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Subject Area: Political Theory
Topic: Progress

Economic Policy: Free Trade and Values - Leonard P. Liggio, Literature of Liberty, Winter 1981, vol. 4, No. 4 [1981]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Economic Policy: Free Trade and Values

Warren J. Samuels

  • Michigan State University

“Economics and Science and Its Relation to Policy: The Example of Free Trade.” Journal of Economic Issues 14(March 1980): 163–185.

For over a century, economists have debated the exact nature of their social role and the relation of economic theory (or science) to policy. Disagreements have concerned the tension between, on the one hand, the desire for analysis free of ideology and values, and, on the other, the reluctant belief in the inevitability of values or ideology. The debates have also stirred doubts as to whether economic principles apply, directly or indirectly, to matters of policy.

Prof. Samuels' article concentrates on the single principle of free trade to highlight the diverse views among economists concerning the scientific status of their field of study and its practical value. He reports the results of a 1977 probe which he conducted among members of the departments of economics and agricultural economics at Michigan State University. The poll consisted of one question: “What do you think is the relationship between the pro-free trade position and the status of economics as a science.” The responses to Samuels' query fell essentially into four categories.

One group of economists affirmed that the position favoring free trade is grounded in economic science. One writer, for example, said that, “under certain ideal conditions (perfect competition, no externalities, etc.), free trade yields a Pareto optimum. This statement,” he continued “is no less scientific than any other in economics.” The respondent added that his view was positive, not normative economics. He believed that “free trade yielding a Pareto-optimum” is a “justification of free trade” but perhaps not an actual affirmation of the free-trade policy position.

A second group of respondents, quite in conflict with the first, argued that there is no justified and conclusive relation between the free-trade position and economics as a science. One economist wrote: “Economics is concerned with the allocation of scarce resources among competing ends. The science of economics does not define the end. Equation of economics as a science with free trade implies that maximum ‘output’ is the only valid end.”

The third major group of economists took a position that economics cannot advocate a specific policy, but can describe the likely consequences of alternative policies. “As a science,” one respondent replied, “economics should strive to identify the magnitude and distribution of benefits and costs associated with different institutions regulating trade under different situations. There is no scientific—that is objective— basis for a universal conclusion favoring free trade.”

Finally, one respondent alone dealt specifically with the conflict between positive and normative economics, as well as with the question of the conditional nature of propositions. He asked the question: “Are free trade advocacy and economics as a science incompatible?” “Yes,” he answered, “if you are a positivist. No, if you are a normativist and allocative efficiency is your only criterion. Maybe, if you are a normativist and your criteria are both allocative efficiency and equity. But in your advocacy you step outside the bounds of what you can objectively say about the specific case using knowledge from economic theory, including welfare economics.”

Prof. Samuels concludes with the comment that there are inevitably normative facets to social science propositions. The meaningfulness of otherwise ostensibly positive “is propositions” depends upon identifying the normative elements. Samuels suspects that, if such a process were faithfully carried out, less disagreement would exist concerning the relation of economic analysis to policy.