ECONOMICS AS AN IMPERIALIST SOCIAL-SCIENCE

Economics is far more versatile than its critics believe. It is a meth od of analysis and not just a field of study. The method is to combine two core assumptions-individual optimization and equilibrium-with var ious sets of specific assumptions adapted to different fields of appli cation. The method is applicable not only to the market system but als o the social and political environment within which this system is emb edded. Social and psychological insights can be encapsulated in the sp ecification of interdependent preferences, which hold the key to model ling all kinds of institutional behavior in rational terms.