Arsip Tulisan 2011 (Yudi Ahmad Faisal)
The analytical approach of this essay will use the dictum of David Hume (1711–1776), as explained by some influential modern scholars in the field, in distinguishing between ‘is’ propositions, and ‘ought’ propositions. According to Hausman (2008:3), the interest in philosophical questions concerning economics has increased progressively. One of the major discussions in the economics’ debate is the relationship between how economics ought to be done with how economics actually is done.
Philosophical thought is thus very central in the economic sphere. It can be argued that the current economics seems to be formally separated from philosophy and becomes a specialised discipline in its own right, in the belief that the current concern of economics is more concrete and practical. Since then economics is made highly abstract and theoretical claims, while also becoming less respectful of philosophical thinking. It is often argued that philosophy stands accused by contemporary economists of being irrelevant, abstract, and a disinterested study (ibid, p.16). However, in the discussion of “what is” and “what ought to”, philosophy carries a very important role in making evaluative judgments, and generating values on every aspect of economic problems that seem not to be emphasized on a positivistic approach. In that sense, philosophy serves as an intellectual foundation of the economic discipline. In other words, philosophy searches into substantive areas of economics, and provides value judgments in formulating the body knowledge of economics.
David Hume on “what is” and “what ought to” from the Economic Context
According to Hardin (2007:8), Hume, based on his work’s a Treatise of Human Nature, famously asserts that the truth cannot be deduced from empirical facts – an ought from an is. Furthermore, another moral philosopher such as R.M. Hare, also argued to support Hume’s work that normative conclusion cannot be validly derived from a set of positive premises, for instance with regard to government and private economic agent policies on what ought to do or not do. Empirical fact is used after at least one normative premise having been made in constructing normative propositions (Roy, 1991:17). In other words, after having empirical studies on economic problem answered, logical approaches have reached its highest work. After it there is argued no further scope for logical and mathematical reasoning to work, only subjective approaches through economist own realm can be utilized towards the subject on economic issues (ibid, p.18).
A Basic View on Hume’s Propositions
Based on the Hume’s dictum, it can be argued that the normative and the positive have no direct inter-related connection. Even though both are possibly connected, but the term normative in Hume’s view seems not automatically detached from the positive, and vice versa. From the perspective of economics, the term positive could appear to be independent principle of any particular ethical positions or normative judgments, or it can possibly be an objective science, which can predict an economic phenomenon precisely by descriptions and explanations on certain economic issues. Furthermore, positive economics, to some extent, could be the chief supplement in resolving normative debates. In that sense, the positive economics becomes a primary judgment on every single economic problem which is experienced by a society.
According to Hardin (2007:8), Hume, based on his work’s a Treatise of Human Nature, famously asserts that the truth cannot be deduced from empirical facts – an ought from an is. Furthermore, another moral philosopher such as R.M. Hare, also argued to support Hume’s work that normative conclusion cannot be validly derived from a set of positive premises, for instance with regard to government and private economic agent policies on what ought to do or not do. Empirical fact is used after at least one normative premise having been made in constructing normative propositions (Roy, 1991:17). In other words, after having empirical studies on economic problem answered, logical approaches have reached its highest work. After it there is argued no further scope for logical and mathematical reasoning to work, only subjective approaches through economist own realm can be utilized towards the subject on economic issues (ibid, p.18).
A Basic View on Hume’s Propositions
Based on the Hume’s dictum, it can be argued that the normative and the positive have no direct inter-related connection. Even though both are possibly connected, but the term normative in Hume’s view seems not automatically detached from the positive, and vice versa. From the perspective of economics, the term positive could appear to be independent principle of any particular ethical positions or normative judgments, or it can possibly be an objective science, which can predict an economic phenomenon precisely by descriptions and explanations on certain economic issues. Furthermore, positive economics, to some extent, could be the chief supplement in resolving normative debates. In that sense, the positive economics becomes a primary judgment on every single economic problem which is experienced by a society.
On the other side, the normative seems to become a subjective position of economic agent, for instances, government, private, or individual in issuing policies to resolve any economic issues. By doing so, the normative economics appears to be a primary consideration in any economic problems as its counterpart. Even though the normative judgment is sometimes weakened by the fact that the provided propositions are not introduced obviously, but in the form of general concepts, which are still debatable. As a result, in the normative side, the vague unanimity often appears and leads to the desire of logical analysis based on empirical evidences. At this point, the economic discussion is thus replaced from the normative to the logical analysis. Hence, economic propositions should evidently define concepts and then operate them in a logically correct manner. What is correct and what false can be discussed with the logical methodology, while conflicting interests can be recognized, never solved scientifically.
Apart from the assumption that the positive economics has no direct relation with the normative one, a number of economic policies derived from empirical studies could be claimed to contain normative judgments. Economics deals with the attitude on how to do the best decision to allocate scarce resources between alternative ends. In this matter, propositions involving “ought to” are in the central position to make judgments based on various alternatives provided by the positivistic approach. Economics seems to have difficulties to execute directly the predictions, and explanations of mathematical investigation of an economic phenomenon without getting influences from hidden factors derived from the normative point of view. For instance, the assumption of “if a government cuts education budget, national economy will be less risky for the next years when it deals with deficit problems”. The assumption is based on a particular investigation and estimation on the relationship between national budget and government spending using mathematical and statistical approaches. The statement “the national economy will be less risky for the next years by cutting educational budget” is derived from economists own assumptions, which are often not based on objective mathematical analysis, because there are many alternatives that are probably taken in managing deficit problems rather than cut educational budget, for instances, military and war spending, banking bailout, or tax increase.
In issuing particular economic policies, the economists often cultivate certain assumptions that may differ from another economist. In fact, not every government in the world prefers to implement the difficult decision to cut educational budget. The decision would be possibly grounded on certain factors beyond the positive explanation. As a result, the normative position is inevitable in the realm of economics.
Based on the above explanation, the position of the normative is not independent from the positive rather both approaches have dependency each other in deriving certain issues on economy. The normative is also not merely value judgments that cannot be verified empirically. It appears after the positivistic analysis is performed. Every judgment of policy makers is essentially in the nature of a theoretical relationship between human subjective values and empirical evidences. Even though the causal relationship between the two seems not always be obviously indicated as exemplified by the decision of a government to cut educational budget. As a result, subjectivity and rationality are thus considered to have a symbiotic relationship.
Apart from the assumption that the positive economics has no direct relation with the normative one, a number of economic policies derived from empirical studies could be claimed to contain normative judgments. Economics deals with the attitude on how to do the best decision to allocate scarce resources between alternative ends. In this matter, propositions involving “ought to” are in the central position to make judgments based on various alternatives provided by the positivistic approach. Economics seems to have difficulties to execute directly the predictions, and explanations of mathematical investigation of an economic phenomenon without getting influences from hidden factors derived from the normative point of view. For instance, the assumption of “if a government cuts education budget, national economy will be less risky for the next years when it deals with deficit problems”. The assumption is based on a particular investigation and estimation on the relationship between national budget and government spending using mathematical and statistical approaches. The statement “the national economy will be less risky for the next years by cutting educational budget” is derived from economists own assumptions, which are often not based on objective mathematical analysis, because there are many alternatives that are probably taken in managing deficit problems rather than cut educational budget, for instances, military and war spending, banking bailout, or tax increase.
In issuing particular economic policies, the economists often cultivate certain assumptions that may differ from another economist. In fact, not every government in the world prefers to implement the difficult decision to cut educational budget. The decision would be possibly grounded on certain factors beyond the positive explanation. As a result, the normative position is inevitable in the realm of economics.
Based on the above explanation, the position of the normative is not independent from the positive rather both approaches have dependency each other in deriving certain issues on economy. The normative is also not merely value judgments that cannot be verified empirically. It appears after the positivistic analysis is performed. Every judgment of policy makers is essentially in the nature of a theoretical relationship between human subjective values and empirical evidences. Even though the causal relationship between the two seems not always be obviously indicated as exemplified by the decision of a government to cut educational budget. As a result, subjectivity and rationality are thus considered to have a symbiotic relationship.
From the above point of view, it is essential to notice that positive economics seems not become defined in terms of the impact on normative goals, or vice versa nor economics seems not entirely neutral and independent of any particular ethical-position or normative judgments. The normative preference of economists is not to be taken as given which has similar preference with other economists in another region. Furthermore, value judgments seem not always consistent with positive judgments. As a result, it can be argued that the relation between positive and normative economics could not be predicted, it randomly happens based on particular preferences of each economist. Since then value judgments has often become crucial. In other words, the decision on economic issues practically takes place following an economist analyses on what is the current phenomenon. However, scientific investigation on what “is” could not completely predict what may happen in the future rather it passes after intermingled with value judgments on what “ought to be”. Hence, the notion of independency of normative from positive or vice versa is progressively challenged.
Thus, the discussion is further shifted to the necessity of using the moral philosophy considerations in this paradigm for allocation and distribution of resources. However, it does not reject the positivist analysis. The latter provides the map of current economy, while the former gives value judgments on how the economy will run in the future. The moral filter seems preferred as a complement of market mechanism which commonly uses the positivist mechanism in issuing policies of allocation and distribution resources. For instance, in deciding economic budget, a government at the very beginning would probably examine the current economic phenomenon, but then its follow up would depend on particular preferences of policy makers. Hence, the decision would probably in line with the result of examination, or vice versa. Because of that the next question that should be addressed by the economists is a kind of moral filter which harmonizes between self-interest and social interest. If there is no synchronization between these two interests, it will appear dissatisfaction on certain economic policies which will result on a conflict of interest.
Conclusion
Based on the Hume’s dictum, it can be argued that the positive economics, which derived from “what is”, seems to be an independent principle of any particular ethical position or normative judgments. Hence, it influences greatly the structure of normative economics. However, based on certain explanation, the normative is neither in the inferior position, nor absolute independent from the positive as contrary assumed by the positivistic approach, instead, both of those are thus considered synonymous, or having a symbiotic relationship.
In the debate between the positive and the normative, philosophy serves as a value judgment of the economic discipline. It serves as a foundation in the economic realm, and often concerns with ethical issues or subjective judgments that are often abandoned by positivistic realm. In the above discussion, it is obvious that the philosophy is not abstract or irrelevant, but it contributes to the final decision on economic policies. Meanwhile, positive economics seems to come out with results based on empirical studies. These results do not always lead to positivistic own decisions, but it often allows a decision to be made by the normative, which is considerably equipped by philosophical considerations. This could be categorized to what so called “subjective” judgment based on Hume’s dictum.
Philosophy appears to make a bridge in connecting the question of what extent ethical values are involved in economic reasoning, human considerations, social interest, and self interest. As a result, philosophy is often involved in formulating economic assumptions and propositions.
References Roy, Subroto, 1991, Philosophy of Economics: On the Scope of Reason in Economic Inquiry, NY: Routledge
Hausman, Daniel M., 2008, the Philosophy of Economics: An Anthology, 3rd Edition, NY: Cambridge University Press
Hardin, Russel, 2007, David Hume: Moral and Political Theorist, NY: Oxford University Press
Thus, the discussion is further shifted to the necessity of using the moral philosophy considerations in this paradigm for allocation and distribution of resources. However, it does not reject the positivist analysis. The latter provides the map of current economy, while the former gives value judgments on how the economy will run in the future. The moral filter seems preferred as a complement of market mechanism which commonly uses the positivist mechanism in issuing policies of allocation and distribution resources. For instance, in deciding economic budget, a government at the very beginning would probably examine the current economic phenomenon, but then its follow up would depend on particular preferences of policy makers. Hence, the decision would probably in line with the result of examination, or vice versa. Because of that the next question that should be addressed by the economists is a kind of moral filter which harmonizes between self-interest and social interest. If there is no synchronization between these two interests, it will appear dissatisfaction on certain economic policies which will result on a conflict of interest.
Conclusion
Based on the Hume’s dictum, it can be argued that the positive economics, which derived from “what is”, seems to be an independent principle of any particular ethical position or normative judgments. Hence, it influences greatly the structure of normative economics. However, based on certain explanation, the normative is neither in the inferior position, nor absolute independent from the positive as contrary assumed by the positivistic approach, instead, both of those are thus considered synonymous, or having a symbiotic relationship.
In the debate between the positive and the normative, philosophy serves as a value judgment of the economic discipline. It serves as a foundation in the economic realm, and often concerns with ethical issues or subjective judgments that are often abandoned by positivistic realm. In the above discussion, it is obvious that the philosophy is not abstract or irrelevant, but it contributes to the final decision on economic policies. Meanwhile, positive economics seems to come out with results based on empirical studies. These results do not always lead to positivistic own decisions, but it often allows a decision to be made by the normative, which is considerably equipped by philosophical considerations. This could be categorized to what so called “subjective” judgment based on Hume’s dictum.
Philosophy appears to make a bridge in connecting the question of what extent ethical values are involved in economic reasoning, human considerations, social interest, and self interest. As a result, philosophy is often involved in formulating economic assumptions and propositions.
References Roy, Subroto, 1991, Philosophy of Economics: On the Scope of Reason in Economic Inquiry, NY: Routledge
Hausman, Daniel M., 2008, the Philosophy of Economics: An Anthology, 3rd Edition, NY: Cambridge University Press
Hardin, Russel, 2007, David Hume: Moral and Political Theorist, NY: Oxford University Press
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