A contribution to scientific studies of norms in economics inspired by JN Keynes and Popper

ABSTRACT

This paper defends JN Keynes’s argument that normative economics can be objective. It begins by exploring Keynes’s view on the positive/normative distinction in economics. After discussing its originality and advantages, the paper recognizes that the Keynesian distinction does not explain the exact nature of the relationship between positive and normative economics. Thus, it tries to improve Keynes’s position using Popper’s contributions to economics. It shows that for Popper, advances in normative social science are the main steppingstone to resolving disagreements over the choice of the norms underlying the reform of social situations. The final two parts of the paper draw on the contributions of Keynes and Popper to the study of norms to explain why normative economics can more easily approach objectivity by concentrating on highly delimited topics. The last part relies on Popper’s concept of avoidable unhappiness to offer one method of restraining the tasks of normative economics.

KEYWORDS:

• Positive economics
• normative economics
• norms and values
• epistemology of economics
• philosophy of economics
• basic needs

Acknowledgement

I want to express my gratitude to John Davis, Wade Hands and Élodie Bertrand for their invaluable comments on previous versions of this paper, and the editors of INEM 2021 Special Issue, Malte Dold, Merve Bornazoglu and Tyler Desroches, for their help and consideration. Last but not least, I would like to acknowledge the immensely helpful comments and suggestions of two anonymous referees, which allowed me to improve the paper considerably. It goes without saying that I am responsible for any remaining shortcoming.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 Hands (2012) has argued in favor of distinguishing epistemic values that influence scientific work from non-epistemic norms that influence the actions of socio-economic agents in general (2012, pp. 220–221). This article's focus is on non-epistemic, i.e., social and ethical norms, and it often follows Hands by distinguishing epistemic values from non-epistemic norms.

2 Keynes's book is much more than a mere epistemological and methodological restatement of Marshall's economics, as proven by Marshall's not-very-enthusiastic comments on the book and Keynes's characterization of Marshall's views as ‘nearly always exaggerated on one side or the other’ (Deane, 2001, p. 138).

3 For example, suppose we have a choice between two policies, A and B. Policy A allows the wealthiest person to gain the sum of x. After compensating the losers, he still gains the sum of y relative to the initial situation. Policy B allows the poorest person to gain the sum of x. After compensating the loser, who happens to be the richest person, she still gains the sum of y relative to the initial situation. Paretian welfare economics offers no guidance as to which of these policies should be adopted, leaving the decision to politicians, even though most practical cases of policymaking involve choosing between such alternatives.

4 Had Keynes been aware of Walras's classification of economics, especially the distinction between the économie politique pure and the science morale pure (Dockès, 1996, pp. 37–59), he would have probably found them very useful and close to his distinction between positive and normative economics.

5 In his writings, especially in Science and Values (1984), Larry Laudan has offered engaging examinations of other models of explaining how disagreements at the factual and methodological levels are treated in science.

6 By values, Putnam refers to both epistemic values and non-epistemic norms. He moreover criticizes those who make distinctions of different kinds between values and norms, such as Habermas (Putnam & Walsh, 2012, pp. 121–128).

7 Even the works just mentioned, which have discussed Popper's normative writings, rarely focus on the relationship between Popper's contributions to normative questions and his writings on economic methodology and economic philosophy. It is worth noting that Popper often uses economics as a model for all social sciences (Popper, 1974/2005, p. 135; Popper, 1976, p. 103; Popper, 1994, p. 181).

8 To be sure, some people may decide to impose their desired plan regardless of those of others. However, this attitude is totalitarian because it makes the desired plan of a limited group the only plan that matters. Avoiding this attitude by seeking to understand the existing situation and the plans of others is, therefore, a normative choice.

9 Numerous scholars (Hands, 2001; Gorton, 2006; O’Gorman, 2008; Agassi, 2009) have already examined Popper's writings on situational analysis. Therefore, this article only discusses its resemblances and dissimilarities vis-à-vis other theoretical approaches in positive economics.

10 Given the role of the institutionalist view in Popper's depiction of the tasks of positive social science, we can wonder whether his agreement with Hayek's characterization of economics (Popper, 1994, p. 181; Popper, 2012, pp. 403–404) is not rooted in his lack of solid knowledge of marginalism. It is worth mentioning that among neoclassical economists working on positive economics, game theorists embody the institutionalist view more than others, as the rules of the games play a determining role in how players’ strategies are explained.

11 For Popper, ‘the use of violence is justified only under a tyranny’ (1945/2013, p. 360) because the latter ‘makes reforms without violence impossible’ (1945/2013, p. 360). Still, he reminds us that the use of violence in such cases ‘should have only one aim, that is, to bring about a state of affairs which makes reforms without violence possible’ (1945/2013, p. 360).

12 I am grateful to one of the reviewers for recommending this paper to me.

13 Robbins's definition and several other arguments of his Essay on the Nature and Significance of Economic Science were in turn influenced by Ludwig von Mises's Epistemological Problems of Economics, first published in German in 1933, then in English in 1960. Most of its chapters had been published as articles between 1928 and 1931, and due to his participation in Mises's seminar in Vienna (Wasserman, 2019), Robbins was familiar with them before writing his Essay and acknowledges ‘especial indebtedness’ to Mises in the latter's preface. Still, Mises was not the only major influence, as emphasized by Howson (2004) and Hands (2009).

14 It is for this reason that the art of political economy should complete the evaluations and prescriptions of normative economics with inputs from other social sciences.

Additional information

Notes on contributors

Sina Badiei

Sina Badiei is Junior Lecturer (Premier assistant) at the Center Walras-Pareto of the University of Lausanne, and Director of Program in the Philosophy and Human Sciences Department at the Collège International de Philosophie (Université Paris Lumières). He studied Electronic Engineering, Physics, Political Philosophy, Economics and the History and Philosophy of Science in the course of his several Bachelor’s and Master’s degrees. He did his Ph.D. in the History, Philosophy and Epistemology of Economics. Entitled ‘Positive Economics and Normative Economics in Marx, Mises, Friedman and Popper’, it was defended in September 2020 and was the winner of the 2022 Best Dissertation Prize of the ‘Association Charles Gide pour l’Étude de la Pensée Économique’, awarded to the best dissertation on the history, epistemology or philosophy of economics defended between 1 January 2020 and 31 December 2021. His research deals with the theoretical and philosophical foundations of the normative positions and analyses of economists in the history of economic thought, especially in the Marxist and Neo-Ricardian schools, the Austrian school, the Chicago school and the Lausanne school. He also works on how norms and values are evaluated in contemporary normative economics (Welfare Economics, Social Choice Theory, the Capability Approach) and contemporary economic theories of justice. He has published two books, co-edited two collective books and co-edited a special issue of the journal Review of Economic Philosophy. Among his recent publications is the collective volume The Positive and the Normative in Economic Thought, which he co-edited for ‘Routledge INEM Advances in Economic Methodology’.