Friday, March 2, 2012

Yglesias on the positive-normative distinction in economics


Yglesias observes that in the view of Hillary Putnam, "The reason you can't rigidly separate positive from normative economics is that you can't rigidly separate claims of fact from claims of value in general. Human language is too laden with thick concepts that mix the two."
For the record, Ludwig Wittgenstein had already elucidated this point through logical analysis in Philosophical Investigations (1953).

Read it at Slate
The Positive/Normative Distinction In Economics Is Nonsense But It Doesn't Really Matter
By Matthew Yglesias

I disagree with Matt that it doesn't really matter. It matters hugely, because obscuring the pervasiveness of the normative and prescriptive in economics and claiming that economic orthodoxy is positive while heterodox economics is not is central to the rhetoric of propaganda designed to justify neoliberalism.

Ravi Batra points out that in eras ruled by acquisitors, intellectuals prostitute themselves for fame, fortune and a share in power by justifying acquisitive behavior to laborers, who make up a vast majority of the population. They do this not through sound reasoning based on true premises and valid logical form, but by obscuring their intent behind a facade of sophistical rhetoric and displays of "expertise" designed to confuse the less-educated.

As Steve Keen artfully shows in Debunking Economics, neoliberalism rests on the "smoke" of sophistical assumptions and "mirrors" of complicated mathematical models that do not represent actual conditions. Thus, the premises are not as represented and the conclusions are also drawn by extending the application of the modeling beyond its scope in order to to convince the rubes that they are getting screwed for "scientific" reasons and there is no alternative other than the boogeyman of "socialism," which "everyone knows" ends in totalitarianism.

Yglesias says, "I think a lot of people who think they disagreement with most mainstream economists about certain things have noticed that most mainstream economists hold a somewhat naive metaphysical position and think that if they can debunk this metaphysical position they've vanquished the beast and now the doors are wide open to a utopia in which economists' critiques of their policy ideas have all been debunked. If mainstream economists are making a mistake in their analysis of the economy, you'll show that by engaging with their analysis of the economy not by engaging with their slipshod freelancing in metaphysics."

I think he is being naive here. The point of much economics is to justify a position that does not work economically, as the only alternative, for example, or the optimal solution.

TINA is often bolstered by the specious claim that every other approach leads to a socially unacceptable conclusion, like "socialism," or "totalitarianism." The focus on supply side is often justified on the basis of that this model of capitalism has generated a global system that has raised many out of poverty and produced the most advanced civilization to date, so let's leave well enough alone. These are specious arguments are successfully deployed to convine the "rabble" to vote against their own economic interests.

 A bevy of think tanks have been funded by acquisitors to justify rapacity in the name of science. They are the go-to sources for the media and their manufactured credibility is used to justify propaganda. So, yes, the blending of fact and value, positive and normative, and descriptive and prescriptive is important and significant socially, politically, and economically in convincing the unsuspecting that their leaders are acting on the best scientific knowledge rather than self-serving ideology.

8 comments:

Anonymous said...

For the record, Ludwig Wittgenstein had already elucidated this point through logical analysis in Philosophical Investigations (1953).

And even longer before that in Hobbes.

Tom Hickey said...

@ DanKervick

And now cognitive science has demonstrated empirically that fact and value, positive and normative, and descriptive and prescriptive are inextricably blended in that brain functioning combines reason and feeling. See Antonio R. Demasio, Descartes' Error: Emotion, Reason, and the Human Brain (1995).

Letsgetitdone said...

Great piece, Tom.

I've done some work on the Fact-value distinction too. See: http://www.kmci.org/media/Against%20The%20Fact-Value%20Dichotomy.pdf

I'll have a look at Yglesias too!

Letsgetitdone said...

Of course, if one agrees with Yglesias about the distinction being invalid, then it also implies that the attempt of the MMR people to distinguish between the two is BS. Of course, one could see that from the very post at MMR which was full of value judgments.

Ryan Harris said...

I think this economic positive-normative distinction is fundamentally different than the Wittgenstein framework in that it isn't questioning the meaning of language or the perceived ambiguity of specific words. The bias in economics arises out of value judgments.. decision of which economic measurements are important to measure and decisions on what to include in which sectors and arbitrary judgment in frameworks. Judgments on what should and should not be managed.

Leverage said...

He is wrong, you must engage their analysis but also their "metaphysics". If the axioms are wrong then their own closed systems are axiomatically incorrect.

If the assumptions most economists use are wrong then their logic model is wrong, that does not mean that you have a better or more correct model (with better foundational assumptions) but wrong is wrong nevertheless.

However, the fact that this discussion is only prominent in not hard sciences is telling about the impossibility to separate both classes of claims. With hard sciences you can always fall back to empiricism to discern both things, but economics being a human construct everything is opinionated. So the question which remains is what should economics try to maximize, and use that as judging value of what works and does't.

Is obvious the status quo economics is trying to maximize profit and accumulation, so it builds its models AND assumptions around that. If economics was trying to maximize happiness or stability then we would be working with other assumptions.

Tom Hickey said...

TB: I think this economic positive-normative distinction is fundamentally different than the Wittgenstein framework in that it isn't questioning the meaning of language or the perceived ambiguity of specific words.

LW elucidates in PI how human beings apprehend what they take as reality through the lens of the logic of their language. The structure of the framework of a worldview is shown by its boundaries and rigidities. These are the criteria and norms, and many of them are presumed rather than stated, and many others are stated as apparently descriptive proposition, but they are privileged from falsity.

Woolhatboy said...

Those interested in pursuing the topic further would likely enjoy Marc R. Tool's The Discretionary Economy: A Normative Theory of Political Economy.

From Chapter 14,
Is, Ought and Underbrush:

"What is required is a criterion of judgment which draws on and is reflective of experience, which recognizes the fact that life is a process, which acknowledges that the human animal is both a product and producer of culture, which is a continuously refined product of reasoned reflection, which clearly distinguishes "what is" from "what ought to be" and which is demonstrably applicable to the problems which generate, in our day, areas of revolutionary unrest. Neither relativists nor absolutists offer criteria with which to cope with poverty, elitism, racism and sexism, and pollution."

The following chapter affirms that direction is forward which provides for "the continuity of human life and the non-invidious recreation of community through the instrumental use of knowledge"

That definition was adapted from the work of J. Fagg Foster who claimed only the instrumental theory of value could be applied. See http://jfaggfoster.org/RelatedWork.html#BRPaper

Great critique of Yglesias Tom!