Why economists are always right… or wrong
Posted March 5, 2008on:
Oliver Woods has used Matt’s post on the trade off between equity and efficiency to launch an attack on the separation between normative and positive economics. Matt’s busy with real economics today so it falls to me to defend his honour. Oliver claims that
…any ‘rational’ observer would see that economics and politics/society/morality are fundamentally intertwined. They’re really more or less the same thing…
There’s a very good reason why economics and politics are entirely different beasts: economists can be right (or wrong), but politicians can never be right. Economists seek to describe the world with positive economics. This is the subject often referred to as economic science. The questions asked have answers. We may not yet know the answers, or our answers may be wrong, but there is a Truth out there. For example, do people buy less of a good when the price goes up? That question has a right or wrong answer. It doesn’t depend on your morals, your politics or your creed; your answer can be judged as correct or not by examination of the facts.
Political economists seek answers to normative, prescriptive questions. They aren’t asking how the world is, but how it should be. How high should the tax rate be? How redistributive should our welfare system be? These questions do not have a right or wrong answer. The answer depends on your morals and your politics. the science of economics has nothing to say about these questions. If you asked what the consequences of an increase in taxes would be then you’d be asking a descriptive, positive question that the science could answer. But when you ask what it SHOULD be then you’re asking a normative question outside the realm of science. Here there are NO right or wrong answers.
Woods appears to both criticise economists for not addressing the questions of political science, and attack economists for “…legitimis[ing] right-wing politics and economics”. I’m not sure how much clearer we can be about this. Economics takes no moral stance. It has no politics. It does not tell us what policies we should enact any more than physics tells us that we should build nuclear weapons and use them against civilian targets. WE may care about people, but the worldd we describe does not and so nor should our description of it.