Ideology and Reality: The Costs of Ignoring Positive Economics
One of the most profound issues in Latin American economic debate is not the coexistence of differing visions for society, but the gradual replacement of scientific analysis with ideological stances that attempt to turn political desires into economic explanations. When this occurs, economics ceases to be a tool for understanding reality and becomes a mechanism to justify pre-existing dogmas. The problem is not the diversity of political preferences, but rather presenting those preferences as technical knowledge even when they contradict available evidence. The theory of value clearly illustrates the origin of this confusion. For much of the history of economic thought, thinkers attempted to explain the value of goods based on their objective attributes. The classical school and later Karl Marx developed an explanation centered on labor. In the Marxist formulation, the value of a commodity depends on the amount of socially necessary labor time required to produce it. However, the margi...