Assessment
In Foundations and in the articles he wrote to develop and support the claims he made in the book, Samuelson developed a justification for what became the standard approach to welfare economics, based on the concept of Pareto efficiency.
This makes him appear to be a supporter of an individualist welfare economics in which welfare was presumed to be an increasing function of individuals’ well-being - a welfarist. However, to draw that conclusion would be a mistake. Samuelson made it clear that individualist welfare economics - or indeed any other welfare economics - rested on ethical judgments that had to be provided from outside economic science. Samuelson (1951, p. 18) cited Maurice Allais as having made the point that people changed over their lifetimes, which would have been consistent with what he had learned from Knight. People were not always rational and it might sometimes be possible to make a case for decisions that appeared to involve paternalism, not least because the division between those qualified to make their own decisions and those not so qualified was not black and white. In addition, the distinction between private and public goods was imprecise, there being many externalities in consumption, and it was necessary to form judgments about income distribution. Some problems, notably the optimal level of saving for a society, involved interpersonal comparisons of utility that could be made only by making additional ethical or political judgments. The ethical values needed to justify an individualistic or welfarist welfare economics might be widely accepted - so much so that one might describe such welfare economics as relatively value-free - but they were neither sacrosanct nor sufficient to draw conclusions about welfare. His own view was that it was important to go beyond the ethical and political judgments involved in individualism.Samuelson’s own views were clearly non-welfarist in that he attached importance to the distribution of income and he took an ethical stance on means - the merits of freedom and of the market mechanism, but he did not construct a formal non-welfarist theory. In his writings on policy issues (not discussed in this chapter) he often held back from making normative judgments, recognizing that these were matters on which people legitimately held different views. That is consistent with his social welfare function being “imposed” and not explained. He saw the derivation of a social welfare function from the different views held by different people as a political, not an economic problem and he did not want political differences to make it harder for people to understand the economic arguments he was making. Because of this, when he was writing about welfare economics, he generally confined himself to what he hoped were generally accepted ethical judgments, focusing on Pareto efficiency. This gave the impression that his perspective was welfarist, even though it was not.