PRINCIPLES OF ECONOMICS
48. Economics is perhaps the most difficult part of the course to criticise. Perhaps the most useful approach is to say that economics at Oxford tends to conflate political economy (roughly the explanation of changes in economic structure and functioning set in a social context) and praxiology (the science of practical reasoning). When the latter is studied without reference to the history and methodology of economic thought, there is a tendency to make an improper transition from the universality and rationality of a linguistic practice to an assumption of the universality and rationality of a particular social-political formation, namely capitalism.
49. Modern economic theory has endeavoured to establish itself as a universally applicable science, independent of politics and sociology. In practice, this meant that these dimensions were only “pushed outside the conscious focus of the system and became its silent and unconscious preconditions.” [NOTE: Perry Anderson, “Components of the National Culture“, New Left Review 50, pp.31-2.] In fact, the only way to make a praxiology perfectly general is to include these dimensions, whilst recognising that this does not diminish the need for political economy.
50. Thus it is not a criticism of the methodology of welfare economics itself that in practice it excludes a whole host of factors whose values will vary necessarily as the economic variables which are included in the analysis vary. This argument only establishes that certain variables should be brought into the analysis. One way this can be done is to bring within the measuring rod of money by legal changes in the real world variables presently excluded – e.g. the creation of amenity rights. The content of the economist’s world will correspondingly change, but not his methodology. Mishan [NOTE: E. J. Mishan, The Costs of Economic Growth, Staples Press, 1967.] is one who has confused the two.
51. The best way to avoid the conflation of political economy and praxiology, and of explanation with justification, is to introduce an historical and methodological dimension into economic studies.