Economic questions are often policy questions, and the answers affect the well-being of millions. Although many sciences have technical uses, the practical importance of economics is special. Indeed, in addition to “positive economics,” which aims to predict and perhaps to explain economic phenomena, there is also “normative economics,” which aims to guide policy. In addition, economics is built around a theory of rationality, which seems also to be normative, though in a different way.

The connections between economics and values raise several different kinds of methodological questions, which are discussed in the five essays in this Part III. In the first essay, Joseph Schumpeter explores how general evaluative visions as well as specific value commitments have shaped the development of economics. The next three essays by Nicholas Kaldor, Michael S. McPherson and myself, and Robert H. Frank lay out the foundations of normative economics and explore some of the difficulties to which it is subject. Finally, Amartya Sen's “Capability and Well-Being,” presents a radical alternative to standard normative economics, which is currently attracting a great deal of attention.