Introduction
John Hicks is one of the major actors in the eventful evolution of welfare economics after its birth by the hands of Arthur Pigou in his magnum opus, The Economics of Welfare (1920).
It is all the more puzzling that Hicks left a non-welfarist manifesto in Hicks (1959/1981) to the following effect: “Though Welfare Economics appears to have settled into the position of a regular, accepted, branch of economics... it remains to some extent a mystery. It has often been criticized, and its critics have never been fully answered; yet it survives. There is a problem here;1 propose... to make yet another attempt to clear it up” (Hicks 1975/ 1981, p. 218). His repeated attempts notwithstanding, the mystery Hicks posed and tried to resolve seems to remain not fully settled yet, and very much alive. This paper is a fresh challenge to Hicks’s mystery by scrutinizing his manifesto. To circumscribe the arena of this attempt, two preliminary remarks are in order.
In the first place, by welfare economics we mean the branch of normative economics, which is concerned with the critical examination of the performance of actual or imaginary economic systems, as well as with the critique, design, and implementation of alternative economic policies. Social choice theory is the complementary branch of normative economics, which is concerned with the evaluation of alternative methods of collective decision-making, and logical foundations of welfare economics.[49] What we are going to discuss in this paper will be relevant not only to welfare economics, but also to social choice theory.
In the second place, there seems to be a logical chain, starting from Pigou’s “old” welfare economics, so-called, going through the interim proposals of the “new” welfare economics on the basis of hypothetical compensation principles and social welfare function a la Abram Bergson and Paul Samuelson, Hicks’s non-welfarist manifesto, and terminating in Sen’s (2009) acute contrast between the comparative assessment approach and transcendental institutionalism. Recollect that these two contrasting approaches were identified by Sen in the context of the ideas of justice, but they are also acutely relevant to normative economics as well.[50] The meaning of Hicks’s manifesto will be made clearer if we keep this underlying chain in mind.
Without any further ado, let us begin our challenge to Hicks’s mystery.
7.2