Raymond Franklin, "American Capitalism: Two Visions", Ch.1, p.5-12, 1977.

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What is economics? This sounds like a simple question, but it is more difficult to answer than we might at first assume. Economics has been defined in a variety of ways. Here are two of the definitions common among mainstream economists:

1. "Economics specializes in the study of that part of the total social system which is organized through exchange and deals with exchangeables." 2

2. "The study of how people . . . end up choosing, with or without money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption." 3

On the radical side of the ledger, economics is considered to be

3. The study of the "generation and absorption of the surplus" and its "modes of utilization.4

4. "The study of the social laws governing the production and distribution of the material means- of satisfying human needs." 5

The first definition emphasizes trade and transactions related to goods and services that have already been produced and are already owned. The work process that creates wealth is ignored. The second definition emphasizes a particular condition-scarcity that guides the choices that people make in the processes of production and consumption. The third definition is concerned with the portion of the whole product above some minimum requirement surplus-and how it is used. The final definition centers on the we which classes of people are interrelated in the production, distribution, and consumption of goods and services.

Differences among economists, however, transcend such definitions. Any survey of economists would reveal divergent opinions on matters of public policy, the importance of power, the uses of mathematical models, the role of consumers, and the nature of the empirical foundations on which economics is based.6 The multiplicity of opinions among economists has been humorously summarized in the suggestion that, if all the economists in the world were laid end to end, no two would reach the same conclusion. It was not without reason that one eminent mainstream economist, Jacob Viner, was driven to suggest some years ago that 'economics is what economists do'. This suggestion is not inconsistent with the cynical admonition of the radical British economist Joan Robinson, who stated that the "purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists." 7 The primary implication of these quips, intended or not, is that the subject matter of economics is the study of the economists, as well as the study of the economy. A further implication is that economists' formulations may, at times, be divorced from an understanding of the actual economy.


Given the possibility that economists do not always understand with certainty the economy that they study, we might be tempted to ask, why not bypass the deliberations of professional economists and simply look at the hard facts? How do people go about earning their livings and making ends meet? How do business leaders make decisions? How do the government and its network of agencies respond to the problems of the economy? But, as "stubborn" as facts may be, they do not speak for themselves. No individual's economic experience is sufficiently varied to produce a general understanding of the economy of a nation as large as the United States. The experience of the ordinary consumer, who receives income for services rendered and buys goods to meet his or her needs, is different from that of a stockbroker who watches a ticker tape all day. The experience of assembly line workers, whose jobs are so repetitious that they spend most of their working time engaged in fantasy, is far removed from that of gentle men of leisure whose incomes are derived from clipping coupons each month. Individual experiences cannot be collected, added up, an extrapolated to produce meaningful generalizations about how the economy functions, how it has evolved, and how it is expected to develop in the future-at least not without a method of inquiry, or style of reasoning, that transcends concrete experiences to serve as prototypes for those of whole classes of individuals of individual organizations, and breaking down information so that it can be measured and related to other sets of data.

Economists establish analytical categories that focus on very small portions of reality; vast portions of reality are ignored because they are deemed irrelevant to understanding the economy. Categories like wealth, income, consumption, human capital, surplus, productive and unproductive labor, and waste all reflect some degree of arbitrariness in both their content and use, in the information contained within the boundaries of each category, and in the way in which these categories are related to each other in the explanation of the system's performance. This arbitrariness has prompted one mainstream economist to note, all too briefly, that "questions [economists] ask, and from what perspective . . . [they] . . . photograph the 'objective' reality-these are themselves at bottom subjective in nature." 8

In essence the process of understanding the actual economy is a process of theorizing, of abstracting from concrete ways in which people experience it. This process involves building models, or maps, of the real economy. But a map is not, of course, to be confused terrain itself. To paraphrase Kenneth Boulding , a well-respected maverick in the economics profession: A student who wants to study how real people experience the real economy had probably better leave economics and the social sciences, and try literature or read biographies. Most of the economist's work, even that which is empirical, involves a great deal of abstracting and theorizing. This advice does not imply disapproval of abstracting or theorizing, both of which are essential; it is a warning against confusing theory with reality. "We would be foolish to try to go for a walk across a map, but a map may be helpful if we are going for a real walk." 9

Two warnings are in order here: First, it we are to put trust in maps that cannot be readily and pragmatically tested on real trips (as most theories in the social sciences cannot), it is necessary at least to understand how the maps were constructed and for what purposes they were designed. Second, if is necessary, as we have suggested, to avoid confusing the abstractions inherent in maps with features of the real terrain.

Yet, despite occasional and brief admissions that economists do think subjectively and that their "maps" are very different from reality, most mainstream economists discuss economics as if it enjoyed the scientific certainty of the physical sciences. Accordingly, they often argue that economics is like physics or chemistry, except that economists cannot perform the controlled experiments typical of the more exact sciences.

In the radical view, mainstream economists are hesitant to examine the fact that "at bottom" their work is highly subjective. There are three reasons for this: First, such an examination would unmask the pretense that economics is a science. Second, it would reveal the extent to which mainstream economics is tied to the values of the capitalist system. And third, it would compel acceptance of the radical claim that much of mainstream economics is vibrant with ideology, a claim that the mainstream applies only to radical economics.


In order to cope with the realities underlying economic propositions and to satisfy a desire to classify them neatly under two distinct headings ("objective" and "subjective"), mainstream economists engage in a game that involves switching roles from "I as a scientist" to "I as a citizen." As scientists, mainstream economists like to think of their subject as value-free, that is objective and unbiased. They claim that their approach is applicable "to any society, and that in principle it can be made to serve almost any political ends."10 As citizens, they accept the need to make value judgments about economic policies and issues and, in the final analysis, about the system as a whole. These two supposedly distinct kinds of thinking are designated by the terms "positive economics" and "normative economics."

Positive economics is concerned with "the [objective] facts and the principles which govern the actual course of economic systems," without value judgments about the way that the systems function. Normative economics, in contrast, "goes on to make [subjective] judgments on whether one state of the system is better than another, and goes on from there to make prescriptions and gives advice in regard to followed."11 Positive economics is concerned with what "is", normative economics with what "ought to be." This distinction is often buttressed by an analogy of the following sort: As a scientist, I believe that an increase in taxes, based upon my analysis of what "is," will bring about unemployment. As a citizen, I believe that unemployment is "bad" and therefore that taxes should not be increased. As a scientist, I believe that Mr. Jones's heart condition will bring about his death in three months. As a citizen, I do not wish his death and believe that his death will be untimely and bad for lis family.

Although mainstream economists recognize that ideology does occasionally creep into "objective" economic statements, most would probably agree with Robert Solow's advice to his colleagues that they should "seek ways to make [economics] as nearly value-free as it is possible."12 This advice rests on the underlying assumption that economists can make statements and do research that are in general free of ideological content, that is, without implicit values, ethical judgments, and normative assumptions.

This notion of "value-free" thinking arises from a theoretical separation of means and ends. Furthermore, the ends- social goals, institutions, laws, and values -are simply taken as given, as permanent features not to be altered by the process of economic analysis. The content of such goals, laws, and values is said to be of no particular concern for economics as such, and economics is therefore considered neutral or value-free. It becomes pure technology, box of tools, unrelated to the ends being served. The role of mainstream economists, once they have mastered the tools of the discipline, is simply to discover the most efficient, or technically feasible, means to realize given goals. By predicting the likely consequences of various alternative policies, they help to facilitate rational choices by the various "free floating" economic decision makers, who must juggle limited means in order to achieve maximum outcomes.

Mainstream economists, acting not as citizens but as professional economists, consider an economy that produces mainly comic books, popcorn, and alcoholic beverages just as valid as one that produces chamber-music concerts, homes, and libraries. As long as the goods and services are selected and produced under "proper" competitive conditions by consumers and producers respectively, the mainstream economist, as a professional, would be unable to make any value judgments about them. This sort of economist is like the an engineer, from the engineer's point of view, the same an be designed for a fascist, communist, or democratic capitalist government. The design of a bridge is assumed to be independent of the type of system that commissioned it. 13 In- this sense, the economist, with his or her value-free kit of economic tools, is, by definition, a value-free professional, a neutral person capable of serving a variety of ends.

Table 1.1




Mainstream Economics

Positive economics
"What is"

Normative economics
"What ought to be"

Radical Economics

Analytic            IDEOLOGY              Legitimizing

function         <-------------------->        function


Economists' perceptions of reality are determined by the delineations of their system of study. The normative-positive distinction is one such delineation in the system of mainstream economics. Ultimately, radical economists assert, mainstream economists do not abide b their normative-positive distinction, even though they claim its validity for analysis. For radical economists, ideology functions as the mediator between the analytic and legitimizing functions, categories that incorporate the mainstream's positive and normative economics.


Radicals deny the possibility of a value-free economics and therefore the usefulness of the distinction between positive and normative economics, as well as the complete separation of ends and means. The end or "goal" of a bridge, for example, is to support a flow of trucks, cars, or trains. The design and materials used will be closely related to, even dictated by, the ends for which it is being constructed. As in engineering, so in the economy: Basic goal changes in society will alter the economic means devised to achieve them.

The idea that a value-free economic position is possible arises partly from the absence among mainstream economists of values distinct from those of the system that they study and serve. Partly, they assume, as we have noted, that means are unrelated to specific ends and that the same means can be applied to any constellation of economic or social goals. In the radical view, this notion of a purely instrumental role is itself part of the value system that justifies the mainstream economist's accommodating role in the capitalist system.

Although in theory mainstream economists favor the separation of objective positions from value-laden ones, in fact, it is difficult to find many mainstream economists who practice their beliefs. In the words of Kenneth Boulding :

Certainly the classical economists had no hesitation about making a strong case for free trade, or even against it. The Keynesian economists have ... no qualms about prescribing remedies for depressions or inflations. The development economists, too, show little hesitation about offering good advice to poor countries who want to get rich quick.14

When there is a systematic and general failure to practice what is preached over long periods of time, there is, at the very least, prima facie evidence of a much deeper problem with the basic distinction between positive and normative economics than mainstream thinkers are willing to explore. In the radical view, the distinction is erroneous because it contradicts the way people learn to think about the world. And, as a practical matter, it obscures the extent to which ideology permeates mainstream economics.


For radical political economists, the proper study of economics begins with ideology because no economy can exist "unless its members have common feelings about what is the proper way of conducting its affairs; and these common feelings are expressed in ideology." 15 Knowledge of how economists as a group are related to the common feelings is critical to understanding their ideological persuasions.

In the broadest sense, ideology refers to a "system of thought ... [a] set of beliefs and ideas, which form a framework....for...particular notions, analyses, applications and conclusions." 16 More specifically, ideology involves values, moral judgements, and ethics used to justify some events and condemn others. It facilitates the adoption and ranking of individual and community goals. It designates the most practical or desirable means to achieve various possible ends. And it suggests the kinds of questions that economists ask, the ways in which they define problems, the categories they invent to organize "facts," and the relevant time horizon for evaluating the effectiveness of alternative policies. Ideology ultimately encompasses the basic elements that make up theories of human nature, society, and history. 17 Ideology, in sum, determines the economist's value judgements and the way he or she reaches them, the assumptions on which they are based, and what is included or omitted in deliberations about the nature of the economy.

Ideology serves two main purposes. First, it facilitates analytical efforts that influence the ways in which we assemble and relate facts. Second, it provides a mode of justifying the functioning or malfunctioning of a social organization. The latter purpose of ideology is reflected in sentiments propagated by the dominant classes in order to maintain and continue the existing stratification of the social order. It has less to do with establishing truth (the first purpose of ideology) than with maintaining power.

The two purposes, which incorporate the simpler positive-normative distinction made by mainstream economists, frequently overlap. It is not always possible to separate the analytic and legitimizing functions. More generally, it is impossible to make serious observations of a "purely" scientific or objective nature connected, at some level, with an ideological system.