveys that found them. Still larger structures might stretch beyond the scope of the surveys. How ridiculous it would be to say that there cannot be a survey beyond our scope? It just highlights our own limitation and incapability.

Similarly in Economics, the social system is too complex to pin down the dimensions and offer accurate measurements. This should not mean that Economics is not physics; it is just that our own understanding has not advanced enough to find these social dimensions where we can successfully apply rules and obtain results. In no way this means that society is dimensionless. It only means that right now, Economics (social science) is in its very nascent stage of development (the same way science or mathematics was) and is in need of its own Galileo or Newton or Einstein to be born. Hence, while there are only 10 countries that meet the Taylor’s rule and 185 sovereign nations that don’t, is it not time to say that the world is not Geocentric in Economics terms? A mistake in a rule is supposed to unearth undiscovered possibilities not discard the rule itself. Am I making sense?