Positive science relates with the causes and facts about a certain problem and studied as “They are” in which a personal opinion is not involved i.e., a positive science only explains” what us or positive science only describes.
In Normative science the relationship between causes and facts are viewed with specific objectives and it is decided whether it should be or should not be or normative economics tells us “what ought to be?”
Positive science only explains “what is” and normative science tells us “what ought to be”-i.e., positive science describes while normative science evaluates. Thus, in positive science we derive propositions, theories and laws following certain rules of logic, which explain the cause and effect relationship between economic variables. While normative science is concerned with describing what should be the things.
According to the classical economist, economics is a science and its none of the function of an economist to comment the wants right or wrong and the economic situation. Robbins also reaffirmed the above view. But the Neo-classical economist declare economics as normative science.
Positive microeconomics is concerned with explaining the determination of relative prices and allocation of resources between different commodities. Whereas, positive macroeconomics is concerned with how the level of national income and employment, aggregate consumption and investment, and general price levels are determined. Normative economics is concerned with what price for a product should be fixed, what wage rate should be paid, how income should be distributed, etc.
Economics is a positive science because:
Firstly, economists collect the facts.
Secondly, they analyze them and derive result.
Thirdly, they determine the relationship between facts and results.
Finally, they give a title to the bosomed relationship.
Economics is normative science because:
Firstly, economists point out different economic problems.
Secondly, they analyze them in the light of statistics or facts and figures.
Finally, they advise policies, laws, theories to solve the problems.
So, to answer, whether economics is a positive science or a Normative science we may say that when we analyze the facts impartially it is a positive science and when we say that it should be like this it is a normative science.
For example: when quantity of money and circulation of money increase as compared to goods and services produced in an economy, there is a hike in price level i.e. inflation. But during inflation the fixed income group suffers while producers enjoy so the price level should be stable.
Economics is, therefore, both a positive science and a normative science.
Munir Ahmed Bhutta. Economics, Azeem Academy Publishers, Lahore.
Abdul Haleem Khawja. Economics, Khawja and Khawja Publishing House, Islamabad.
Manzoor Tahir Ch. Principles of Economics, Azeem Academy Publishers, Lahore.
Muhammad Irshad. Economics, Naveed Publications, Lahore.
K K Dewett & M H Navalur. Modern Economic Theory (Theory and Policy), S. Chand Publishing.