The existential mutation of economics

Economics were in the beginning a field studied by philosophers amongst other social sciences experts. It was a normative topic, arising a bit from the laws of nature but above all the laws of men: values and ethics. Smith wrote the theory of moral sentiment 15 years before the wealth of nations, and could not imagine an economy and a market without values driving it. 

Marx was a sociologist, Hayek was a philosopher, kindleberger a historian, and so was Ibn Khaldun...

Yet, step by step, economy became a discipline dominated by techniques, rather than ideas, moral and values. 

The connection that emerged between the world of economy and the world of physics was definitely finance through mathematics. Finance became a topic often described by physicists, who are constantly looking for a perfect framework that can be explained by laws, as is nature, given that Physics is derived from Phusis which means the study of nature, in Ancient Greec. 

When Galileo wrote that nature is a framework perfectly ruled by mathematic laws, it was a breakthrough in the philosophy of science. Yet, he was talking about the laws of nature, framed by God, that are explained by Physics, and that are progressively discovered by scientists. These laws do not vary from a city to another. 

The world of humans is different. It's a world with irregular laws, contradictory rules, a world dominated by passion, emotion and inconsistency. These do not obey mathematical constant laws, nor a regular perfect framework as would be the pure and perfect competition, or the world imagined by Black and Scholes through the hypotheses of their model. 

Finance is today the second most preferred job for physicists*, just after education, and way before laboratories, engineering companies... A shift that reveals either an identity crisis of physicists, or an identity crisis of the economic world... or both ! 

Dear physicists, the market is not a system ruled by given and constant laws of protons and neutrons that could be understood, rather, it is a perpetual moving framework governed by changing laws and dominated by unconstant and irrational agents: humans !

As physicists (not all of them of course) entered the world of economy, through finance, they forgot to change their epistemological positioning, from the will to explain constant regular and perfect phenomenons through mathematical models, to a more humble strategy, that would eventually aim more to relativity, contingency and imperfection. Such a view may would have avoided humanity silly hypotheses that support nowadays the most famous finance models used in most stock markets, and eventually deadly financial and economical turnmoils.

References:

*http://www.theguardian.com/science/2013/jul/21/physics-graduates-gravitate-to-finance