Session 15 : Ceteris Paribus

While reading the topic of “the economy and society” by Heywood, I observed one common fact in all the economic theories and their sub branches. No matter if Heywood talks about the economic structure by giving reference to notable economics scholars like Adam Smith (founding father of economics), Milton Friedman (father of monetarist theory) or Maynard Keynes (father of Keynesian theory); all of them had the common factor of Ceteris Paribus in them.

Honestly since the first time I came across these theories and heard the term “ceteris paribus” i.e. everything else remaining constant, I was quite surprised. The common mind frame regarding economics is that it is attached to the society and works for the improvement of the people living in that particular society. 

Even after studying economics as a principle from a well reputed institute like Lums, one thing that I couldn't understand is that what is the need for attaching this assumption of ceteris paribus in all the theories that are released by the best economists. Considering the fact that in economics there Is a direct relationship between many different variables and all are working hand in hand with the other one, but placing assumptions like these not only greatly impact the working of the theories but also cause the result to become void and unreliable. Attaching such assumptions is a clear illustration that there is some sort of lacking in the efficiency of these theories.

In my opinion it won’t be wrong to say that it is because of the use of assumptions in theories related to one’s daily life that there comes time when the actual result of the theory is different when it Is implemented in a practical situation as compared to what the theory predicted. It is in honor of these times that the writers have written that everything works well in theories, but in the end they are just theories.