Everything about Positive Economics totally explained
Positive economics is the branch of
economics that concerns the description and explanation of economic phenomena (Wong, 1987, p. 920). It focuses on facts and cause-and-effect relationships and includes the development and testing of
economics theories. Earlier terms were
value-free economics and its
German counterpart
wertfrei economics. These terms were challenged as
persuasive rather than descriptive.
Positive economics as
science (Robbins,
1932) concerns analysis of economic
behavior. A standard theoretical statement of positive economics as
operationally meaningful theorems is in
Paul Samuelson (
1947). Positive economics as such avoids economic
value judgements. For example, a positive economic
theory might describe how
money supply growth affects
inflation, but it doesn't provide any instruction on what
policy should be followed.
Still, positive economics is commonly deemed necessary for the ranking of economic policies or outcomes as to acceptability (Wong, 1987, p. 921), which is
normative economics. Positive economics is sometimes defined as the economics of "what is", whereas normative economics discusses "what ought to be". The distinction was exposited by
John Neville Keynes (1891) and elaborated by
Milton Friedman in an influential 1953
essay.
The metholodogical basis for a positive/normative distinction has its roots in the
fact-value distinction in philosophy, the principal proponents of such distinctions being
David Hume and
G. E. Moore. The logical basis of such a relation as a
dichotomy has been disputed in the philosophical literature. Such debates are reflected in discussion of
positive science and specifically in economics, where critics, such as
Gunnar Myrdal (1954) dispute the idea that economics can be completely neutral and agenda-free.
Further Information
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