Conclusion
Contemplating Musgrave’s long intellectual life has allowed us to identify recurrent themes in his writing. The concept of merit wants that he coined in his middle age acquired an original meaning as ‘community wants’ only in his old age.
This late reframing of the problem benefited from a revival of moral and political philosophy in the 1970s, yet it also connected directly to ideas Musgrave had been exposed to during his formation in Germany and in the United States in the interwar years. In his dissertation, Musgrave (1937) employed the concepts of individual wants and social wants. As the concept of a social/public/collective good acquired its definitive - and restrictive - meaning in the 1960s, a host of legitimate concerns were left out. Musgrave wanted to remind economists about these concerns, which did not fit the narrow category of collective goods. Even many arguments that commentators understood to justify merit goods could be explained by other categories found in the market failure literature. What did not fit were the communal concerns.More generally, the New Welfare Economics was too narrow a methodological perspective to achieve the aims of public finance and public economics. As Musgrave remarked: ‘The “new welfare economics”, by definition, excludes distributional issues, limiting its attention to situations where everybody’s welfare can be raised. Welfare economists thus save their scientific conscience but, alas, are of only slight use in solving policy problems’ (1964, 2). In other words, a comprehensive normative theory of public finance must have a conception of justice that goes far beyond Pareto-efficiency. For Musgrave, the moral dimensions of the public budget could not be derived in the abstract, but had to be related to the values of the social group or community to which the theory would be applied: ‘Distributive justice, as seen by most people, is not divinely preordained but depends on society’s sense of entitlement and fairness’ (Musgrave 1981, 221). Welfare economics could satisfy itself with unrealistic welfarist assumptions, but public finance being an applied field, Musgrave wanted to design a framework that could be used to improve policy decisions and fiscal administration.
Individuals are always the ultimate valuation reference, but social groups or communities need to enter the theoretical framework. This is the message we can extract from analysing Musgrave’s engagement with the notions of community and society. Musgrave did not provide a fully fledged alternative to individualistic welfare economics. Nonetheless, he warned us against the danger of building an unrealistic construction based on isolated individuals. Such a model might be appropriate for a pure market price theory, but it will be insufficient for a theory of the public household. The first proponents of methodological individualism were conscious of this limitation - one that was forgotten in the middle of the twentieth century. As Schumpeter put it: ‘[A]s soon as we go beyond the limits of the pure theory, the whole thing looks different. For example, in the organization theory and in the sociology in general, individualism would not get us very far’ (Schumpeter 1908, 183). Likewise, Pareto (1898) argued that the homo Wconomicus assumption was useful only in pure economics. Yet, pure economics was only a first approximation of complex human behaviour. This behaviour could only be fully apprehended by an extended sociological analysis. To put the matter differently, Musgrave’s message is that a narrow reading of the Gesellschaft sociability does not provide wide enough foundations for an economic theory of the state. Two alternatives remain: enlarge the bases of economics, or draw from sociology, law, and from moral and political philosophy, other sources of normativity. Group belonging can be one such source of normativity.