Musgrave’s Late Writing
In the 1970s, Musgrave wrote an undergraduate textbook on public finance with his wife and former PhD student, Peggy B. Musgrave.[122] In the second edition of their textbook, Musgrave and Musgrave (1976) presented a standard interpretation of merit goods that extended the welfarist framework to account for cases of misinformation, irrationality, and interdependent preferences (Desmarais-Tremblay 2019).
In a different part of the book where they explained ‘fiscal politics',the authors introduced a discussion on ‘the community interest’. Rejecting out of hand the idea of an organic group and that of a dictator, Musgrave and Musgrave (1976) entertained the hypothesis that there might exist a community interest beyond the addition of individual interests. Such an interest might emerge through social interaction:[B]y virtue of sustained association, people come to develop common concerns. A group of people, for instance, share a historical experience with which they identify, thereby establishing a common bond. Individuals will join in defending the borders of ‘their’ territory or to protect the beauty of ‘their’ countryside. At the same time, it is difficult to extend this existence of common concern to the contention that resource allocation should, generally speaking, be based on consensus rather than on individual preference. X and Y may join in defending ‘their’ territory even though each wishes to make an independent choice regarding his consumption of apples and oranges. (122)
Musgrave and Musgrave also argued that accounting for a community interest might call for a change of perspective on social interaction, substituting a competitive view for a ‘cooperative approach’. They claimed that interindividual co-operation towards the realisation of common goals might even be ‘more conducive to human dignity and fulfillment’ (123).
Musgrave and Musgrave reminded their readers that ‘economic welfare narrowly defined, after all, is not the only objective in life; and efficiency (as a criterion for rational action) should be interpreted to include all objectives that matter’.To put it differently, economists should account for the fact that individuals might have non-selfish motivations and a realistic theory of fiscal processes should make room for other values that individuals might want to defend through public means. Contrary to the welfarist interpretation, this interpretation of merit wants did not appear in the first edition of their textbook, thus indicating a change of mind over the 1970s. Yet, the consequences of this short discussion of a ‘cooperative approach' for fiscal theory were not developed by Musgrave and Musgrave in the 1970s.13
In the third edition of the book, the newly renamed ‘communal wants' were discussed side by side with ‘merit wants' (Musgrave and Musgrave 1980, 83-6). Compared to the previous edition, the authors added the following comment on the idea of community interest:
This community interest then gives rise to communal wants, wants which are generated by and pertain to the welfare of the group as a whole.... [B]y virtue of sustained association and mutual sympathy, people come to develop common concerns. A group of people, for instance, share an historical experience or cultural tradition with which they identify, thereby establishing a common bond. (84)
Their conclusion echoed a point already acknowledged by Musgrave (1959): the ‘individual preference approach does not tell the entire story' (Musgrave and Musgrave 1980, 84).
That communal wants could be a type of merit want was only explicitly spelled out by Musgrave in his entry on ‘merit goods' for the New Palgrave Dictionary of Economics in 1987. One reason for this late integration of the two concepts might be that from the 1960s onwards, merit wants came to be called by the goods which satisfy them - merit goods.
This transition suited well the evolution of social wants to social goods, but not the notion of merit wants, as Musgrave (1986, 39) eventually admitted. Communal wants arose because of human interaction. They capture the needs of social beings, not specific commodities. If the concept of merit goods was more fruitful in the discussion on ‘fair shares' of primary goods, of ‘higher values', and of ‘community values', as Musgrave (1987) claimed, then it would be more appropriate to talk of merit wants. Going back to the label of wants brought the concept closer to the newly (re)discovered idea of ‘community preferences', or ‘communal wants'.Thus, contrary to the 1960s and the 1970s when Musgrave tried to minimise the relevance of merit wants, from the 1980s onwards, he started to commend more and more his concept because he found better philosophical underpinnings. Moreover, the communal wants rationale was a positive argument to support public provision of some goods and services; it did not rely on a negative view of human agency or markets such as the market failure argument. Rather than relying on a qualification, or an exception to the norm of consumer sovereignty, it suggested an alternative principle for the allocation of some resources (Musgrave 1987).
Besides the philosophical opening of the 1970s, another reason for Musgrave’s renewed interest in his concept of merit wants might be the ‘swing of the pendulum’ towards more negative attitudes to the government among economists in the 1970s and eventually the rise of neoliberal politics in the 1980s. In justifying extended transfer programmes, the concept of merit goods could serve as a reminder of the plural functions of government in a democratic society. As Samuelson later remarked: ‘Since about 1980, under the influence of libertarians like Milton Friedman, the quasi-paternalistic “merit wants” of Musgrave have too often become forgotten’ (Samuelson in Atkinson et al. 2008, 167).
Reiner (2011, 302) makes a similar point to explain the contributions of Michael Walzer and Michael Sandel to the so-called communitarian doctrine in political philosophy.
He argues that they have to be understood as a response to the rise of Reaganomics in the 1980s. There is a striking proximity between Musgrave’s ideas on community and communitarian philosophy. Each in their own way, Charles Taylor, Michael Walzer, Alasdair MacIntyre, and Michael Sandel have criticised the individualistic basis of Rawlsian liberal egalitarianism. They insisted on the centrality of community ties in human life. Their different anthropological starting point led to a different vision of the polity, one that did not shy away from a substantial conception of the common good. Whereas defending the importance of communities could have passed as conservative talk in the post-war period, in the neoliberal politics of the 1980s, it could be used to defend state intervention. There is no evidence that Musgrave was knowledgeable about this communitarian literature when he reframed his ideas on merit goods in the 1970s and early 1980s.[123] Yet, in the 1970s Musgrave read Unger, who was influenced by Hegel, just as the other communitarian critics of philosophical liberalism (Gutmann 1985, 308). In the end, the communitarian critiques probably arrived too late on the scene for Musgrave to benefit from them in his reformulation of merit wants as communal wants.After his retirement from Harvard in 1981, Musgrave moved to California, where his wife was teaching. During the 1980s and 1990s, he wrote a few history of economics papers, as well as more personal retrospective accounts. In contrasting German and Anglo-American
14
public finance, he explicitly distinguished issues of ‘public goods’ in the market failure tradition from ‘communal wants’ concerns in Finanzwissenschaft:
Membership in the community also implies values and imposes obligations which transcend self-interest. Communal wants and obligations, evidently, are not amenable to ready analysis by the economist’s tools as are public goods. It does not follow, however, that Finanzwissenschaft was mistaken in raising the issue of communal concerns, and of motivations which transcend self-interest.
Public finance may well have taken too narrow a view by holding that selfinterest-based action is all there is. While the state or community ‘as such’ cannot be the subject of wants, a distinction between the private and communal concerns of individuals cannot be rejected that easily. Nor can the role of communal concern be resolved in the utilitarian frame by allowance for interpersonal utility interdependence. There remains an uneasy feeling that something is missing. The concep[t] of merit wants... address[es] this gap, but much remains to be done to resolve the problem of communal wants in a satisfactory fashion. Such remains the case, uncomfortable though the community concept may be to economics, and dangerous though it becomes when abused. (Musgrave 1996, 73)A few years earlier, Musgrave had participated in a conference in Germany organised by Harald Hagemann on German emigre economists. In his retrospective account of his youth, Musgrave indicated that a ‘concern with a communal want approach had remained much in the air during [his] Heidelberg years’:
Though non-rival consumption is the core of the public goods problem, it does not follow that self-interested exchange (be it via market or vote) is the only meaningful form of social interaction. Admittedly difficult to define and dangerous to entertain, communal concerns have been part of the scene from Plato on, and my concept of merit goods (applicable to private and social goods alike) was to provide a limited opening for their role (Musgrave 1958 and 1987). Dutiful performance of civil service remains a constructive concept, as does that of responsible public leadership. Though they now tend to be ridiculed, both these alternative modes are essential to make democracy work. Nor are issues of entitlement and distributive justice reducible to principles of exchange, issues which have to be resolved before that mode can be given its role. The broad-based roots of the German tradition, its linkage to the theory of state and to fiscal sociology (Musgrave 1980) helped to provide awareness of these issues, and could have done so quite consistently with a private-want-based theory of public goods. (Musgrave 1997, 77)
Hence, for Musgrave communal wants, a type of merit wants, had their place in a broad-based view of the public household. At the expense of a fully consistent and simple view of human agency, Musgrave assumed that individuals in a democracy held different values, some of which needed to be directly supported by public institutions, while others motivate them to work for their self-interest in the market sphere - but this also called for governmental intervention to correct the resulting inefficiencies, for instance by providing public goods.
10.5