I thought I might say a few more syllables about the distinction between positive neoclassical economics and normative neoclassical “welfare” economics, always a source of fun and amusement in the context of bad economics in the conservative style.
What makes pervasive confusion about positive and normative propositions so interesting in the context of economics is many methodological issues have positive and normative versions, appropriate for their respective contexts, but often muddled or conflated in funny ways. For example, I often discuss assumptions like perfect rationality, perfect information, which show up in positive neoclassical economics as false but simplifying assumptions, but in normative neoclassical welfare economies as false factual premises. Two different issues. Nothing much wrong with false but simplifying assumptions in a positive context dealing with an engineering model meant strictly for empirical prediction, although their use in a purportedly scientific theory seems a bit more questionable, dismissive of fact, reality. In contrast, trying to apply in reality a normative or ethical theory based on false factual premises is just incorrect. It doesn’t reflect reality, what it needs to reflect in order to be evaluated properly as a proposed normative proposition meant for the real world. It’s quite common to get on a funny merry-go-round in discussions of economic methods in which one might object to the use of false factual premises in normative economics only to be told they’re simply false, simplifying assumptions, so it's all good. It’s called bad philosophy.
I noted another example the other day, about trying to understand the rationale for, and implications of, redefining “utility” as preference rank for a given individual. In a positive context, one hears it related to a positivist concerns to discuss only observable phenomenon. In that context, the redefinition is about how we (ostensibly) can’t observe internal feelings or sensations of happiness or satisfaction, so if that’s what we had in mind by “utility” formerly, then we need to replace it with something that is observable as revealed preference. That’s a perfectly fine point to make as far as economics as a predictive engineering model or a dodgy simulacrum of a scientific theory, but it doesn’t really make it in the context of a normative ethical theory, which must and always goes beyond observable phenomenon. Indeed, the distinctive characteristic of a normative or ethical theory is it involves propositions that require evaluation by the subjective moral sense or sensibility. It’s not just about facts, science, logic, math, observations; it also involves ethical judgment. When one apprehends neoclassical welfare economics as a normative, evaluative, ethical theory, one has a different perspective on the rationale for, and implications of, redefining “utility,” namely, it changes the nature of the normative assumptions, conclusions.
Getting serious about normative, as opposed to positive, economics, becoming interested in how the redefinition of “utility" changes the normative assumptions, conclusions, is the gateway to more easily perceiving the rhetorical program of bad economics in the conservative style. If one has an ethical theory, even a partial and unreal ethical theory using false factual premises, addressed to maximizing “utility,” associates that with social “welfare,” the evaluation must hinge on the definition of “utility,” not simply the word, but how it’s defined. Do you know what it means to maximize “utility” defined only as the preference rank of a given individual, inappropriate or undefined when thinking of more than one individual at a time? Do you understand it’s not a typical sort of definition one finds in ethical utilitarianism? Not going over it all again here, just saying, consider if that shift in the supposed goal may, in fact, have been the point of the redefinition, and if bad economics in the conservative style expresses the implications of that redefinition accurately. Just some things to think about. Some motivation for bothering trying to make sense of some of the issues I discuss, week in and week out. Think normative, evaluative, ethics, morals, values. Set aside, save for later, positive, empirical, predictive, scientific.
To complete the set, shall we go over two other bad takes on positive and normative in economics? One is that normative ideas may affect positive science in various ways as a form of bias. Sure, but that doesn’t imply there’s no distinction between positive and normative. A normative or ethical theory about what one ought to do may have positive elements as factual premises, logic; a positive scientific theory about what is may have normative influences, motivations, biases. But normative and positive remain distinct at the propositional level. A particular form of philosophical claptrap common today seeks to obliterate the distinction between positive and normative, is and ought, science and ethics, arguing one is justified in supposing whatever one wants or prefers to be the case is, in fact, the case. One is not.
The other bad take is normative economics is just positive analysis of the logic behind a random normative, ethical theory other people, certainly not economists, propose, promote, evaluate highly, take seriously. Just trying to be helpful. Not a very sincere argument, is it? Purveyors of bad economics in the conservative style, including many economists, clearly promote their normative theory, based loosely on the ethical half-theory of neoclassical welfare economics, as a normative, evaluative, ethical scheme others should take seriously. And all ethical theories meant to be applied to the real world may be evaluated along different lines: the scientific accuracy of any proposed factual premises, the logic, but also, crucially, whether one agrees, evaluates highly the normative inputs, assumptions, conclusions. Evaluate conclusions? Yes, ethics isn’t a logic problem. One may evaluate normative conclusions as a check. Logical manipulation cannot add normative content, so acceptable normative inputs, true factual premises, sound logic, yet unacceptable results is a paradox to investigate. In some cases, the implications of seemingly innocuous, acceptable normative inputs or assumptions only become apparent in the conclusions of an ethical argument, which is perfectly fine and should lead one to re-examine or re-evaluate those inputs. That’s philosophy, ethics. Don’t fall for the rhetorical gambit I call “positive normative economics,” in which one supposes proponents of normative economics are simply logicians, mathematicians, working out the conclusions implied by normative inputs they don’t necessary accept, although others might.
The big, controversial issues in economics are mostly normative in nature, about ethics, values, philosophy. Learn about them and the appropriate methods to investigate, discuss them. Learn to distinguish them from positive, predictive issues, the philosophy of science.
