Value-free Economics Research Articles

Value-free paradise is lost. Economists could learn from artists

Despite the conclusions from the contemporary philosophy of science, many economists cherish the ideal of positive science. Therefore, value-free economics is still the central paradigm in economics. The first aim of the paper is to investigate economics’ axiomatic assumptions from an epistemological perspective. The critical analysis of the literature shows that the positive-normative dichotomy is exaggerated. Moreover, value-free economics is based on normative foundations that have a negative impact on individuals and society. The paper’s second aim is to show that economics’ normativity is not a problem because the discussion concerning values is possible and unavoidable. In this context, Weber and other methodologists are investigated. The conclusion of the paper is that science can thrive without strict methodological rules thanks to institutional mechanisms. Therefore, economists could learn from artists who accept the world without absolute rules. This perspective opens the possibility for methodological pluralism and normative approaches.

Redistributional Externalities and the Ethics of Rent Seeking and Coasean Bargains

Tullock identified resources invested in acquiring rents as socially wasteful. Several authors have argued that this identification is value-laden and normative, resting on interpersonal comparisons of utility, measurement of subjective opportunity costs, and presumptions concerning the legitimate scope of government and the ideal structure of property rights. This paper suggests a constructive way to assimilate this normative criticism into positive, value-free economics, using the concept of externalities developed by Buchanan and Tullock. Buchanan and Tullock argue that individuals will seek that constitution which reduces redistributional externalities. We suggest that the costs of rent seeking are a type of redistributional externality which constitutional political economists must consider in their positive study of constitutional choice. In addition, we challenge the claim that redistributional consequences of policy can be ignored because the government can always reverse its own redistribution. The endogenization of the political process by Public Choice renders this argument untenable.

‘True Man’: The True Economic Man for Islamic Economics

As value-free economics is under serious attacks, Islamic economics seems to have a bright future. Unfortunately, Islamic economics is facing an identity-crisis. This paper seeks to perform an inspection on the conceptualization of the ‘Islamic economic man’ by employing a discursive method. This paper first provides a reality-check exercise which reveals that Islamic economics institution’s weak social performance originates from the absence of homo Islamicus. Thence, this paper searches for a universal truth about Muslims as economic agents. Surprisingly, this paper has found that they are neither homo Islamicus nor homo economicus. Thus, the most important implication of this paper is the replacement of homo Islamicus as the basis of the micro-foundation for Islamic economics. Instead, the concept of ‘true man’ is proposed. Therefore, future research may develop the specific details of this ‘true man’ for Islamic economics to be a more reliable social science.

Review of The end of value-free economics, edited by Hilary Putnam and Vivian Walsh. Routledge, 2011, 230pp.

Review of The end of value-free economics, edited by Hilary Putnam and Vivian Walsh. Routledge, 2011, 230pp.

Social Contract and Introspection. A Proposal for an Austrian Welfare Economics

considerable part of research in economics deals with issues of a normative character. Economists are supposed to know better than the average lay people, for example, when the central bank ought to expand the quantity of money, how an employer ought to make his hiring decisions, or even which health care services the government ought to provide to the poor. All these problems should presumably be solved so as to make the well-being or welfare of the human beings involved as large as possible. This individualist emphasis is even so strong that economists regularly term "welfare economics" the whole body of their prescriptive inquiries. Economists are conspicuously eager to give their scientific advice and tell how things ought to be done in an endless number of various situations. This might seem at first sight unexpected as normative statements always depend on moral valuations and the scientific status is thus less secure than in positive statements. The enterprise of welfare economics has retained its fascination because the permission to convey one's own recommendations gives the individual practitioner more scope to do something clearly useful and, to concede the brutal fact, to find good jobs in the labor market. The members of the Austrian school of economics are often mentioned as strict adherents of valuefree economic reasoning. For example, Kirzner (1976, p. 75) maintains that "the tradition within Austrian economics has been strongly in support of Wertfreiheitas a cardinal precept of scientific propriety." In so far as the practice of scholarly work is concerned, the striving for valuefree economics seems often little more than fine rhetoric. Austrian economists appear to be much as enthusiastic as the rest of the profession to insert personal opinions in their scientific treatises and to blur the distinction between positive and normative statements. Austrian economists are particularly known for their assured belief in the superiority of the market order in solving social problems. The praise of free markets and the antago- nism toward government action is in fact so pronounced that in the eyes of some observers Austrian economics is, rightly or wrongly, mere capitalist apologetics worthy of little scien- tific attention. The Austrian theorist with perhaps the most unqualified views in this regard is Ludwig von Mises, who may argue inside the covers of one and the same book that the scientific character of an economic inquiry "precludes all standards and judgments of value" and that such inquiry proves "the market economy is the only feasible system of social cooperation" (1933, pp. 36, 196). Hutchison (1981, p. 221) avails himself in full of the tempting opportunity and, prior to citing a similar pair of phrases from the book, says that "there would seem to be a considerable contrast, not to say contradiction, between the following two statements of Mises".

Origins and Development of the Trend Toward Value-Free Economics

The idea of value-free economics is an old methodological issue. It has given rise to one of the most important controversies in the history of economic thought. The discussion was important because it had to do with the scientific nature of economics. One can still find a significant number of methodological works (e.g. Coddington 1972, Gordon 1977, Samuels 1977, Sugden 1981, Colander 1994) which echo this old controversy. Most economists today, though, would agree that the claim of an economic theory free from values is essential in establishing the scientific nature of the discipline. A positive, value-free economics, in the sense of not relying on any particular set of value judgments or on any philosophical or psychological framework, is generally seen as the ideal. This approach has crucially influenced important branches of economics such as microeconomic theory. The current established position was a product of a historical process which played a significant role in the formation of the body of economic theory. Furthermore, the idea of what is value-free economics has changed since its first introduction as a scientific ideal. The nature of this change is also important for understanding the present conception of the scientific character of economics.