Fact, Value, and Economic Policy Objectives *

By Elliott, John E. | Review of Social Economy, September 2005 | Go to article overview

Fact, Value, and Economic Policy Objectives *


Elliott, John E., Review of Social Economy


Elliott examines three central issues in this article published originally in 1980: (1) the interdependence between fact and value; (2) policy objectives as a social fact, subject to explanation; and (3) evaluation of policy objectives. His concern however is more with identifying questions and issues than in providing definitive answers. As to the fact/value dichotomy, Elliott insists that because facts typically are influenced by valuational judgment, a completely valuationally neutral economic theory is impossible. Values, to Elliott's mind, are facts of a very special kind. As to the second issue, the formulation of economic policy objectives, the evaluation of programs in terms of their goals, and the construction of goal-oriented programs are among the most significant facts of economic life. Regarding the third issue, evaluation of policy objectives requires both scientific knowledge of goals and a set of explicit normative standards with which that knowledge may be confronted and in terms of which evaluations may be made.

Keywords: fact/value dichotomy, normative standards, scientific knowledge, valuational wisdom, social facts, values as facts

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This paper critically examines some elusive but fundamental methodological issues in the study of economic policy objectives. Despite long and widespread concern of economists with policy and policy objectives, consensus regarding scope and methodology in this area remains unachieved. What follows provides more key questions than definitive answers. Still, one fruitful result of this procedure is to suggest that methodologies often perceived as competitive are actually complementary. The paper focuses upon three major issues: (i) the interdependence between "fact" and "value"; (ii) policy objectives as a social fact, subject to explanation; (iii) evaluation of policy objectives.

THE INTERDEPENDENCE OF FACT AND VALUE IN ECONOMICS (2)

A prominent source of methodological disagreement in policy analysis concerns independence versus interdependence. Wherein and to what degree are fact and value, is and ought, goal and instrument, end and means, or analysis and advocacy independent or interdependent? In relation to concrete issues in economic policy, sharp distinctions are virtually impossible to make. Five examples of interdependence will illustrate.

A. Fact and Value

First, "facts" are intimately linked with "values," since conceptions of what constitutes relevant economic facts typically are influenced by valuational judgment. A completely valuationally neutral economic theory would study "all" facts. But economists cannot do this. Indeed, a prominent function of economic theory is to select the facts considered relevant from total, complex situations. The likelihood of selecting problems for analysis completely free from interest or valuational judgment seems remote. Gunnar Myrdal argues persuasively: "Facts do not organize themselves into concepts and theories just by being looked at ... There is an inescapable a priori element in all scientific work. Questions must be asked before answers can be given. The questions are an expression of our interest in the world, they are at bottom valuations. Valuations are thus necessarily involved already at the stage when we observe facts and carry on theoretical analysis, and not only at the stage when we draw political inferences from facts and valuations" (Myrdal 1954: vii). True, Milton Friedman contends that this is a "practical" rather than a "logical" difficulty (Friedman 1953: esp. 42-3); and Joseph Schumpeter observes that it constitutes a "pre-scientific" rather than a "scientific" act (Schumpeter 1954, chapter 4). Still, the key point is the importance for the formulation, if not validation, of ideas about policy objectives and programs of explicit recognition of the impact of value judgments on the selection and analysis of "facts."

B. …

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