Nowadays the issues of economy having a global impact are being addressed by a growing body of international law which includes major legal and institutional developments in the areas of business regulation, economic integration and development, foreign direct investment, intellectual property, sanctions, taxation, trade, and other issues related to the export and import of capital, goods and services across nations.
What is Economic Law?
While the generalization of law is stated as the “establishment of a general truth on the basis of particular observations or experiments which traces out a causal relationship between two or more phenomena”, economic laws on the other hand are statements concerning the relationships between two or more economic phenomena of general tendencies or uniformities relating to human behavior with the primary motive and concern leaning towards monetary value.
Nature of Economic Law.
Like any other law in the principle of scientific or natural or physical laws, economic law suggest a fundamental relationship between two or more phenomena. Much like in natural sciences, a particular cause in economics is followed by a specific effect or result. For example, the law of gravitation states that things coming from above must fall to the ground at a specific rate, except when there are other factors or tendencies like a storm, the gravitational force will be reduced and the law will not work properly. Economic laws are similarly statements of tendencies like when a fall in price leads to an extension in demand and vice versa. The similarity of economic law to scientific laws makes it universally valid.
However, because economic law do not work with the same amount of certainty the way scientific laws do, it is not precise and positive compared to the laws of natural sciences despite their similarities. While for instance, with the law of gravitation where any object coming from above must fall to the ground, when it comes to economic, demand will not increase even when there is a fall in prices when the consumers lacks purchasing power due to depression or war.
Therefore, it is said that “there are no economic tendencies which act as steadily and can be measured as exactly as gravitation can, and consequently, there are no laws of economics which can be compared for precision with the law of gravitation.”
When it comes to natural sciences, a controlled experimentation can be done and scientific laws can be tested by altering natural conditions like the temperature or pressure through experiments. In economics however, controlled experiments cannot be done because there is no economic situation which can be repeated as precisely as it was at another time. And to adding to the complication is the unpredictable way man will act in different situations in accordance with his tastes, habits, idiosyncrasies, etc. Economic laws are also less certain due to the fact that value of money does not always remain constant and changes from time to time.
Like any other law, economic law has all the complexities a regular person will be hard-pressed to fathom that is why the advice and services of the experts should be solicited. Legal offices like MW Legal can help you with your concerns pertaining to this nature.