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Positive and Normative Economics

Updated on May 31, 2014
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Introduction

There are a couple of sciences, namely positive science and normative science. A positive science attributes ‘what it is’ and a normative science tells us ‘what ought to be.’ For example, the assertion “It is not possible to breakup atoms” is a positive statement. A statement is said to be positive if it can be proved by scientific experiments. The argument “Scientists should never breakup atoms” is a normative statement. This argument is a normative since it includes value judgments. It tells what scientists should do. To say it quite simply, the positive science attempts to figure out, clarify and project. It can never be employed to ascertain whether the result is ideal or undesirable. In a nutshell, positive science explains whereas normative science reviews.

Economics continues to be labeled as a positive science from its beginning. As outlined by Milton Friedman, positive economics studies the way an economic issue is remedied, at the same time normative economics focuses on how economic issue ought to be worked out.

Positive Science: English Classical View

The English Classical School regarded economics as an absolutely positive science. Positive economics experiments the real economic units and interactions among them. This means that it basically analyzes cause and effect relationships. The following are the arguments in favor of positive science:

Specialization of Labor

The modern economy is founded on division of labor. Every single work is assigned to a trained set of employees. The manufacturing and selling of tobacco products are frivolous or pernicious to physical health thereby ethically unjustifiable; however, economists never have entitlement to offer value judgments since this specific process fulfills human needs and includes economic activities. As per Robbins, the responsibility of economists needs to be limited merely to economic activities, and other parts may perhaps be referred to either politics or ethics.

Logical Reasoning

Logical study is a rational investigation. As emphasized by Robbins, economics is a positive science because it is dependent on logical argument. By making use of logic, the interaction between cause and effect could very well be detected. For instance, positive economics analyzes the advantages,drawbacks of direct and indirect taxation. In spite of this, it can never pronounce value judgments regarding an appropriate type of taxation.

Scope for Uniformity

Positive economics provide scope for more uniformity. As per Robbins, the research of ‘what should be’ can cause everlasting controversy as well as contention in the subject matter. Eventually, this may obstruct the improvement of the science.

Complexity

If positive economics is put together with normative economics, it may result in chaos in the long-run. For instance, if the economists enlighten the characteristics of income distribution and simultaneously state which kind of income distribution ought to be implemented, it will certainly aggravate the problem. It is showed that a man cannot really work for two masters. If an economist tackles both the concerns – ‘what is and what ought to be’, he can never be unbiased. In case value principles are incorporated into economics, the economist will probably be placed in an extremely cumbersome situation.

Normative Science: German Historical View

Economics is generally identified as the science of human welfare and therefore, welfare could be maximized only if economics exhibits a normative identity. The advocates of normative economics do acknowledge the positive aspect of economics; however, they claim that an economist must not neglect the value judgment of economics. Normative economics relies on value judgment. Marshall was a severe critic of the poverty of the common people and provided consent to inter-personal study of utility on humanitarian basis. Under normative economics, debate among economists is unavoidable. At the same time, economics can be both ‘light-giving’ and ‘fruit-bearing’.

The following are the arguments in favor of normative science:

Economic Development

Normative economics has produced substantial contributions to the overall economy. Several economists have designed policy actions to enhance the economy. For instance, Malthus cautioned the surplus of over population. Adam Smith emphasized the essential of Laissez faire. Lord Keynes recommended action plans to get rid of unemployment. J.S. Mill pleaded for the burden of taxes on unearned revenues and so on.

Logical versus Sentimental

While presenting the positive character of economics, Robbins offered a lot of significance to logic and entirely overlooked the sentimental facets of human beings. Economists like other individuals possess heart, flesh and blood. They understand the miseries as well as distresses of people. They really are in an excellent place to propose appropriate economic measures.

Necessity of Value Judgment

Economic strategies in the reality impact some individuals positively and other folks adversely. Furthermore, in the world today economic planning is necessary for growing nations. For economic planning, economists make use of value judgments on the acceptability of several assignments. The job of value judgment ought not to be abandoned to the legislators and social reformers solely.

Beyond the Value of Equilibrium

In accordance with reviewers, it is always incorrect to believe that equilibrium is simply equilibrium. Economics is one thing, which moves beyond establishing the value of equilibrium. To illustrate, there is no question regarding the assertion that the presence of massive unemployment is the consequence of abundance of supply of labor over demand. However, it is the duty of the economists to advise solution and methods to get rid of this social evil.

Summary

Marshall and his supporters strongly considered that economics and ethics are interrelated. The modern economists do admit that economics is both a positive science and a normative science. They stress the point that the best possible employment of the means just cannot be the single objective of economics but additionally the attainment of certain suitable purposes like more and just allocation of economic power and prospects among people. Hence, we could summarize that economics is both a positive and a normative science.

© 2013 Sundaram Ponnusamy

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