I had an interesting conversation the other day about the usefulness of the philosophical distinction between normative and positive in the context of neoclassical welfare economics and bad economics in the conservative style. Let’s discuss that this week.
To understand the issue, it helps to know some history. What eventually became neoclassical economics has intellectual roots going back to 18th century moral philosophy, and it retains notable normative, ethical content to this day in the form of neoclassical “welfare” economics. However, by the early 20th century, with all hands on deck fighting the perceived threat from “leftist” economic ideas, orthodox economics including the normative bit was very purposefully recast as a “pure” science, with an ostensible aspiration to be “like physics.” In their zeal to be seen as scientists, many economists adopted some of the views of the philosophical “logical positivists,” who were famously so monomaniacal in their focus on empirical science they proposed at one point ethics was literal nonsense, unworthy of discussion. This led some economists to attempt to portray the normative or ethical content in neoclassical welfare economics as a positive analysis of certain words and concepts, with no implication anyone should attach normative significance to it, a sort of science of words, logic, math. Rather comically, the argument pertains to any ethical theory involving normative propositions expressed in words and related by logic, so all of them, which could then ostensibly be viewed as positive rather than normative theories, science rather than ethical philosophy. That bit of rhetorical tomfoolery is something I often refer to as the conceit of “positive normative” economics. It’s tomfoolery because it’s the presence of normative propositions that make a theory a normative or ethical theory, not the supposition anyone takes it seriously. It’s also transparently false. Economists themselves are the main audience for, and main proponents of, the ethical or normative ideas expressed. They clearly use them to make policy recommendations. The notion they’re simply helping others with their logic and math is false. No, the reality is what we now know as neoclassical economics retains two major components: a positive component, based ostensibly on empirical prediction, objective fact, science, and a normative component, based in subjective ethics, value propositions, etc. The critical discussion of the positive versus normative distinction follows suit, with one line of discussion addressing positive economics and deriving from philosophy of science, and one line addressing normative economics and deriving from ethical philosophy.
Let’s break it down. The first line of criticism of the notion neoclassical economics is a “pure” science as the old physicist wannabes proposed is that normative issues may influence the development of any science, such as science, but particularly a science about humans. This line of criticism is a theme from the philosophy of science, in which philosophers have proposed normative motivations may influence the practical conduct of science in various ways including individual scientists’ motivations, research agendas, funding, etc. In addition, some have floated the concept of “understanding” as an independent evaluative criterion for science, in addition to empirical prediction, and in any science but especially a science addressing humans, “understanding” may easily devolve into normative appealing storytelling, ideology. This line of criticism seems commonly presented as refuting or seeking to refute the positive versus normative distinction. However, I would suggest it doesn’t seek to refute the distinction at the level of propositions, but something a bit different. What it’s really refuting, or at least calling into question, is the idea of a purely positive science developed without normative influences, and especially but not necessarily exclusively in the case of a science about humans, without potential normative evaluation and effects via “understanding” / storytelling.
The second line of criticism of the notion that neoclassical economics is a “pure” science is that neoclassical welfare economics contains explicit, overtly normative propositions in a way other sciences do not, and thus, in fact, is not a science like physics. This line, of which I am a proponent, argues it’s vitally important to recognize this normative or ethical content as such because the proper methods of developing and evaluating normative arguments are fundamentally different from those of positive arguments. What sorts of differences are we talking about? One involves evaluation, which for a positive proposition, an “is” statement, involves objective fact, but for a normative proposition, an “ought” statement, involves evaluation relative to subjective moral sensibilities. A difference in methods is that false, simplifying assumptions are arguably acceptable in a positive “theory” / model empirically evaluated as a unit, while for an ethical theory to be appropriate to a particular context any factual premises must, in fact, be true. This line is not about denying interactions between positive and normative. A normative or ethical theory meant to apply to reality may be defined by the presence of normative propositions, but it will also contain positive elements: logic, factual premises, etc. Similarly, a positive theory may be about fact, but normative motivations and influences may intrude, and normative beliefs may complicate or distort empirical evaluation, as can the goal of generating normatively appealing storytelling, which some may simply suppose bad science. Positive economics can, of course, be “bad economics” in the sense of being flawed, compromised, ideologically motivated, inferior, pseudo-science. It’s not really my area, but it seems quite likely to me, and I support efforts to improve the science of positive economics. However, the “bad economics in the conservative style” I focus upon is explicitly normative economics, about what we ostensibly “ought" to do, not what “is,” about values, ethics, evaluation, optimality, welfare, goals, objectives, etc. It’s not about science, positive economics. The positive logic of normative economics seems to me pretty sound. It says what it says. However, I perceive a great deal of confusion about what it says, particularly about real world policy issues, which I suppose are generated and cultivated by confusing bits in that theory.
Those who delve into normative issues relating to positive economics, in the tradition of the philosophy of science, often suppose they’re refuting the claims of quaint old “economics is a purely positive science” rhetoric, and to some extent they are. However, by implying the only real issue is how normative issues can affect positive economics, implying normative economics does not present its own distinctive issues, such critics are, in a way, supporting the misleading rhetoric of the old economics as pure science camp. The two distinct lines of discussion about the presence, relation, interaction of positive and normative in economics, in terms of propositions, but also models, theories, broader normative effects, motivations, influences, etc., are complementary, not contradictory.
