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School of Distance EducationUNIVERSITY OF CALICUTSCHOOL OF DISTANCE EDUCATIONStudy materialCORE COURSE (I)For I SEMESTER BA ECONOMICSMICRO ECONOMICS IPrepared by1. Module I and V:Dr. P. CHACKO JOSEAssociate professor,Department of Economics,Secred Heart College Chalakkudy2. Module II:Dr. K. RAJANAssociate Professor,M.D. College, Pazhanji.,Thrissur-680 542.3. Module III:Sri. K.P. SHABEERAssistant Professor,Government College, Kodanchery.4. Module IV:Dr. M.P. ABDULLAAssociate Professor,E.M.E.A. College, Kondotty.:Dr.C.KRISHNANEdited & Scrutinised byAssociate Professor,Department of Economics,Govt. College, Kodanchery ReservedMicro Economics - I (I Sem. BA Economics)2


School of Distance EducationMicro Economics - I (I Sem. BA Economics)4

School of Distance EducationModule -IIntroduction to Social SciencesWhat are social sciences?1.1. IntroductionThe social sciences are one of three divisions of science, along with natural science and formalscience. Social science is, in its broadest sense, the study of society and the manner in which peoplebehave and influence the world around us. The social sciences are a group of academic disciplines thatstudy the human aspects of the world. They diverge from the arts and humanities in that the socialsciences emphasize the use of the scientific method and rigorous standards of evidence in the study ofhumanity, including quantitative and qualitative methods. The social sciences are also known pejorativelyas the soft sciences in contrast to the hard sciences. Social science theories typically deal with aggregated,not individual, behaviour. Social science investigations examine an individual‘s relationship with andinteraction in society.Social science -cultural definitionThe study of people living together in groups, families, etc., and their customs, activities, etc.The study of how groups of people behave, often in an effort to predict how they will behave in thefuture.A branch of science that deals with the institutions and functioning of human society and with theinterpersonal relationships of individuals as members of societyA science (as economics or political science) dealing with a particular phase or aspect of humansocietyAcademic DefinitionThe social sciences are a group of academic disciplines that study human aspects of the world.They diverge from the arts and humanities in that the social sciences tend to emphasize the use ofthe scientific method in the study of humanity, including quantitative and qualitative methods. The socialsciences, in studying subjective, inter-subjective and objective or structural aspects of society, aresometimes referred to as soft sciences. This is in contrast to hard sciences, which may focus exclusivelyon objective aspects of nature. Social scientists engage in research and theorize about both group andindividual behaviours.1.2. History of Social SciencesLet us see a chronological time line of the history of social sciences.Ancient GreeceIn ancient philosophy, there was no difference between mathematics and the study of history,poetry or politics. Only with the development of mathematical proof did there gradually arise a perceiveddifference between ―scientific‖ disciplines and others, the ―humanities‖ or the liberal arts. Thus, Aristotlestudies planetary motion and poetry with the same methods, and Plato mixes geometrical proofs with hisdemonstration on the state of intrinsic knowledge.Micro Economics - I (I Sem. BA Economics)5

School of Distance EducationThe EnlightenmentThis unity of science as descriptive remains, for example, in the time of Thomas Hobbes whoargued that deductive reasoning from axioms created a scientific framework, and hence his Leviathan was ascientific description of a political commonwealth. What would happen within decades of his work was arevolution in what constituted ―science‖, particularly the work of Isaac Newton in physics. Newton, byrevolutionizing what was then called ―natural philosophy‖, changed the basic framework by whichindividuals understood what was ―scientific‖. While he was merely the archetype of an accelerating trend,the important distinction is that for Newton, the mathematical flowed from a presumed reality independentof the observer, and working by its own rules. For philosophers of the same period, mathematicalexpression of philosophical ideals was taken to be symbolic of natural human relationships as well: thesame laws moved physical and spiritual reality. For examples see Blaise Pascal, Gottfried Leibniz andJohannes Kepler, each of whom took mathematical examples as models for human behavior directly. InPascal's case, the famous wager; for Leibniz‘, the invention of binary computation; and for Kepler, theintervention of angels to guide the planets. In the realm of other disciplines, this created a pressure toexpress ideas in the form of mathematical relationships. Such relationships, called ―Laws‖ after the usage ofthe time (see philosophy of science) became the model which other disciplines would emulate.19th CenturyAuguste Comte (1797-1857) argued that ideas pass through three rising stages, Theological,Philosophical and Scientific. He defined the difference as the first being rooted in assumption, the secondin critical thinking, and the third in positive observation. This framework, still rejected by many,encapsulates the thinking which was to push economic study from being a descriptive to a mathematicallybased discipline. Karl Marx was one of the first writers to claim that his methods of research representeda scientific view of history in this model. With the late 19th century, attempts to apply equations tostatements about human behaviour became increasingly common. Among the first were the ―Laws‖ ofphilology, which attempted to map the change over time of sounds in a language.It was with the work of Darwin that the descriptive version of social theory received anothershock. Biology had, seemingly, resisted mathematical study, and yet the Theory of Natural Selection andthe implied idea of Genetic inheritance - later found to have been enunciated by Gregor Mendel, seemedto point in the direction of a scientific biology based, like physics and chemistry, on mathematicalrelationships.20th CenturyIn the first half of the twentieth century, statistics became a free-standing discipline of appliedmathematics. Statistical methods were used confidently, for example in an increasingly statistical viewof biology. The first thinkers to attempt to combine inquiry of the type they saw in Darwin withexploration of human relationships, which, evolutionary theory implied, would be based on selectiveforces, were Freud in Austria and William James in the United States. Freud's theory of the functioning ofthe mind, and James' work on experimental psychology would have enormous impact on those thatfollowed. Freud, in particular, created a framework which would appeal not only to those studyingpsychology, but artists and writers as well.Micro Economics - I (I Sem. BA Economics)6

School of Distance EducationOne of the most persuasive advocates for the view of scientific treatment of philosophy would beJohn Dewey (1859-1952). He began, as Marx did, in an attempt to weld Hegelian idealism and logic toexperimental science, for example in his ―Psychology‖ of 1887. However, it is when he abandonedHegelian constructs, and joined the movement in America called Pragmatism, possibly under theinfluence of William James' ―Principles of Psychology‖ that he began to formulate his basic doctrine,enunciated in essays such as ―The Influence of Darwin on Philosophy‖ (1910).This idea, based on his theory of how organisms respond, states that there are three phases to the processof inquiry:1. Problematic Situation, where the typical response is inadequate.2. Isolation of Data or subject matter.3. Reflective, which is tested empirically.With the rise of the idea of quantitative measurement in the physical sciences, for example LordRutherford's famous maxim that any knowledge that one cannot measure numerically ―is a poor sort ofknowledge‖, the stage was set for the conception of the humanities as being precursors to ―socialscience.‖ This change was not, and is not, without its detractors, both inside of academia and outside.The range of critiques begin from those who believe that the physical sciences are qualitatively differentfrom social sciences, through those who do not believe in statistical science of any kind, through thosewho disagree with the methodology and kinds of conclusion of social science, to those who believe theentire framework of scientificizing these disciplines is solely, or mostly, from a desire for prestige and toalienate the public.Theodore Porter argued in ―The Rise of Statistical Thinking‖ that the effort to provide a syntheticsocial science is a matter of both administration and discovery combined, and that the rise of socialscience was, therefore, marked by both pragmatic needs as much as by theoretical purity. An example ofthis is the rise of the concept of Intelligence Quotient, or IQ, a test which produces a number which it isnot clear what, precisely, is being measured, except that it has pragmatic utility in predicting success incertain tasks.The rise of industrialism had created a series of social, economic, and political problems,particularly in managing supply and demand in their political economy, the management of resources formilitary and developmental use, the creation of mass education systems to train individuals in symbolicreasoning and problems in managing the effects of industrialization itself. The perceived senselessness ofthe ―Great War‖ as it was then called, of 1914-1918, now called World War I, based in what wereperceived to be ―emotional‖ and ―irrational‖ decisions, provided an immediate impetus for a form ofdecision making that was more ―scientific‖ and easier to manage. Simply put, to manage the new multinational enterprises, private and governmental, required more data. More data required a means ofreducing it to information upon which to make decisions. Numbers and charts could be interpreted morequickly and moved more efficiently than long texts.Micro Economics - I (I Sem. BA Economics)7

School of Distance EducationIn the 1930s this new model of managing decision making became cemented with the New Dealin the US, and in Europe with the increasing need to manage industrial production and governmentalaffairs. Institutions such as The New School for Social Research, International Institute of Social History,and departments of ―social research‖ at prestigious universities were meant to fill the growing demand forindividuals who could quantify human interactions and produce models for decision making on this basis.Coupled with this pragmatic need was the belief that the clarity and simplicity of mathematical expressionavoided systematic errors of holistic thinking and logic rooted in traditional argument. This trend, part ofthe larger movement known as Modernism provided the rhetorical edge for the expansion of socialsciences.Present stateThere continues to be little movement toward consensus on what methodology might have thepower and refinement to connect a proposed ―grand theory‖ with the various midrange theories which,with considerable success, continue to provide usable frameworks for massive, growing data banks.1.3. Evolution of Social sciencesThe social sciences have existed at least since Ancient Greece, where philosophers such asPlato and Aristotle studied numerous aspects of the world and passed them down via texts. To thesethinkers, there was no fundamental distinction between social and natural science the way there is today.Disciplines such as geometry and psychology were intermixed and practiced by the same communities.During the 18th century there was a distinction made between the different types of sciences studied.Natural sciences were defined as sciences that are experimental and applied, whereas the social sciencesare those that grew from moral philosophy. The generally accepted branches of social science includeanthropology, economics, history, political science, psychology and sociology. Some additions to thesehave been made since their development to include education, geography, law, linguistics, criminologyand archaeology. These all examine and study man‘s interactions with his fellow man and with hissociety.The history of the social sciences has origin in the Western philosophy and shares variousforerunners, but began most intentionally in the early 19th century with the positivist philosophy ofscience. Since the mid-20th century the term ―social science‖ has come to refer more generally, not justto ety andculture;from anthropology to linguistics to media studies.The idea that society may be studied in a standardized and objective manner, with scholarly rulesand methodology, is comparatively recent. Whilst there is evidence of early sociology in medieval Islam,and whilst philosophers such as Confucius had long since theorised on topics such as social roles, thescientific analysis of ―Man‖ is peculiar to the intellectual break away from the Age of Enlightenment andtoward the discourses of Modernity. Social sciences came forth from the moral philosophy of the timeand were influenced by the Age of Revolutions, such as the Industrial revolution and the Frenchrevolution. The beginnings of the social sciences in the 18th century are reflected in variousgrand encyclopaedia of Diderot, with articles from Rousseau and other pioneers. The growth of the socialsciences is also reflected in other specialized encyclopaedias. In the modern period, the term ―socialscience‖ first used as a distinct conceptual field.Micro Economics - I (I Sem. BA Economics)8

School of Distance EducationAround the turn of the 20th century, Enlightenment philosophy was challenged in variousquarters. After the use of classical theories since the end of the scientific revolution, various fieldssubstituted mathematics studies for experimental studies and examining equations to build a theoreticalstructure. The development of social science subfields became very quantitative in methodology.Conversely, the interdisciplinary and cross-disciplinary nature of scientific inquiry into human behaviourand social and environmental factors affecting it made many of the natural sciences interested in someaspects of social science methodology. Examples of boundary blurring include emerging disciplines likesocial studies of medicine, socio-biology, neuro-psychology, bio-economics and the history and sociologyof science. Increasingly, quantitative and qualitative methods are being integrated in the study of humanaction and its implications and consequences. In the first half of the 20th century, statistics became a freestanding discipline of applied mathematics. Statistical methods were used confidently.In the contemporary period, there continues to be little movement toward consensus on whatmethodology might have the power and refinement to connect a proposed ―grand theory‖ with the variousmidrange theories which, with considerable success, continue to provide usable frameworks for massive,growing data banks.The idea of social science is distinctively modern. Four developments set the stage for its emergencebetween the 17th and 19th centuries. First, the 17th century revolution in science was pivotal. Itgenerated the notion of science as a cumulative empirical project, and complemented this with an ethosfavouring the public sharing of knowledge and the foundation of social institutions to further both inquiryand publication. Science, in this new sense, combined inductive inquiry with explicit testing ofpropositions and formulation of theories based on empirical evidence. Second, the rise of the modernstate (in both its domestic and colonial forms) gave social science both a topic and a client. States soughtknowledge as the basis for policy. And the state itself could be an important object of science, as scholarssought to understand which policies worked and which did not, what factors made for better rule, andwhat organization of the state advanced human liberty. Closely related, the notion of nation as a prepolitical definition of the people who rightly belonged in a given state, helped frame ―society‖ asbounded, integrated, and developing through history. Third, the dramatic expansion of trade, division oflabour, industry, and capital accumulation that marked the modern era provided both an impetus to studysociety and a basis for differentiating directly societal sources of change and self-organization from theeffects of political rule. If the idea of nation suggested seeing society as a culturally unified entity with itsown history, the modern idea of economy added the notion that society could develop on its own throughmaterial transformations in its productive capacity as well as through knowledge.Fourth, Europeans in the early modern era undertook projects of exploration and eventuallyempire on a scale the world had never seen before. These paved the way for social science by makingmanifest the enormous diversity of human cultural forms and practices. Both missionaries andadministrators - as well as eventually anthropologists - sought to understand kinship, family, theorganization of household economies, hierarchies of power, specialization of religious responsibilities,and approaches to educating the young - as variables in a complex collection of social structures, andinquired into what function each might serve. Knowledge of human diversity helped to break theassumption that locally observable social organization needed no explanation.Micro Economics - I (I Sem. BA Economics)9

School of Distance EducationFrom Classical Philosophy to Modern Social Science, from the renaissance through the 18 thcentury, scholarship on political and social subjects remained largely commentary on ancient texts.Thomas Hobbes‘ Leviathan (1651) drew in important ways on classical sources, but also marked atransition to modern social science. It presented a theory of the state formulated through what Hobbesclaimed were strict deductions from empirical bases. To be sure, the notion of social contract at its centrewas either a thought experiment or a metaphor, not a statement of factual history. But Hobbes based hisarguments about the legitimacy of government on reasoning from what he took to be facts and logicalnecessity, not tradition or divine inspiration. Criticism and revision could (and did) focus on both theputative facts and the reasoning without (always) going back to first principles.John Locke made political theory depend more on an idea of society (and the benefits thatlanguage and money as well as government could bring). Among the first great works of comparativesocial science was Montesquieu‘s Spirit of Laws (1748).Montesquieu made a more systematic effort than Locke to account for the differences in legal andgovernmental systems by differences in environmental context, social organization, and culture. AdamFerguson took this further, developing the notion of ―civil society‖ as a counterpart to government (andindeed to the derivation of social laws from theology). In 1767, Ferguson presented the history of civilsociety in a series of stages, prefiguring 19th century evolutionary thought. Much less empirical, JeanJacques Rousseau nonetheless contributed to soc

CALICUT UNIVERSITY P.O. MALAPPURAM, KERALA, INDIA - 673 635 261 . School of Distance Education Micro Economics - I (I Sem. BA Economics) 2 UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION Study material CORE COURSE (I) For I SEMESTER BA ECONOMICS MICRO ECONOMICS I Prepared by 1. Module I and V: Dr. P. CHACKO JOSE Associate professor, Department of Economics, Secred Heart College Chalakkudy 2 .

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