Of Wolves and Ravens: Lessons in Logic – Normative vs. Positive Economics

Happy Tyr’s Day

Introduction:

I am working on school work so it is helpful to review certain concepts.  Most notably basics.  Most people think economics is a dull subject but it probably is the one science that also deals rationally with the question of scarcity.  That is what to do with resources as all resources have a limited availability?  All resources are scarce, so how to distribute them is always the issue. Within this framework will be arguments and in economics arguments boil down to whether something is normative or positively stated.

A positive statement is factual dealing with the way things are and describes things factually.  A normative statement is a statement of what should be and deals with recommendations for how things should be.  In my old religious/theology classes positives statements are the issues of morals – the way things are and how people actually behave.  Normative statements would be the issues of ethics – the way things ought to be.

When people ask me why I like economics so much it is because economics is a very human thing. Society and individuals do not live in a world of pure positive or normative reality.  In truth things are constantly going back and forth between what is and what ought to be. To the wolves and ravens.

Needs (Geri):

It is a positive statement to say that human beings have needs.  Things that must take place for people to survive. We need water, food, shelter from the elements and air.  Without these things we would die. Most of these things are scarce, in truth all of them.

What is not always clear is how these needs should be met in the most effective and efficient manner.  Economists will put out different models and will engage the subject with as much fact and evidence they can muster.  However, some of this discussion in the area of needs dwells in the realm of the normative, because some economists might argue that this list of needs is too short. Education, Health Care, Defense, etc. all enter the picture here as the issues of well-being and security seem to be in that realm of tug of war between morals and ethics.

Wants (Freki):

People want things – that is probably a positive statement.  The issue of how one goes about acquiring what one wants enters the realm of ethics and the normative very quickly. The whole discussion of rights, collectivism vs. individualism and many other discussions of which economics system is the best, enter the arena at this point.  It could be said that the majority of the disagreements between economists involve wants vs. needs discussions.

Reason (Huginn):

One would think the moment we engage reason that the world of the normative drops out of the picture.  It doesn’t though. Reason has to engage ideas of all kinds.  In economics reason might spend a large part of the time engaging the laws of economics (there are at east thirty of them) but sometimes it is not clear because of the normative nature of the issue how those laws should be applied. This is the centrality of the issue of economics.  I love this aspect of it.

Wisdom (Muninn):

Wisdom is learning to understand things and how to apply them.  Economics, because of this normative/positive tug of war, has the added feature of trying to be applied to real life. Trying to come up with the best solution for the problems of needs and wants is the central core of economics and this practical aspect draws me to it like a moth to a flame. Sifting through all the normative and positive statements to find a true genuinely helpful philosophy of economics is a worthy goal and one I want to embrace.  In addition economics has been around long enough that from Adam Smith onward we have a large number people to draw from as far as experiences and thought.  It means the wisdom provided on these questions is extensive.

Conclusion:

If there is any lesson today it is for people to recognize that there are positive and normative statements in the world and to learn to distinguish between the two of them.  This becomes the foundational skill of learning not only how to engage logical principles but to learn how to know when someone is stating a fact or an ethical opinion is something that every person should learn. For me economics stands as this great fusion between life and philosophy and learning how to navigate both.

The Rabyd Skald – Wandering Soul, Bard and Philosopher. The Grey Wayfarer.

Skaal!!!

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