The Normative Versus the Positive: Unemployment and Economics As a Social Science

One of the things that freaks out some people in the 'hard' sciences (and I use that term broadly) about the social sciences is that they, unlike the hard sciences, they don't restrict themselves to positive statements, but, instead, deal with normative statements. In other (less high-falutin') words, the social sciences don't only try to explain why things are, they often make statements about how things should be. This not only makes my colleagues in the physical sciences uncomfortable, but it's also viewed as lacking rigor which means your penis will fall off.

This, to me, seems both unfair and unrealistic. I don't see how one could study, for example, the civil rights movement or race in general, without some basic value judgments involved. I don't think there are any serious scholars of race relations, regardless of political orientation, in the U.S. who think racial discrimination, segregation, or Jim Crow are good things. Many social science disciplines have made good contributions using theory that incorporates normative conclusions: the basic feminist interpretation of gender relations has improved our understanding of women's status in society. Of course, there can be excesses, and not all theories are appropriate to the particular task at hand: a point most physical scientists wouldn't dispute either (a conservative friend has joked about the collapse of Big Shitpile that there are never Marxists around when you need them). And social scientists, as with their physical counterparts, can be fucking morons too--they can practice their craft poorly.

Which brings me to economics (and, later in the post, unemployment as promised).

In a different context, I've noted that economists can suffer from a conflation of normative and positive statements:

Economists are particularly bad at confusing positive and normative statements. Often, stated results, such as policy X will maximize productivity are implicitly assumed to be desirable, when maximizing productivity above all else might not be the 'best' outcome. For instance, one might be more concerned with controlling the release of a toxic compound into the environment, even if that doesn't allow the maximization of productivity.

This conflation is something that progressive pundit Matthew Yglesias stumbled into about unemployment (I'm being snarky, since liberals and modern monetary theorists have been saying this for, well, forever; italics original, boldface mine):

...punditocratic discussions of stimulus (whether fiscal or monetary) have been misleading in some respects that can be illustrated via the suggestion that we ought to think of the issue as one involving real resources rather than money.

Think about a total war scenario like World War II. Here if we're looking at a country that's fated to fare poorly--Italy, say--it swiftly becomes apparent that questions about the Italian government's budget are not so interesting. What matters are things like how many airplanes does Italy have? How many pilots does Italy have? And how many new airplanes can Italy build? The government "running out of money" isn't a real concern in this situation. If there's an airplane factory, and the factory has appropriately skilled workers, and the raw materials needed to build the plane exist, the state will find a way of mobilizing these resources to make the planes.

Something to consider when you read about the U.S. government 'going bankrupt.' Just saying. Anyway, back to Yglesias:

...mass unemployment represents, among other things, an enormous wastage of potentially productive time and energy.

Yglesias still doesn't quite find the nut (bad squirrel!), since he's still making efficiency arguments. And that's what's wrong with our economic discourse--and it stems from professional economists. Because economics suffers from 'physics envy', the notion that normative questions can be explicitly discussed is anathema. Yet there is a basic issue that is glossed over: what is a healthy economy?

A healthy economy is one that provides a decent job at a decent wage and conditions to everyone who is able to work.

A healthy economy is one that does not leave one out of five children in poverty.

A healthy economy is one where many households are not one crisis away--and many of these crises are inevitable, such as illness--from bankruptcy.

And a healthy economy is one where workers are not kept in constant fear of unemployment.

Phrased like this, worrying about a three percent inflation rate or an increase in the debt-to-GDP ratio by ten or fifteen percent is utterly ridiculous. We begin to realize that the deficits über alles crowd (even though they're really not) are conflating balance of account statements with the real economy.

My list above is composed social goods--and is definitely a big honking normative statement. Certainly, many social conservatives, at least judged by statements by current Republican office holders, do not agree with my definition of a healthy economy.

While economics does need to be focused on the workings of the economy (especially those stupid fucking economic natural history facts), economics has excluded overt discussions of the normative from its sphere of activity. That has severely weakened its usefulness, since it is not addressing what really matters.

If economics were to embrace the idea that it is a social science, that would also improve its rigor since it would be able to explicitly identify its assumptions, as well as begin to salve the Great Mortification. But more importantly, millions of people might be lifted out of poverty. That really matters.

Update: Kevin Drum today makes a similar point:

But there are rules and regulations we should put in place purely because they represent the way we think people should be treated. Potential employers shouldn't have access to my credit record because that's something I think we should treat as private. Banks shouldn't be able to retroactively raise interest rates on credit card balances because that's something I think is fundamentally unfair. Pharmaceutical companies shouldn't be allowed to sell drugs that don't work (even if they're safe) because I don't think sick people should be treated that way. Restaurants shouldn't be allowed to run filthy kitchens on the theory that an occasional outbreak of food poisoning isn't worth the cost of prevention. Farmers shouldn't be allowed to pay migrant workers two dollars an hour in scrip because I think adult human beings deserve better than that even if (or maybe especially if) they're desperate. I can't necessarily justify any of these things on purely economic grounds, and even if I could I'm not sure I'd want to. Because that's not truly why I believe them.

Even on the left, I feel like we've allowed ourselves to buy far too heavily into the homo economicus model of human interaction. But if I can be allowed to put on my old school lefty hat for a moment, that model just doesn't work when the power relations are too far out of whack. And to a large extent, businesses simply have the whip hand on too many things today. When you sign a form from your doctor agreeing to send all complaints to arbitration instead of to the civil court system, this isn't really an agreement between consenting adults. Once the AMA has convinced enough doctors to require this of all their patients, you no longer have a choice. You either give up your legal rights or else you go without medical services.

The alternative, of course, is political, not economic: pass a law that says access to courts is a basic right that can't be taken away even if your doctor or your credit card company or your employer forces you to sign a piece of paper to the contrary. Pass a law that prohibits employers from checking credit scores -- even if that's economically efficient in some technical sense -- simply because individuals ought to have a certain zone of privacy in their personal affairs. Pass a law that outlaws no-doc liar loans because they're bad for the country regardless of whether individuals can make money from them.....

We're perfectly justified in requiring them to treat people decently even if we don't have an economic justification for it. We used to understand that better than we do today.