The Object of Study of Economics
There is a tradition of distinguishing between the active life and the contemplative life. Now being intellectually aware of distinctions in things need not necessarily affect one’s “appetitive” preferences for these things. This is because it is not worth to an actor to pay attention to all the distinctions in order to satisfy his desires, but only to those that are relevant. In other words, not all “truth” is “useful,” and economics deals with acting men, not with “contemplating” men.
Thus, two opposite mistakes are possible in regard to the subject matter of economics. First, one might claim that economics is the study of wealth. Second, that economics is a sort of psychology. In fact, however, economics deals neither with the motions of dumb things or with physical events nor with disembodied thoughts and spirits; rather, it describes the processes by which man’s intellect through action relates to and makes an imprint on the external material world. Its subject matter lies within the nexus of planning which involves using scarce resources and putting the plan into action, of conceiving practical ideas to “remove felt uneasiness” and their actual implementation.