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The fourteenth-century English philosopher, William of Ockam, is usually given credit for identifying one of the most basic scientific principles. Simply put, if one is confronted with competing and apparently valid explanations for any phenomenon, one should select the simplest alternative as the most useful. Simplicity is measured by the number of components in the theory. Usefulness is measured by the fact that the problem at hand is addressed to the satisfaction of the user of the theory. This rule is known as "Ockam's Razor" and has two active components, simplicity and usefulness. Ockam's Razor is roughly the same approach as the "KISS" philosophy of engineers, "Keep It Simple, Stupid".
A standard rebuttal to Ockam's Razor is that for any social or scientific issue there is always an explanation that is simple, brief, attractive and wrong. This rebuttal to Ockam's Razor hides the point that being correct can be satisfying but might not be functional. The answer one seeks needs to be useful. Often an answer needs to be correct to be useful but not always. Einstein corrected Newton but for the most part Newton put a man on the moon. If an answer is only simple, Ockam's Razor is not satisfied. If an answer is complete it may contain too much information.
In explaining social and business phenomena, scholars have generally divided themselves among those who advocate the "holistic" views and what might be called an "abstractionist" or "economic" approach. The holistic interpretation, favored by disciplines like anthropology and sociology, holds that phenomena can only be understood or explained when an issue is viewed in terms of its interaction with an entirety. Abstractions would of course be necessary to present even a holistic theory of behavior, and any competent holistic theorist would accept as useful some abstraction of an economist such as demand theory, even if he felt the abstraction did not reveal enough on the issue at hand. Further, as holistic and economic disciplines have evolved, distinctions among the practitioners have blurred. Economic theories have become more complex while, especially among the statisticians, sociologists and anthropologists have often simplified their approaches.
An economist presents a counter, though not necessarily contrary, view of the world. His theory is based on a set of abstractions...