Are to demonstrate below that the injection of values

Are Facts and Values Inevitably Intertwined in Economics?

Economics contains within in a conflation of fact and value properties that can, prima facie, be easily separated. The former appears to be crucial to economics as an embodiment of cold mathematical calculation – a withholding of morals and ethical sympathy if you will – devoted entirely to the maximisation of profit margins, while the latter seems to play a very little part in the modus operandi of a business; if a CEO stopped to consider the ethical implications of all the workers or animals s/he was controlling, then their company would surely fail. However, it has come to the attention of many (partially due to the recent developments in the Philosophy of Economics), that the distinction (if such a distinction exists) is not quite as clear-cut as it may seem. Simply put, a problem arises when one attempts to move from a pre-scientific cognitive act to ‘real’ science. This adds an additional layer to the original problem, namely, “Is Economics a Science?” Given the constraints of this essay, let us assume it is a science. Therefore, when doing ‘science’, it is in its best interests to not have ideology, or what probably can be interpreted as ‘values’, ‘trickling’ or indeed intertwined in economics, as I have illustrated in the reductio above. Adam Smith’s ideology is easily separated from his methodology, whereas Marx sees the ideological bias in society and how it affects methodology/science, but only sees it in other people and not himself. Given this, this essay will aim to tackle the question of whether facts and values are intertwined in economics in two parts. First, it will approach the problem through the lens of ethics, specifically virtue ethics (if we assume that it is synonymous to values), and an ideological linguistic approach in which I hope to illustrate the downfall of any economic statement that aims to be entirely separate from value statements, with a side-note on the fallibility of the fact/value distinction in general. I intend to demonstrate below that the injection of values into economic practices are essential to the success of any business and, if we assume that the intrinsic goal, by nature, of economics is to maximise wealth, then facts and values must be inevitably intertwined. For if they were not, economics as a concept would, arguably not have existed in the first place.

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At first glance, an attempt to develop a Virtue Ethics approach (or any ethical value-based approach) to economics seems oxymoronic.1 Any appeal to Aristotle for guidance in relation to this will be faced with the stunning judgement that much of what is done under the name “capitalism” and finance (chrematisike) is entirely devoid of virtue and the work of “parasites.” The only virtuous form of business for Aristotle was household trading and craft production (oikonomikos2), which did not focus on the profit motive in the first instance, but a form of Eudaimonia, wellbeing and flourishing for those concerned. Just as for the individual and pleasure, so to for the business and profit; an organisation should seek excellence and flourishing in the first instance, given this, and good fortune, profit may follow. Given this, Alasdar MacIntyre, whose work has always sympathised with a Neo-Marxist critique of capitalism, has argued that an ethical or value-driven approach to business (as a microcosm of economics as a whole), is inimical to the current corporate culture. For MacIntyre, a corporation devoted to values is one which promotes excellence, self-actualisation and the achievement of “internal goods” for its staff, customers and beyond. “External goods”, that is to say material goods, should not be the primary telos. Instead, MacIntyre has claimed that a corporations devotion to internal goods and the “possession of values may perfectly well hinder us in achieving external good”.

This neo-Aristotelian approach is reflected in Abraham Maslow’s Hierarchy of Needs – which many corporations promote to their middle management. The fashionability of the latter and value-centric teachings in MBA courses has been regarded to be akin to a “Trojan Horse” which introduces an ethos that radically contradicts the profitability/shareholder value system that provides the telos of most publically listed corporations (e.g. Apple).

The popularity of value/ethical approaches to business (i.e. companies demonstrating their ethical treatment of animals to entice customers, etc.) can be reduced to three reasons. The first is its advantage over traditional Kantian and Utilitarian approaches. The latter are action-based as they focus on developing rules or guidelines to constrain managerial and staff actions. These rules or guidelines take the form of corporate codes-of-conduct/ethics. They are generally negative, whereas virtue ethics as a value-based agent approach concerns the fundamental character and motivations of the individual agent. “Moral behaviour is not limited to adherence to a rule or guideline but rather involves the individual rationally pursuing moral excellence as a goal in and of itself.” In essence, values in economics proves a positive objective or goal/telos for corporate activity rather than a constraint. Another advantage of values in economics is that it allows for the evaluation of ethical decisions from within a specific role, and provides employees with a greater sense of autonomy and personal decision making. Corporate ethics then becomes contextual and connected to a given person and situation, rather than being a separate and abstract set of rules which has become so common in contemporary professional codes of conduct. Finally, the combination of facts and values appears to solve the standard dilemma or antinomy of choosing between deontological altruistic regulative principles (e.g. no insider trading; no non-sustainable mining) and self-interested/profitability and consequentialist considerations (insider trading; profit driven mining). In a corporation committed to a value/ethics framework, the dilemma is less likely to arise, as profitability is not the primary telos of the organisation. Thus, for the examples given, there is no pressure for employees or managers to illegally trade on non-publically disclosed information or pursue mineral extraction with little investment into the local community and environment. Hence the moral ‘schizophrenia’ of being both an ethical corporate citizen and a good profit maximising employee does not arise; one would not have to weigh the goal of maximizing firm profits against the constraints of an ethics code. Maximizing firm profits would simply no longer be a person’s ultimate objective. Obviously, this requires a radical paradigm shift; the values of fortitude and temperance must be employed for a longer term view, as eudaimonic businesses will most likely incur short and medium term losses. Indeed, it is a well-known late 20th C. phenomena, that many executives “drop-out” of corporate life to pursue their own goals in small businesses; the latter appearing akin to the Aristotelian conception of oikonomikos, however, as evidenced by many Fortune 500 companies, those that intertwine facts and value considerations ultimately result in the largest success. Given the constraints of this essay, these rather simplistic arguments will have to suffice.

All of the above so far has assumed that there is at least some distinction between facts and values. This dichotomy could be seen to be the central assertion of the various manifestations of positivism and its prioritisation of methodological empiricism (as exemplified in the physiological and biological sciences) over other purported sources of knowledge. What follows is a critique of the positivist dichotomisation of facts and values with reference to Hilary Putnam’s work. In essence, if we collapse the dichotomy, then they are to be regarded as one and the same, intertwined and entangled within all concepts that use them, much like quantum entanglement; if one changes, so does the other regardless of how ‘far’ they may seem to be from each other. As a result, it is in this essays best interests to attempt to prove that they are indeed entangled.

Beginning with the fact that positivism defines facts empirically as ideas or propositions that are drawn from sense impressions that correspond to external objects, we can safely assume that facts are not drawn from other epistemologies such as testimony, rationalism, intuitionism, sentiment, mysticism, non-propositional mental states, non-sense impressions such as feeling, nor from other theories of truth (coherence, pragmatic), nor from introspective states, nor from non-objects such as abstract mathematical entities. These are undeniably less preferred or valued over than the premise one as criterions of truth, or as a method for attaining such truth. Therefore, what is regarded to be factual must be determined by presupposed values, often without justification or deemed as self-evident. This results in a subjectivity amongst all values on the positivist view, including those outlined in premise two. The Elenchic and reduction ad absurdum conclusion is therefore, given the fact that they are all subjective, the criteria of what objective facts are rests upon subjective values – an unacceptable contradictory conclusion. Putnam, however, asserts an Alethic conclusion where it is proclaimed that facts and values are not independent and that description and evaluation are “entangled and interdependent…with all theory selection value laden”. Of course some may argue for axiomatic postulation of these values on the grounds of greater pragmatic utility (i.e. scientific achievement post-Scientific Revolution), however Putnam, who as a pragmatist (following James and Dewey), argues that judgements of usefulness and utility are also value judgements or at least based on value judgements (best explanation, simplicity, etc.).3 The conclusion of this attempt at collapsing the dichotomy is that, due to the fact that both epistemic and moral values are required in the sciences (as equivalent to economics) when seeking facts, constructing theories, engaging in scientific processes, methodologies, interpretation, observation, description and evaluation, there is simply no way to separate the two entities from each other.

Evaluating this from a linguistic bent, all language used to describe or engage with the sciences (in this case, economics), carries with it a saturated ideology and phenomenology, namely the labels of ‘Fact’ and ‘Value’. Unlike analytic philosophers who have generally focussed on the propositional analysis of those words/concepts, Continental philosophers such as Husserl would rather seek clarity and precision in the rigorous description of our immediate experience (the phenomena) rather than in the logical analysis of concepts or language. He saw phenomenological analysis as the study of the Heraclitean flow of our everyday experience of the world as operating at a more fundamental level of knowledge on which any propositional truths of conceptual or linguistic analysis would be based on or abstracted from. Essential to this process is his “epoche”, that is, the suspension of “judgement” or the use of classical philosophical categories such as cause and effect, fact and value, etc., in order to liberate phenomena from procrustean misrepresentation by inherited conceptual and ideological schemes, as discussed in paragraph one. Instead, one should participate and aim to adopt the Pre-Socratic notions of Being, especially that of Parmenides and Heraclitus and free yourself from philosophical, ideological and conceptual contagions.

Although there are many differing interpretations to the problem given in this essay, namely 1) an intertwined fact and value system stimulates economics and is thus inevitable, 2) the presupposition of values in everyday description and evaluation results in the entanglement of facts and values, and 3) that the philosophical distinction should not even be applied, it has become abundantly clear that the synonymous nature of facts and values underpins all. Perhaps the most powerful argument is that the creation of language itself is already value-laden. Language was created undeniably subjectively and with different values and ideologies that influenced it and are attributed to it. As remarked in paragraph one, some philosophers such as Marx were able to identify the influence of ideology and values on economics, but were unable to see it in themselves which evokes the Kantian concept of an eye that looks, yet cannot look back upon itself and thus is blind to its own influences and biases. Ultimately, it becomes apparent that facts and values are essentially one and the same, especially in the field of economics.






1 “The life of money making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and used for the sake of something else.” Nichomachean Ethics

2 Literally, economics.

3 It should be noted that Putnam does not deny the distinction between the terms fact and value, rather he merely regards the dichotomisation and mutual exclusivity of such as misrepresenting the nature of science, and a forgetting of the historical, cultural and normative contexts and conditions that frame the worldview of research communities (like any other human community.)