(1) >Economic theory, like the physics on which it is based (2) >Price is nearly equal to value except in rare edge cases of market failure The first quote is

(1) >Economic theory, like the physics on which it is based (2) >Price is nearly equal to value except in rare edge cases of market failure The first quote is more controversial than the author suggests. Then he continues that while economics cannot make accurate models of the world, it's still 'just like physics in using accurate heuristics.' Then one such heuristic, quoted (2), is, to someone with economic training, an obvious and perfect example that economics is based on the social science of people, psychology, and moddeling human behavior relies on subjective understanding. In fact, here is the Subjective Theory of Value. It states people define value in markets by marginal utility, which is a psychological phenomenon. Diamonds are valued more than water because of our psychology, not because of any physical laws dictating how much aggregate value is added to humans and their civilizations from either water or diamonds. This was even a very famoud paradox in economics, the Diamond-Water paradox. Here is what I mean in other words: I find it frustratint that Economics is conveniently absolved from rigor and responsibility of the scientific method as the experimentation step is practically impossible. But despite that, economists cite their maths prowess and claim they're 'fundamentally an extension of physics.' Finally, they conclude that while they don't have accurate models, they do have some great tools (then point to theories formulated in social psychology).