ECONOMIC STATICS

Literally the word ‘statics’ implies causing to stand’. III common usage, the term static connotes a position of rest or absence of  movement. However, economic statics docs not imply absence of movement, rather it denotes a state in which there is a continuous, regular, certain and constant movement without change. It is a state wherein economic activity goes 011 regularly and constantly on an even keel. Thus, remarks Pigou, Just ¥ the drops of water that form a stream arc always changing but its form remains Uie same so do, in a static state; the factors change but they are not of any consequence.

Harrod is of the view that static analysis is concerned with a state of rest. State of rest docs not signify a state of idleness but simply lack of investment with the result that the economy repeats itself over time. Harrod, of course, does not confine his concept of statics to such a rigidly defined state of affairs. He includes in it the once-for-all change whereby the economy shifts from one slate of rest to
another.

Prof. Hicks has a somewhat different notion of statics. According to him, we should call economic statics those parts of economic theory where we do not trouble about dating. He means to say that economic statics studies stationary situations which are devoid of any change and which do not require any relation to the past or the future. Thus, the static economy of his vision is a timeless economy in which the various phenomena and their effects are analyses without reference to time. For instance, when we say that if price is lowered by 5 percent demand rises by 3 per cent, we are in the field of static analysis.

Clark maintains that a static state is characterized by the absence of five kinds of change : the size of population, the supply of capital, the methods of production, the forms of business organization and the wants of the people; but all the same the economy continuous to work at a steady pace. Marshall states that It is to this active but unchanging process …. that the expression static economics should be applied.

Frisch maintains .that by static analysis is meant “A method of dealing with economic phenomena that tries to establish relations between elements of the economic syst cruc prices and quantities of commodities-all of which have the same point of time. In other words, in economic statics we do not study anything about the connection between conditions at various points of time, e.g., sequences, lags, ete. The ordinary theory of demand and supply is an illustration of the static analysis. It builds up a relationship between demand and supply as they are supposed to be at any moment of time. The market situation is assumed to be immune from the influences of the decisions of past or by the future expectations of value (although actually it is not so).

Thus, static analysis being a timeless analysis assumes instantaneous adjustment of the indices. Prof. Samuelson states in this connection: “Economic statics concerns itself with the simultaneous or instantaneous determination of the economic variables by mutually interdependent relations. Since instantaneous determinations keep no link with the past or future, we can infer that economic statics contains no element of uncertainty in it. Prof. Kuznets, while commenting on this aspect, remarks that, “Static economics deals with relations and processes on the assumption of uniformity and persistence of either the absolute or relative economic quantities involved In simple words, economic statics presupposes that the-manner in which an economic unit changes is the same as it changed in the past and will change in the future It suffices, therefore, under economic statics, to study the economy in its present position.It gives only a “still picture” of the economy, a vision of the moment. disappearing as soon as itit makes its appear=nee