Introduction

The new welfare economics developed by John R. Hicks examined the welfare implications of exchange and production without resort to inter­personal comparisons of utility or, indeed, to any value judgement predi­cated on interpersonal comparison.

The ‘New Welfare Economics’ of a later generation - by which I mean not only the so called ‘Kaldor-Hicks’ compensation principle, but the whole body of work by Hotelling, Kahn, Bergson, Scitovsky, Little and many other besides Kaldor and myself - takes its name from Pigou (the ‘Economics of Welfare’) but its distin­guishing mark is its use of the Pareto test. (Hicks 1975 [1999: 427])

Within that context, the Paretian origins of the ‘New Welfare Economics’ are largely evident from Hicks and Allen (1934) and Hicks (1939).

As Kotaro Suzumura (2016) has pointed out, however, when Hicks introduced his Essays in World Economics with a ‘Preface - and a Manifesto’, he presented what is now regarded as a manifesto of ‘non­welfarism’ (see Suzumura, Chapter 7 in this volume). In that document, Hicks appears to characterise ‘economic welfarism’ by the relationship between value propositions and economic analysis described above for the ‘New Welfare Economics’; plus, issues related to distribution that fall within the scope prescribed by A. C. Pigou (1920) in The Economics of Welfare. While non-welfarism is not defined clearly in the Manifesto, its main characteristic appears to be the withdrawal of the economists’ prohibition on value judgements, such as those associated with interper­sonal comparisons of utility, when advising public authorities on the practical development of policy.

Vilfredo Pareto’s approach to welfare theory too went through a sub­stantial transformation. In 1894, he started a theoretical investigation of the topic in ‘The Maximum of Utility Given by Free Competition’ (Pareto 1894), which set his path for an economic analysis of collective welfare in which individuals are treated as egocentric in the sense that they do not act with regard to others except for respecting their property rights. By 1913 he started theoretical investigation of ‘The Maximum of Utility for a Collective in Sociology’ (Pareto 1913 [1999]), in which people are treated as social beings, in that one’s own welfare also depends on the welfare of others.

The purpose of this chapter is twofold. First, to track Pareto’s contribu­tions to the stream of ‘economic welfarism’ associated with the ‘new welfare economics’, commencing from Pareto (1894) and continuing to his subsequent studies on the economics of welfare. Particular consider­ation is given to Pareto’s treatment of values within that approach, which Vincent Tarascio (1968) characterised as methodological commitment to ‘ethical neutrality’. Second, to identify the treatment of values within his sociology of collective welfare, from Pareto (1913) until his Sociologia (1916 [1935]), and to establish the extent to which his sociology of welfare constitutes a move in the direction of non-welfarism as envisaged by Hicks.

To meet these objectives, the chapter is structured in four parts includ­ing this introduction. Section 6.2 considers the development of Pareto’s economics of collective welfare as an early example of economic welfarism. Particular attention is given to his exclusion of interpersonal comparisons of utility from the study of collective economic welfare and the introduc­tion of a division between the roles of the Ministry of Production and the Ministry of Justice. Section 6.3 examines Pareto’s sociological analysis in relation to values and the extension of his approach from a limited notion of economic welfare to the very much broader notion of social welfare. The non-welfarism dimension to Pareto’s sociology of welfare concerns his reintroduction of interpersonal comparisons of utility and his withdrawal of the Pareto test. The study concludes in Section 6.4 that Pareto’s treat­ment of values in his economics of welfare is an early and typical case of economic welfarism in the sense that he does not deny the importance of values, rather, he attempts to have them isolated and confined as extra- economic considerations. In contrast, Pareto’s sociology incorporates indi­viduals’ values within the analytical process. But as Pareto also retains the requirement of ethical neutrality for policy advisors, his sociological ap­proach to welfare does not extend to Hicks's notion of non welfarism.

6.2