In economics there are generally two directions of inquiry: positive and normative. Positive research is mainly descriptive: it describes peoples actions but does not prescribe them or judge them. Normative research in contrast is research about what we should do: it does prescribe actions.

To be able to prescribe actions we first have to set norms and goals. Most economists in that sense are utilitarians and consequentialists. The first term means that we generally care only about human happiness, the second that we judge actions by their consequences on human happiness. Although these standpoints seem innocent enough, they do have some interesting implications, that often get us into disputes, such as these.

Take for example the first point: for your average economist it is perfectly all right to have intensive agricultural production including all bells and whistles of genetic modification, cloning and other techniques. What is there not to like? We get a maximum output in terms of production, so we can spend money on other things that make people happy. Animal welfare does not count, or only to the extent that humans care about animal welfare. If humans care about animal welfare (and many people do of course, myself included) then the economist is quick to point out that we can have that, but we have to realize that we have to pay the price, or more correctly cover the additional costs.

I guess the best example of the second point is the value of a statistical life. Technically speaking this is the amount that society is willing to pay to reduce the probability of mortality of an individual, but its casual incorrect interpretation is the  value of a life. People are generally horrified if they learn that economists include these in their cost-benefit analyses, but in effect it is matter of judging actions by their consequences: if a policy saves lives, then we have to account for those. Society does not judge lives as worth an infinite amount of money: if it did there would be no dangerous jobs or wars.

Because of all this, including the disputes and some of the implications of the normative framework of economists, I  have always been a fan of positive economics. No need to judge; just describing if A then B.In addition it did offer the occasional possibility to judge situations as “non-efficient”; the same goal could be reached with the use of less. Finally it somewhat appealed to me that I wouldn’t have to take a stand: it is not for me to decide what’s best; it’s up to society/the policy makers.

Positive economics is distinctively amoral: no need to judge actions. However, I am not so sure I am a fan of amorality anymore. The reason is a combination of the Panama papers and a book I read recently, Swimming with sharks by Dutch journalist Joris Luyendijk (see here for a summary and review by the financial times).

I guess I don’t have to explain the Panama papers. The book by Luyendijk is a description of his time spent in the world of the banks of the City and the interviews he had with anonymous bankers. The book is a good and easy read if you ask me, and there is no need to be an economist to understand it. What (many of) the bankers in the book and the founders of the Panama lawyer firm have in common is their line of defense: “we’re not doing anything illegal”. In the book the bankers classify their behaviour as “amoral” as opposed to “immoral”. The book ends with a sombre message, albeit one that appeals to any economist: we’re doomed if we don’t change the incentives in the banking system.

If we look at the news today, however, there is no question how the general public judges the actions of bankers and lawyers: by their consequences, that is, immoral, even when they are within the law. The line between amorality and immorality is a very thin one, and if both events have made one thing clear to me then it is that I should reduce my enthusiasm for amorality and look at the consequences. At some point my Kantian philosopher friend may even be able to convince me that that is enough, and the actions themselves matter, too.