Wednesday, 14 June 2017

Positive v's normative economics

This is a distinction every economics student knows. But where did it originate?

A clear distinction between positive and normative economics goes back at least as far as John Neville Keynes (father of Maynard). Keynes wrote,
"[a]s the terms are here used, a positive science may be defined as a body of systematized knowledge concerning what is ; a normative or regulative science as a body of systematized knowledge relating to criteria of what ought to be, and concerned therefore with the ideal as distinguished from the actual ; an art as a system of rules for the attainment of a given end. The object of a positive science is the establishment of uniformities, of a normative science the determination of ideals, of an art the formulation of precepts" (Keynes 1917: 34-5).
Carl Menger also saw a difference, with regard to ethical considerations, between theoretical economics (positive economics) and economic policy (normative economics). In Menger (1883: 235) Menger criticises what he calls the "ethical orientation" of the German historical school. He writes with regard to theoretical economics that
"[w]hat we should like to stress here particularly is the fact that we cannot rationally speak of an ethical orientation of theoretical economics either in respect to the exact orientation of theoretical research or to the empirical-realistic orientation". But normative consideration do enter into economic policy: ``Economic policy, the science of the basic principles for suitable advancement (appropriate to conditions) of ``national economy" on the part of the public authorities" (Menger 1883: 211).
The important word here is suitable. You can not determine what is suitable without value judgements.

John Stuart Mill makes a similar distinction when he differentiates between science and art.
"These two ideas [science and art] differ from one another as the understanding differs from the will, or as the indicative mood in grammar differs from the imperative. The one deals in facts, the other in precepts. Science is a collection of truths ; art, a body of rules, or directions for conduct. The language of science is, This is, or, This is not ; This does, or does not, happen. The language of art is, Do this ; Avoid that. Science takes cognizance of a phenomenon, and endeavours to discover its law ; art proposes to itself an end, and looks out for means to effect it" (Mill 1844: 124).
So 1844 is as far back as I've found the distinction going, so far.

  • Keynes, John Neville (1917). The Scope and Method of Political Economy 4th edition, New York: Augustus M. Kelley Publishers, 1986.
  • Menger, Carl (1883). Investigations into the Method of the Social Sciences with Special Reference to Economics, formerly published under the title: Problems of Economics and Sociology (Untersuchungen uber die Methode der Socialwissenschaften und der Politischen Oekonomie insbesondere), with a new introduction by Lawrence H. White, edited by Louis Schneider, translated by Francis J. Nock, New York: New York University Press, 1985.
  • Mill, John Stuart (1844). Essays on Some Unsettled Questions of Political Economy, London: John W. Parker.

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