Connecting with the practice, this paper expounds the significance of studying industrial economics.

There are many jokes about economists, and the derogatory meaning is far greater than the positive one. But few economists are worried about this, because the economist industry is still one of the most concerned, prestigious and profitable industries; Others try to enter the ranks of economists. Therefore, many economists often tell such jokes themselves, which seem to be self-deprecating, but actually boast. Of course, some of these jokes are not derogatory, or for economists themselves, they are not considered derogatory. One of the jokes is that a group of physicists were surprised when they saw the mathematical knowledge used by economists: economics used such complicated mathematics! Economists are equally surprised by the mathematical knowledge used in physics. Physics uses such simple mathematics! To some people, this is a mockery of the overuse of mathematics in economics. For economists, the tools used by economists are more and more advanced, and naturally they are developing in the direction of accurate natural science, which is a kind of praise.

Sociologists and political scientists disapprove of the imperialist tendency of economics and think that economists are actually no different from them; Natural scientists don't even think that economics is a natural science. On the other hand, economists swing between natural science and social science. Economists naturally hope that economics is considered as a natural science, because natural science is more accurate and objective. Objectivity and accuracy are boasted and prided by economists, who hope to distinguish them from other social scientists. Based on rational people, economists have introduced marginal analysis and extensive mathematical tools in an attempt to establish an objective and accurate economic empire. More and more economists emphasize the importance of positive economics and explain a phenomenon. They think that economics should explain "what is" rather than "what should be", because the latter often contains too many value judgments, and value judgments inevitably contain too many personal interests.

Nowadays, econometrics is in full swing, especially in China. We open the most famous academic journals of economics in China, most of which are quantitative articles, and even some journals have reached the point where they cannot be published without quantitative articles. Almost all the papers published by China economists in foreign academic journals are econometric articles. Why is econometric society so prosperous? In the final analysis, it is nothing more than the objective, true and accurate result pursued by economics. Econometrics has established a seemingly accurate and objective economic empire for economics through constantly improving tools, a large amount of data and rigorous methods. But is this really the case?

Objectivity of economists

2004 and 2005 were eventful years for China's economy. Since Lang Xianping shelled Greencole, some famous economists in Chinese mainland had a fierce confrontation with Lang Xianping, and some famous economists even said many personal attacks. In the end, this debate has almost become a debate with the participation of the whole people. From the Internet, Lang Xianping almost won. However, according to some statistics, most people who study economics are against Lang Xianping. As we all know, compared with the average person, most people who have studied economics are more right-leaning, so it is not surprising that this happens. In this debate, there is no doubt that many economists and students of economics discuss it from the perspective of "objectivity". The so-called objectivity in economics is "efficiency". For economics pretending to be objective, it is not surprising to choose efficiency as the standard for evaluating economic policies or economic performance. Because, from the core assumption of economics that people are selfish and rational, the final result can only be measured by "efficiency", while judging the quality of economic policies or performance by fairness is always full of "value judgment" and highly subjective.

However, starting from efficiency does not necessarily guarantee the objectivity of economics. Especially after Greencole finally closed down in 2005 and its chairman was arrested on suspicion of crime, many people became more and more skeptical about the objectivity and neutrality of economists. This is not surprising in itself, nor does it mean that mainland economists have failed. However, the subsequent news was undoubtedly a big surprise. Some economists who supported Greencole in the argument with Lang Xianping once held an academic conference with Greencole's support to criticize Lang Xianping, and raised the debate to the height of the reform line. This is actually nothing, because Lang Xianping did try to draw some general conclusions, so it is normal to escalate the debate into a "reform line" debate. However, it is doubtful whether the academic conference sponsored by the relevant enterprises is credible. More importantly, the subsequent investigation showed that Greencole paid these economists a high appearance fee and manuscript fee. Moreover, some economists continue to attend various meetings organized by some large private enterprises, especially those transformed from state-owned or collective enterprises, and make high-profile speeches, which triggered a series of debates. The distrust of economists among ordinary people seems to be spreading.

This distrust is based on economists speaking for a few people and a few vested interests. But this kind of economist who speaks for a few people will soon be distrusted by most people and will not cause substantial harm to economics. Even if economists still trust these people, it doesn't matter, because the distrust of most people means that the economic market will inevitably shrink. Therefore, the unfounded statements of individual economists do not damage the objectivity of economics itself, but only the objectivity of economists or this group. However, the question is often, is economics itself objective?

Is economics objective?

Economics often has many basic assumptions, and any theory or model in economics has a lot of assumptions. The original intention of these assumptions is to abstract and simplify real life, thus enhancing the explanatory power of the model. However, these assumptions are often inconsistent with reality, which leads to their insufficient explanatory power to reality. In fact, the development of economics is based on the constant revision of economic assumptions. The development of a certain theory or model is also based on the constant revision of certain assumptions. For example, the revision of the price rigidity hypothesis in classical economics led to Keynesian economics in which the government intervened; The revision of the assumption of perfect competition has produced the theory of imperfect competition; The revision of the assumption that the transaction cost is zero has produced a new institutional economics. This is especially true for the development of a specific theory or model, from Cournot model to Bertrand model and then to Staercke Berg model, all of which are obtained by changing the competitive variables and modes of related manufacturers. The same is true of the development of game theory, from complete information static game to incomplete information static game, to complete information dynamic game, to incomplete information dynamic game, all of which are based on some assumptions. Of course, these improvements to the hypothesis are becoming more and more realistic in many cases. In other words, this makes the hypothesis closer to reality. However, because an abstract theory and model often need many assumptions, it is almost impossible to make the assumptions completely conform to reality. This impossibility not only gives room for further improvement of economics, but also gives economists a lot of room for explanation. This kind of space is actually the "power space" of economists, which not only gives economists the possibility to improve their theories, but also gives economists the possibility to demonstrate and explain.

If the theory only provides an idea or explanation, then positive economics, especially the currently highly prosperous econometrics, gives economists an opportunity to prove its objectivity and accuracy. Many theories often contradict each other. For example, when income effect and substitution effect coexist, which effect is stronger? This requires empirical testing. For example, how does the income gap affect economic growth? Different theories give different explanations. Which theory is credible? This also needs positive economics's inspection. Therefore, positive economics has become an important criterion to test the correctness of the theory.

However, for theoretical economists, this test is always questionable. As far as case testing is concerned. China's gradual reform is more successful than Russian shock therapy. Which is more successful in economic development, Indian or China? Judging from the current experience alone, there is no doubt that China's reform is more successful than Russian reform and Indian reform. However, if I say this, I will definitely be considered by economists to be imprecise, and even suspect that I really studied economics, at least not well. For example, many economists insist that China's reforms are not necessarily more successful than Russian ones. Because, although China's economy is developing well at present, Russia has established a better system and market environment through shock therapy, and its future development may be faster than that of China. In other words, economics tells us that in the long run, the development of China and Russia is uncertain. However, as Keynes said, "long-term is a misleading thing. In the long run, we are all dead." Moreover, in the long run, nothing is certain, because who knows what will happen in the future? These things may completely change the overall picture of China-Russia economic development at present. So it may be right to say that the future is uncertain, but it is useless. If we just say not necessarily, the meaning of economics will be in doubt. Perhaps economists will say that decision-making is a matter for leaders, and we only provide suggestions and information. More information will help decision makers to make more correct decisions. However, if any information provided is uncertain, we still say that it is not necessarily better or worse for a fact that we can all observe. Then, economics as a "long-term learning" is worthless.

Similarly, for empirical economists, empirical testing is also questionable. Not to mention that the continuous improvement of measurement methods will make people find the defects of previous empirical research, and different measurement methods will also produce various controversies. If the results of different measurement methods are consistent, there will be no problem. However, in most cases, different measurement methods will draw different conclusions. So which one should we believe? In addition, many econometric studies are often very sensitive to data, and changes in data often lead to changes in results. Similarly, people familiar with econometrics know that in many cases, the choice of variables will often become the center of debate, and the results of different variables will be inconsistent.

Take the influence of income gap on economic growth as an example. Since Kuznets, this topic has been a hot topic in economic research, because it is of great significance to the formulation of a country's economic policy and will also have an impact on the values and morality of the whole society. However, the research on this issue has always been controversial. Domestic scholars' research on this issue has also increased in recent years. Before 1990' s, most theoretical and empirical studies in this field showed that income gap contributed to economic growth, or the relationship between income gap and economic growth was inverted U-shaped. The resulting policy recommendations are naturally to pursue more efficient rather than fairer economic policies; After 1990, many studies have used political and economic models or models with sociological tendencies, indicating that the widening income gap will lead to political inhibition of investment, or excessive pursuit of social status will inhibit investment, thus hindering economic growth. Moreover, the relevant empirical research also confirmed this theoretical analysis. Many of these studies are published in influential academic journals, such as American Economic Review and Journal of Political Economy. The research in this field in China is inconclusive. Because the policy suggestions inferred from different research results are completely contradictory, policymakers are undoubtedly more confused.

The Explanatory Space of Economists

It is not surprising that theoretical research will come to the opposite conclusion, and it is normal for empirical research to come to the opposite conclusion. If the empirical research results we get are contrary to the theory, we may find a new theory or something hidden behind the evidence. Natural science often develops in this way, but economics is difficult to develop in this way, because natural science has only one fact, and economics can often find many "facts". When we find that the conclusion of empirical research is contrary to the conclusion of theoretical research, most of us will improve the method of empirical research, find new data, or put forward new explanations. But the problem follows: there are many theories and models of economics, and different theories put forward different explanations for the same thing, and which theory is correct often depends on the test of empirical research. If the empirical test results are opposite, it is difficult for us to judge which test or fact is effective because different test results can also be supported by different theories. Therefore, we will find that the theory and facts are not clear.

Many beginners of econometrics will find that small changes in data or methods will make the test results very different. This shows that the results are not robust. In many cases, especially in many domestic economic magazines, the econometric test we see is not stable. But in the face of these test results, we can often see many theoretical explanations and explanations. In other words, the author has great power to interpret different measurement and test results. As long as the results are significant, we can always find a "reasonable" explanation. The most famous example comes from an economist in Britain. One of his research results shows that the activity of sunspots has a great influence on the economic development cycle of Britain. Many people think this conclusion is ridiculous and laugh at economics, but according to the logic of economists, this is really not necessarily right.

Fortunately, the tools of econometrics are constantly improving, and the control of various factors makes econometrics more and more accurate. However, there is still a lot of room for economists to explain the results of theoretical, practical and empirical tests, and there are often many explanations for the same thing, which is undoubtedly annoying. Just as we read some essays and tell the same story over and over again, we can actually tell dozens of truths, even the opposite.

It is precisely because economics has a lot of room to explain the results that we have to remind ourselves to be careful about the interests behind our thoughts. Economists flaunt their efficiency standards to show objectivity and neutrality. However, Lord acton's words still ring in my ears: Absolute power leads to absolute corruption. In the language of economics, where there is power, there is rent-seeking. The space for economists to explain theories, phenomena and empirical test results is a kind of power. Because there is space, there is the power to explain, and this power will inevitably lead to rent-seeking. As economics thinks, economists are by no means virtuous people. On the contrary, they are selfish and rational people. So, is there any reason to think that they will not use their own interpretation space and their own power to rent it for themselves?

If economics only helps people explain the reasons for the existence of phenomena, or helps people better understand various phenomena, then there is nothing wrong with the existence of such an explanatory space. However, regardless of ancient and modern times, every economist always hopes that his ideas will be used by decision makers. I used to think that foreign economists might not be like this, but when a Nobel Prize winner came to Fudan University to give a speech, there were several photos with the President of the United States on PPT(PowerPoint slide file), and I immediately knew that all economists were rational people. Moreover, at present, economics has a strong influence on policy makers and ordinary people. If an economist and a theory serve a few people, the consequences will often be very serious. Therefore, the explanatory space of economics is relatively harmful to society. It is precisely because of this that a fully competitive economic market, an economic market that opposes monopoly, and an economic market that allows everyone to speak rather than exclude them are the necessary conditions for narrowing the space for economic interpretation and disintegrating the absolute power of economics. Similarly, the existence of a broader knowledge market, an academic market that allows sociologists, political scientists, philosophers, etc. to fully express themselves, is also conducive to controlling the space for economic interpretation, thus reducing the space for economists to seek rent.

Therefore, both policy makers and ordinary people, when seeing an economic theory, please warn yourself first: beware of the interests behind the thought.