Taxonomy

Taxonomy
A precise taxonomy is a necessary precondition for all scientific enquiry. All
too often, common words used in economics have a multitude of connotations.
Consequently, many of the arguments among economists often involve
semantic obfuscation where participants are using the same words to connote
different meanings or, even worse, the same participant uses the same word
to suggest different concepts at various points of their argument. Nowhere is
this more obvious than in the use of the word ‘money’ in economic discussions.
To avoid such semantic confusion, it is necessary to provide a dictionary
of oft-used, and misused, words up front to explain exactly what the concept
denotes. For example, how many economists have carefully read and comprehended
Keynes’s definitional Chapter 6 and its Appendix in his General
Theory? Similarly, how many have worked through Chapters 1 and 2 of
Friedman’s (1957) Theory of the Consumption Function and realized that
Friedman defines saving (p. 11) to include the purchase of new durable goods
including clothing and so on while, for Keynes, saving involves the decision
not to purchase durables or non-durables by households? Harrod (1951,
pp. 463–4), with typical lucidity, highlighted the essential nature of Keynes’s
revolution when he wrote:
Classification in economics, as in biology, is crucial to the scientific structure …
The real defect in the classical system was that it deflected attention from what
most needed attention. It was Keynes’ extraordinarily powerful intuitive sense of
what was important that convinced him that the old classification was inadequate.
It was his highly developed logical capacity that enabled him to construct a new
classification of his own.