econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 21 March 2017

Economics Isn't Ideology-free And It's Misleading To Suggest It Is

from The Conversation

-- this post authored by Graham White, University of Sydney

Prime Minister Malcolm Turnbull recently commented that when it comes to Australia's energy supply:

"policymakers have put ideology and politics ahead of engineering and economics".

It's not uncommon for a politician to accuse other politicians of being subservient to ideology on some issue. But to couch this accusation in terms of a choice between "the economics" or "just ideology" is problematic.

We should be highly sceptical of claims that the pronouncements of economists about real world economic problems stand above any ideological influence. This might in turn allow for a more sober assessment of what economics can and can't deliver.

There's a belief, still present within the economics profession and which still finds its way into the education of undergraduate economics students, that economics possesses a box of tools that are value-free, or ideologically uncontaminated. And that somehow this allows for economic statements about real world problems that are free of ideology.

The idea persists in part because it serves a purpose, for some, in providing a benchmark for measuring the "scientific progress" of economics as an intellectual discipline.

But things are less clear when you look more closely at how the box of tools is used.

Take the proposition, for example, that lower prices for goods and services would benefit the consumer, using some measure of consumer welfare. Or that increased competition would under certain conditions lead to lower prices.

Leaving aside the fact that the choice of measure of consumer welfare might itself not be completely untainted by ideology, using these propositions to diagnose real world problems inevitably brings ideology into play.

For example, justifying a policy to promote "efficiencies" in production as a means of achieving lower prices, which might also require people losing their jobs, would warrant some additional reasoning about society's objectives underpinning the production and distribution of its material wealth.

This is especially the case where the economic toolbox does not support a belief that market mechanisms would automatically kick in to provide employment for displaced workers. Policy prescription in this case is inevitably ideologically laden.

The tool box can also contain, for example, propositions about how the size of the federal government's budget deficit, the speed at which the economy is growing and the path of public debt over time are all connected.

To turn such propositions into meaningful discussions of economic policy, particularly about government spending, taxation or welfare outlays, requires additional propositions that are likely to be conditioned by ideology. This includes the amount of public debt a country should live with and, more fundamentally, what activities governments should be involved in.

For 20th-century economist Maurice Dobb, ideology enters into the picture as soon as we put the box of tools to work.

In other words, a set of formal economic propositions could only be considered immune from ideology prior to being used as a means of illuminating real world problems. But arguably, as Dobb suggests, at this stage the box of tools has little economic content.

But as soon as these propositions are used to infer cause and effect, and in turn form a basis for policy prescription, ideology inevitably enters into the picture.

Indeed, for some, even decisions about which tools go into the tool box are not completely free of ideology.

The point of all this is not that we should throw up our arms in despair at the influence of ideology in economics. To quote the Austrian economist and historian of economic thought Joseph Schumpeter:

"explanation, however correct, of the reasons why a man says what he says tells us nothing about whether it is true or false".

Economics and ideology intertwine. This serves as a reminder that the use of economic propositions for diagnosis and policy prescription can be affected by a historically conditioned vision of how things are and "the way in which we wish to see them" (to borrow Schumpeter's terminology).

Graham White, Associate Professor, School of Economics, University of Sydney

This article was originally published on The Conversation. Read the original article.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Opinion Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Opinion








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved