The Value Premises of Social Scientists Must Be Clarified

Between 1870 and 1914 Europe experienced prosperity and stability, facilitated by the classical gold standard. This era prioritized balance of payments over other economic concerns. During this time, an economic theory reached its peak, assuming that perfect markets and minimal government intervention would lead to full employment. However, World War I disrupted the stability, leading to a loss of credibility in governments’ fiscal and monetary policies. The war’s aftermath saw fiscal disasters and rising unemployment. The expansion of suffrage made unemployment a political issue, challenging the laissez-faire doctrine and leading to calls for government intervention to achieve full employment. Alongside John Maynard Keynes, The Stockholm School economists, including Gunnar Myrdal, emerged, advocating for state intervention to stimulate demand and address unemployment. Gunnar Myrdal’s book The Political Element in the Development of Economic Theory is a doctrinal critique of three central notions: the idea of value, the theory of free competition, and the theory of public finance. Influenced by Max Weber, Myrdal argued for clear value premises in economic analysis, emphasizing that economics cannot be value-free.