If physics is logical empiricism of the material world (See "Einstein's Philosophy of Science," Philipp Frank: Reviews of Modern Physics, 1949) and engineering is applied physics in the design and development of technology, then by analogy:
- Psychology is logical empiricism of the mental world;
- Economics is applied psychology in the natural or positive explanation and analysis of the behavior of economic systems;
- Political economy is applied economics in the normative development of economic systems.
Normative political economy is distinguished from natural or positive economics, as "normative" engineering is distinguished from the natural science of physics.
In any case, the existence of two times in economics--i.e., real (clock) time of daily activity plus imaginary (psychological) time of expected activity--introduces difficulties absent from real-time dependent physics and engineering.
MICROECONOMICS VERSUS MACROECONOMICS
- In the above approach to defining economics, microeconomics—a subject investigating the economic behavior of the individual actor or company (e.g., saving, investment, capital function, and substitution relations)—corresponds to particle physics—a subject investigating the behavior of the individual atom or molecule;
- Macroeconomics addresses large scale economic behavior (e.g., market function, instability, inequality, and uneven growth) on the basis (in part) of microeconomic behavior—analogous to astrophysics addressing large scale behavior (e.g., supernovas) on the basis (in part) of particle physics;
- Furthermore, as astrophysics would be severely limited in its explanation and prediction in the absence of competent and true particle physics, it may be concluded that macroeconomics is severely limited in the absence of competent and true (mathematical) microeconomics.