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Where Economics Went Wrong$
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David Colander and Craig Freedman

Print publication date: 2018

Print ISBN-13: 9780691179209

Published to Princeton Scholarship Online: May 2019

DOI: 10.23943/princeton/9780691179209.001.0001

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Economic Policy Becomes a Science

Economic Policy Becomes a Science

The Rise of Welfare Economics, and the Chicago Alternative

Chapter:
(p.82) 6 Economic Policy Becomes a Science
Source:
Where Economics Went Wrong
Author(s):

David Colander

Craig Freedman

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691179209.003.0006

This chapter explores Chicago's interaction with the mainstream of economics that conditioned its emergence. The catalyst to the postwar change was the mainstream adoption of welfare economics, which drew policy implications directly from economic theory. Composing a new approach, it directly specified what the “optimal” policy should be. This measure of decisiveness was in stark contrast to Classical Liberal methodology. For a Classical Liberal economist, policy did not follow directly from scientific economic theory. Instead, economic science and theory provided a useful tool that shed light on policy problems, but, on its own, had no immediate policy implications. These consequences could only be determined once one considered all the issues, not just a subset covered by economic theory. As a result, policy had to be deliberately separated from science.

Keywords:   economics, welfare economics, Chicago, economic theory, Classical Liberal methodology, economic science, policy problems, science

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