“Positive economics is in principle independent of any particular ethical position or normative judgments.” (Friedman 1953) Discuss.

Friedman was an advocate of sharp distinction between positive and normative economics, i.e. the fact-value dichotomy. Developing this point, he states that positive economics, similar to natural science, is objective and independent of ethics or evaluative judgements. In this essay, I will argue that positive economics is not entirely value-free and independent of normative judgements. The reason for it is the presence of normative context. I assume this to be relevant since the normative context shapes such variables of economics as the economists’ academic interests or human behaviour in the economy. There is no clear gap between facts and values: even if they are distinct, they are not independent.

To start with, I would like to be clear with the terms I use. According to the standard view (which is characterised by above Friedman’s statement), positive economics describes, “what certain things are”, while normative economics deals with evaluative judgements such as “what it should be”. Therefore, the standard view protectors assume that positive economics does not and should not appeal to any values: it should be separate from ethics and deal with facts only. In the following paragraphs, I will illustrate with examples that even positive economics is usually not entirely distinct from value judgements.

Imagine a young economist who studies how inflation and unemployment are related: she simply describes how they affect each other and tries to be free from any normative judgements. Therefore, she is working within the positive economics framework. However, this case is not entirely ethically neutral, compared to what it may seem at a glance. It happens due to the presence of normative context, famously mentioned by Richard McKenzie. In order to support my claim, I am going to analyse the young economist’s activity breaking it down into several parts.

First of all, let me try to understand why the mentioned above economist chose the relation between inflation and unemployment for her research. Possibly, she is trying to find a way to fight negative consequences of a crisis in her country. Or it may be that she is a big fan of William Phillips and is willing to give a new life to his hydraulic model of economy. And almost certainly, she has at least unconscious judgements on whether unemployment and inflation are good or bad phenomena, even if she does not show this explicitly in her work. No matter what her motives are, they were not formed independently of her values: she found this area of economics interesting and important. Methods of investigation are also chosen based on previous experience. As Dan Hausman, Michael McPherson and Debra Satz put it in their collaborative work How Could Ethics Matter to Economics?, any research requires an action, and any action happens under a choice. When a person makes her choice, she evaluates possible alternatives thus the choice cannot be value-free.

Moreover, economists’ motives often depend on their background, personality and position in the society – Schumpeter used a term ideologies for this. If we look at economic history and significant figures in economics, we will find bright examples of ideologies. Biography of Karl Marx illustrates how an economist’s life can be tightly connected to the views and ideas he defends. He was under great influence of German philosophy, French socialism and English political economy – doctrines specific for countries he lived in for a long time in different periods of his life. Consequently, social and geographical context played a certain role in shaping his views. He spent his life in poverty, and it seems that being a victim of the capitalistic system became the reason of why he was so rebellion against it. Schumpeter noticed that in case of Marx, ideology prevailed over analytics thus making his theory too biased, although undoubtedly fundamental and influential for the course of 20^th century history. Or think about Thomas Mun, an English writer on economics. His interest and sympathy to mercantilism is easily explained by his career as the director of the East India Company – an English joint-stock company formed to trade in the Indian Ocean region. Mun published a book based on this experience called A Discourse of Trade from England Unto the East Indies. Quoting Gunnar Myrdal’s words: «We are influenced by personality traits and prejudices in the society»[1]. All of these are examples of the value-ladenne