On "Econometrics" and the Use of Mathematics in Economic Analysis

One of the tasks posed by the Twenty- First Congress of the Communist Party of the Soviet Union is that of overcoming the lag in economics, which should study the laws governing the development of our system and furnish a sound foundation for economic planning and management, for assuring the proportionate development of the economy with the maximum utilization of all its possibilities for accelerating the advance towards communism. To this end economic science should make a deeper study of the operation of the laws of economic development, extending its analysis to both the qualitative aspect of social relations, and to quantitative relationships in the economy. This was the way in which it was founded and developed by Marx, Engels and Lenin.

On the Application of Mathematics in Economics

The problems of applying mathematical methods in economic science have been worked on intensively in our country for several years now. This work is being conducted by a special laboratory of the USSR Academy of Sciences, the Institute of Economic Research of the State Economic Council, the Institute of Complex Transport Problems of the USSR Academy of Sciences, by a number of universities, Moscow and Leningrad Universities, the Moscow State Institute of Economics, the Moscow Institute of Engineering Economics, the Siberian Branch of the USSR Academy of Sciences, the Armenian Academy of Sciences, and others. In April 1960 the USSR Academy of Sciences held a special conference at which economists and mathematicians met for joint creative discussions. (>u>1>/u>) The problems involved in applying mathematics to economics are dealt with in monographs and economic journals. (>u>2>/u>) This is unquestionably a progressive phenomenon.

Mathematical Methods and Optimal Planning

In advancing to the forefront the objective of improving the planning and management of the economy of developed socialist society, the Twenty-Fourth Congress of the CPSU emphasized the necessity of applying mathematical methods in this area. Through them it is possible to obtain the most precisely balanced variant of the plan assuring the successful management of the economy, i.e., the best, optimal variant. Accordingly, the central point in the use of economic-mathematical methods must be their application in optimal planning.

Mathematical Methods and the Requirements of Marxist Economics

There is hardly a problem in national economic planning, or even in the plan of a single enterprise, which can besolved without taking into account the combined influence of numerous factors. Their combined interdependence makes it necessary to treat them in combination. Inasmuch as such factors have a definite quantitative measure and the expected result also has its quantitative expression, their interconnections can be most accurately and concretely assessed only by means of mathematical methods. The need for the extensive use of mathematical methods in planning and in economic activity in general is becoming increasingly apparent to Soviet economists, including both theoretical and practical workers among them.

On the Theory of Games as a Theory of Economic Behavior

Any application of mathematics in studying a particular sphere of phenomena is no longer part of mathematics itself, but is part of the science which studies the given phenomena. For this reason, mathematical applications to the social sciences, particularly economics, acquire traits that are peculiar to the social sciences. To think that because mathematically formulated and developed arguments are employed, a particular principle in the sphere of social sciences acquires the character of a supra-class truth, would mean to break with the principle of partisanship (1) which is required in social science under any form of argumentation, in the analysis of the quality of social phenomena as well as in the analysis of their quantitative relations.