Chicken and egg economics
Posted February 15, 2008on:
After my recent post, which dealt with issues of equity, I have been invited to consider how appropriate it is to bring normative issues in to a discussion of economics. I was referred to a paper which discusses the distinction between economics as a science and political economy:
For Robbins, the science of economics and the entire field of economics were quite different… He saw [the] pure science of economics as only a small sub branch of economics — a branch, which in his view, had nothing to do with policy. He saw another branch of what economists do — political economy, as the branch primarily concerned with applied policy, not with science. Here, he wanted value judgments to have free reign, and to be allowed into the analysis.
I like the distinction, but I feel that the normative judgments should inform our science, not just the other way around.
If the aim of economics is to study the allocation of scarce resources then surely there is little point in studying allocative mechanisms which are not practical or feasible. For an economist to study the science of economics without considering the constraints of what is politically possible is to render his science irrelevant before the ink has dried. Is the science of economics to be a tool for signalling intelligence, or do we actually seek to improve the world by doing it? If it is the latter then developing the science without first considering what tools the political economists need is pointless.
Academic economists should be mindful of the normative judgments that political economists make when they choose their research topics. If the tools that they develop do not aid in making these normative policy judgments then they are not helping the cause of economics, only the academic’s own career. While a separation between the science and political economy is important, one must not make the mistake of thinking that the science can be effectively done without reference to the normative judgments that are being made.