Economic Analysis and Value Judgment

Chapter 3, Section 6: Economic Analysis and Value Judgment

As is said, the criteria of competitions determine the economic operation of a society. Among all the discussions on "criteria", some belong to economic analysis, while the others are actually about subjective or ethic problems, and thus have nothing to do with objective analysis. The two must be clearly distinguished.

As we all know, under different victor criteria, the winners or losers would usually shift. Therefore, some people prefer one criterion, while some others prefer another. Such preferences fit into the scope of economics. Take examination as an example, some students prefer essay questions as they are good at argument, while some others require multiple choice questions so they have a better chance of winning. All individual choice behaviors are the objects of economic analysis.

Yet which criterion is better, or how a criterion benefits social welfare, are problems of ethics or value judgment, and irrelevant to objective analysis. For example, as I've stated, taking market price as the victor criterion doesn't waste, because that would lead to increased production, while the other criteria all have certain level of waste. However, I never say increased production is good or waste bad. What's good or bad can only be decided by personal value judgment, or only God knows. (Translator: The distinction is fairly easy: ethics or value judgment seeks a unified standard of "better", a "better" that's gonna apply to at least one more person besides oneself, while analysis of economics doesn't.)

Previously the people's communes of China led Chinese people to the edge of starvation, why was it so is a problem for economic analysis, but whether living on the edge of starvation is good or bad, is then a subjective judgment. Economics can explain human behaviors, and can inform us under which constraints people would become living on the edge of starvation, but it doesn't judge right or wrong. By "no judgment", I mean economics doesn't do that, and don't mean economists don't do that. Never forget that, economists are also human and thus have their own value judgment. If I say hunger and cold is bad, that's a subjective assertion, from the standpoint of a human, instead of objective economic analysis. I certainly have the right to make such a subjective judgment, as I have a human's rights, but this right never requires any training in economics.

I can express my value judgment, and the others can express theirs as well, but whose is better, only God knows. Expression of value judgment doesn't require any prior training of analysis. You think blue is good-looking, while I say red, then who can make a decision that satisfies both of us?  You deem government's support of education good, while I think it's bad, then we aren't gonna be able to reach any conclusion even after hundreds of years of argument. That's because the views of good or bad, love or hate, cannot be objectively agreed upon via scientific analysis.

If I say hunger and cold is not good but bad, many would agree. That's just because most (almost all) of us don't like themselves to be in hunger and cold. People agree because they have the same value judgment, instead of because there exists an objective analysis for that. Economics can explain why people would be in hunger and cold, or with the support from government what would happen to education, but it never judges good or wrong.

As is mentioned, economists are also human and thus have their value judgments. Yet, when doing analysis, they may intentionally or unintentionally bring in their value expressions about certain effect is good or bad. Objective analysis and subjective judgment can appear together. It's no big deal, although sometimes the readers or listeners may get confused. What's really important is, people dealing with economic analysis must separate subjective and objective distinctly, and never allow subjective judgment interfere with objective analysis. That's to say, if an economist twists his analysis intentionally or unintentionally because he deems government  support to education good, so that the analysis breaks away from logical norms, then that'd be an inexcusable mistake in science.

Sometimes economists may haven't say anything about good or bad, yet outsiders think they have. For instance, I've said market price can promote production, and many readers think I deem market price as a good criterion, which I have never said. The readers think I did, because themselves think production increase is good. Of course, when writing for newspapers, to avoid dullness, I sometimes make my judgments of good or bad. Nevertheless the focus of this book is objective economic explanation.

Some readers think I believe in and have special preference to market. I do trust in the capabilities of market, while I also know there are things that the market is incapable of. Yet my personal value judgment is against market, and I hate communist system as well, because I can hardly stand out under either of the two. What I really prefer, is to allocate social wealth according to study and exams, as I am really distinguished under any exam criterion. It's really sad, that nowhere of this world allocates wealth or beauties via exams. (Only God knows, the imperial examination system in old China did effect wealth allocation, but I guess I shall never have my chance to win!)