Origenes De La Vida

I. HISTORY OF POLITICAL ECONOMY.


2.1 SIGNIFICANCE OF ECONOMIC SCIENCE

We have seen that it provides, within its own structure of generalizations, no norms which are binding in practice. It is incapable of deciding as between the desirability of different ends. It is fundamentally distinct from Ethics. Where does its unquestionable significance consist? Surely it consists injust this, that, when we are faced with a choice between ultimates, it enables us to choose with full awareness of the implications of what we are choosing. Faced with the problem of deciding between this and that, we are not entitled to look to Economics for the ultimate decision. There is nothing in Economics which relieves us of the obligation to choose.

There is nothing in any kind ofscience which can decide the ultimate problem of preference. But, to be completely rational, we must know what it is we prefer. We must be aware of the implications of the alternatives. For rationality in choice is nothing more and nothing less than choice with complete awareness of the alternatives rejected. And it is just here that Economics acquires its practical significance, it can make clear tous the implications of the different ends we may choose. It makes it possible for us to will with knowledge of what it is we are willing.
It makes it possible for us to select a system of ends which are mutually consistent with each other.

* An example or two should make this quite clear. Let us start with a case in which the implications of one act of choice are elucidated. We may revertonce more to an example we have already considered—the imposition of a protective tariff. We have seen already that there is nothing in scientific •Economics which warrants our describing such a policy as good or bad. We have decided that, if such a policy is decided upon with full consciousness of the sacrifices involved, there is no justification for describing it as uneconomical. The deliberatechoice by a body of citizens acting collectively to frustrate, in the interests of ends such as defense, the preservation of the countryside, and so on, their several choices as consumers, cannot be described as uneconomical or irrational, if it is done with full awareness of what is being done.

But this will not be the case unless the citizens in question are fully conscious of theobjective implications of the step they are taking. And in an extensive modern society it is only as a result of intricate economic analysis that they may be placed in possession of this knowledge. The great majority, even of educated people, called upon to decide upon the desirability of, let us say, protection for agriculture, think only of the effects of such measures on the protected industry. Theysee that such measures are likely to benefit the industry, and hence they argue that the measures are good. But, of course, as every first year student knows, it is only here that the problem begins. To judge the further repercussions of the tariff an analytical technique is necessary.
This is why in countries where the level of education in Economics is not high; there is a constant tendency tothe approval of more and more protective tariffs. Nor is the utility of such analysis to be regarded as confined to decisions on isolated measures such as the imposition of a single tariff. It enables us to judge more complicated systems of policy. It enables us to see what sets of ends are compatible with each other and what are not, and upon what conditions such compatibility is dependent. And,indeed, it is just here that the possession of some such technique becomes quite indispensable if policy is to be rational.

We may take an example from the sphere of monetary policy. It is an inescapable deduction from the first principles of monetary theory that, in a world in which conditions are changing at different rates in different monetary areas, it is impossible to achieve at once...