distinguishing positive. economics sharply from normative economics is precisely the contribution that can thereby be made to agreement about policy IL. POSITIVE ECONOMICS The ultimate goal of a positive science is the development of a theory" or, " hypothesis"that yields valid and meaningful (i.e,not truistic) predictions about phenomena not yet observed. Such a theory is, in general, a complex intermixture of two elements. In part, it is a language"designed to promote " systematic and organized methods of reasoning. In part, it is a body of substantive hypotheses designed to abstract essential features of complex reality Viewed as a language, theory has no substantive content; it is a set of tautologies. Its function is to serve as a filing system for organizing empirical material and facilitating our understanding of it; and the criteria by which it is to be judged are those appropriate to a filing system. Are, the categories clearly and precisely defined? Are they exhaustive? Do we know where to file each individual, item, or is there considerable ambiguity? Is the system of headings and subheadings so designed that we can quickly find an item we want, or must we hunt from place to place? Are the items we shall want to consider jointly filed together? Does the filing system avoid elaborate cross-references? The answers to these questions depend partly on logical, partly on factual. considerations. The canons 'of formal logic alone can show whether a particular language is complete and consistent, that is whether propositions in the language are"right"or"wrong. Factual evidence alone can show whether the categories of the"analytical filing system" have a meaningful empirical counterpart, that is whether they are useful in analyzing a particular class of concrete problems. The simple example of"supply"and"demand"illustrates both this point and the 5. Final quoted phrase from Alfred Marshall, "The Present Position of Economics"(1885), reprinted in Memorials of Alfred Marshall, ed. A C Pigou (London: Macmillan Co, 1925), p. 164. See also The Marshallian Demand Curve, "infra, pp 56-57, 90-91 6. See Lange on Price Flexibility and Employment: A Methodological Criticism, infra, pp. 282-897 distinguishing positive. economics sharply from normative economics is precisely the contribution that can thereby be made to agreement about policy. II. POSITIVE ECONOMICS The ultimate goal of a positive science is the development of a "theory" or, "hypothesis" that yields valid and meaningful (i.e., not truistic) predictions about phenomena not yet observed. Such a theory is, in general, a complex intermixture of two elements. In part, it is a "language" designed to promote "systematic and organized methods of reasoning."5 In part, it is a body of substantive hypotheses designed to abstract essential features of complex reality. Viewed as a language, theory has no substantive content; it is a set of tautologies. Its function is to serve as a filing system for organizing empirical material and facilitating our understanding of it; and the criteria by which it is to be judged are those appropriate to a filing system. Are, the categories clearly and precisely defined? Are they exhaustive? Do we know where to file each individual, item, or is there considerable ambiguity? Is the system of headings and subheadings so designed that we can quickly find an item we want, or must we hunt from place to place? Are the items we shall want to consider jointly filed together? Does the filing system avoid elaborate cross-references? The answers to these questions depend partly on logical, partly on factual, considerations. The canons 'of formal logic alone can show whether a particular language is complete and consistent, that is, whether propositions in the language are "right" or "wrong." Factual evidence alone can show whether the categories of the "analytical filing system" have a meaningful empirical counterpart, that is, whether they are useful in analyzing a particular class of concrete problems.6 The simple example of "supply" and "demand" illustrates both this point and the 5. Final quoted phrase from Alfred Marshall, "The Present Position of Economics" (1885), reprinted in Memorials of Alfred Marshall, ed. A. C. Pigou (London: Macmillan & Co., 1925), p. 164. See also "The Marshallian Demand Curve," infra, pp. 56-57, 90-91. 6. See 'Lange on Price Flexibility and Employment: A Methodological Criticism," infra, pp. 282-89