Human beings live in groups.

They share values with other members of their community, values that they transmit to new members. In turn, these values shape their expectations and the way they interact with other members of their community as well as with individuals of other groups.

In this chapter, I review the history of Musgrave’s engagement with the idea of community. Musgrave’s modest opening - often implicit - for the

This chapter was presented at the workshop ‘Between Economics and Ethics: Welfare, Liberalism, Macro Economics’ in Nice in March 2017, and at the Associazione Italiana per la Storia del Pensiero Economico annual conference in Rome in November 2017. I thank the participants of these events for their positive feedback. I am especially indebted to Marianne Johnson, Roger Backhouse, and Antoinette Baujard for providing me with detailed recom­mendations that have improved this work.

¹ For biographical elements on Musgrave, see Sinn (2009); Read (2016); Sturn (2016b) and Desmarais-Tremblay (2017b).

idea of community provides a basis for an alternative conception of welfare. Musgrave came to realise the importance and originality of a social or communal frame only late in his life and left readers with at most cursory remarks to ponder. He never fully articulated a coherent vision of what the idea of community belonging might entail for a democratic theory of the government’s budget. Yet, securing an ontological status for societies or communities, besides individuals, allowed him to theorise a larger scope for legitimate public interventions than other economic models of the state allowed, such as can be found in Public Choice.^[112] For instance, his Theory of Public Finance (1959) accounts for the government’s role in income redistribution, both in cash and in kind through the provision of goods to satisfy merit wants. Moreover, the broad foundation of his Theory, synthe­sising different national traditions, is a reminder of the fruitfulness - and an invitation to renew - cross-cultural and interdisciplinary dialogues between economics and other disciplines.

Musgrave (1959) theorised three functions for public expenditures: allocating public goods, redistributing income, and stabilising the econ­omy. Public goods fulfil social wants and merit wants. In Musgrave’s subsequent terminology (1969), the government should provide social goods because the private market fails to satisfactorily allocate such goods, given that they are non-rival and non-excludable. Merit wants are individual needs of high importance which should not be left to market allocation. Education, health, and basic nutrition are cases in point for which the government can guarantee a minimal level of satisfaction through transfers in kind. Such interventions, however, were deemed paternalistic by many economists, and the concept of merit wants was rejected by economists such as Charles E.

Musgrave was of two minds about the status of merit wants in his normative theory of the public household. The normative underpinnings of the concept were not clearly formulated in his Theory (1959), which led to a long debate about the nature of merit wants (or merit goods) and how they could be justified in modern public finance (Desmarais-Tremblay 2019). Late in his life, Musgrave provided what he came to see as the most appropriate explanation of the provision of merit goods:

[C]onsider a setting where individuals, as members of the community, accept certain community values or preferences, even though their personal prefer­ences might differ. Concern for maintenance of historical sites, respect for national holidays, regard for environment or for learning and the arts are cases in point. Such acceptance in turn may affect one's choice of private goods or lead to budgetary support of public goods even though own preferences speak otherwise. By the same token, society may come to reject or penalize certain activities or products which are regarded as demerit goods. Restriction of drug use or of prostitution as offences to human dignity (quite apart from poten­tially costly externalities) may be seen to fit this pattern.

The goal of this chapter is twofold. First, it aims to understand how Musgrave came to propose this ‘communal' reading of merit goods in his New Palgrave entry of 1987. Musgrave gave this direction to the concept despite the attempts by many economists to justify merit goods in an extended welfarist framework accounting for information asymmetries, irrationality, and psychic externalities. Second, this chapter aims to recon­struct the place that collective concepts play in Musgrave's normative theorisation of the public sector in order to unlock its (often implicit) criticism of standard welfare economics. This chapter follows Musgrave's interaction with the idea of community during three periods of his career. During the early years, he was much influenced by the German economic tradition, as reflected in his 1937 dissertation. In the second part of his career - from the fifties to the early seventies - Musgrave rose to promin­ence in the academic community and in policy circles. Although he rarely explicitly criticised the mainstream methodological perspective, he nevertheless held that the state (and not the individual) was the correct vantage point to deal with two problems in particular: fiscal policy and the distribution of the tax burden according to ability-to-pay. I take this as an implicit epistemological commitment to a notion of the collective as not being reducible to individuals. Then, in the seventies, important philo­sophical works by Harvard professors, as well as the responsibility for a new graduate seminar on ‘Economy and Society’, provided Musgrave with an opportunity to revisit the social and philosophical foundations of economics, as I discuss in Section 10.3. In Section 10.4, I present Musgrave’s mature comments on merit goods.

10.1