Concept of Law: Law means “rule or conduct”. A law expresses the causal relationship between two sets of phenomenon. Like other sciences, economics also collects facts and undertakes their systematic study. The facts are analysed and conclusion drawn. These conclusions establish causal relationship between the concerned facts. These are called laws or generalisations.
Collection of facts ⇨ Systematic Study of facts ⇨ Establishment of facts ⇨ Analysis of facts ⇨ Conclusion has drawn ⇨ Establish causal relationship (Law). Definition:
According to Prof. Tugwell, “A law is summary of observed relations.” According to Marshall, “The term law means nothing more than the general proposition r statement of tendencies, more or less certain, more or less definite.” Types of Economic Laws:
* Statutory Laws
* Social Laws
* Moral Laws
* Procedural Laws
* Scientific Laws
* Statutory Laws: These are framed and enforced by the government within the national boundaries. Citizens violating these laws are liable to be punished.
* Social Laws: These laws are framed by different societies in order to regulate the social life of their members. For example, laws relating to the marriages, festival etc. Those violating social laws are liable to be boycotted by the society.
* Moral Laws: These laws are framed to regulate the life of a man from the moral point of view. These laws enjoin on the people ’what they should do’ and ‘what they should not do’. For example, one should speak truth and not a tell a lie.
* Procedural Laws: Under these laws, procedures are laid down to perform different functions smoothly. For example, rules of games, rules of examination etc.
* Scientific Laws: These laws establish a relationship between the cause and effects.
What are economic laws?
They are scientific laws because they establish relationship between economic causes and their effects”. For example; Law of demand states; when the price of a commodity raises its demand is likely to contracts, ceteris paribus.” It is a scientific law, because it establishes a relationship between the cause (that is rise in price) and the effect (reduction in demand). The economic laws do not describe a particular phenomenon, rather they describe general features of all similar phenomenon and that is why these laws are also known as generalizations.
According to Marshall, “Economic laws or statements of economic tendencies are those social laws which relates to branches of conduct in which the strength of motives chiefly concerned can be measured by a money price.”
This definition states:
* The economic laws are mere statements of economic tendencies. * These ends are concerned with such ends of man as can be measured by money.
According to Robbins, “Economic laws are statements of uniformities which govern human behaviour concerning the utilisation of limited resources for the attainment of unlimited ends.”
Nature of Economic Laws:
1. Economic Laws are Human Laws: Economic laws are concerned with human behaviour, not with the behaviour of lifeless things. Economic laws tell about the expected behaviour of such economic units as consumer, producer, employer, employee, debtor, creditor, buyer, seller etc. under given circumstances.
2. Statement of Tendencies: Economic laws express tendencies. They are not exact laws. For example, law of supply states that with a fall in price, supply is likely to fall but it does not claim categorically that fall in price must be followed by fall in supply. This law simply refers to the tendency found in the relationship between ‘price’ and ‘supply’.
3. Generalisation: Economic laws refer to the general features found in all phenomenon. Law of demand does not assert that rise in price of petrol will be followed by fall in its demand or fall in its price will be followed by rise in its demand. This law states the...