“Business management is about making value judgments. Is it more valuable to launch a new product or stay with the existing products? Is it profitable to initiate a new research and development project? These kinds of questions must be carefully appraised each day by corporate executives. Though often not recognized, the answers to these value judgments depend more on the executive’s philosophical foundations than on empirical analysis.
Paul Samuelson in his book Foundations of Economic Analysis (1947) laid the groundwork for economic study based solely on positive economic analysis. Positive economic analysis focuses on “what is” in contrast with normative economic analysis that focuses on “what ought to be.” When Samuelson’s book was published, the positive approach was tenable because it rested on the shared values of the post–World War II West. A shared belief in traditional values provided the foundation for property rights, the rule of law, and the preservation of a culture of trust.”