Preceding Studies

4.2.1 A Historically Contextual View

The conventional view is that hedonism and utilitarianism are two sides of the same coin, so that negation of one logically means negation of the other.

4.2.2 Incommensurability among Utilities

It may have been Shionoya who first argued the non-utilitarian interpret­ation of Pigou’s welfare economics. His argument can be summarized as ‘two kinds of incommensurability’ (Shionoya 1984; 1993). There is incom­mensurability among different kinds of utility and there is also incommen­surability between different individuals.

According to Shionoya, the first correction made by Pigou to utilitarian welfare economics was his distinction between economic and non­economic welfare (general welfare), which essentially meant that Pigou focused not on welfare as a whole but only on one part, that of economic welfare. Traditional hedonistic utilitarianism is thought to have judged the rightness or wrongness of actions or arrangements in light of the sum of the resulting utility (pleasure or satisfaction). However, Pigou did not deal with the whole process of causes and effects, and instead focused on a partial process by devising the notion of economic welfare. This is because he assumed that economic welfare could be measured by the scale of money (reflecting the strength of our desire and thereby providing an approximation of the resulting satisfaction). Economic welfare was ‘that part of social welfare that can be brought directly or indirectly into relation with the measuring-rod of money’ (Pigou 1932, 11). At first glance, this definition of economic welfare based on money appears to embrace all the resulting utilities generated by goods and services in economic activities, but that is not what Pigou intended. Although introducing the measuring rod of money can define economic factors as the causes of resulting utilities, thereby excluding non-economic factors, Pigou’s economic wel­fare is not supposed to include all utility consequences brought about by economic factors. The notion of making a distinction between conse­quences can be made possible by the introduction of a money measure (Shionoya 1984, 364-5).

Pigou distinguishes two ways in which economics factors can affect non­economic welfare: through earning income, and through using it. Non­economic welfare was thought to relate mainly to spiritual, athletic, and ethical aspects of human life (consciousness). Although Pigou did notice that there might be conflicts between the effects of economic causes on economic welfare and on non-economic welfare, he concluded that we should focus on economic welfare alone.

Shionoya unfolded his argument concerning the possibility of dishar­mony or conflicts between the effects of economic causes on economic and non-economic welfare as follows. There are two ways of thinking about welfare: satisfaction and desire. According to Pigou, economic welfare does not represent the amount of satisfaction yielded by certain causes (e.g. the consumption of goods), but the intensity of the desire for them. The money measure applied to the definition of economic welfare in essence means the demand-price for goods (i.e. the amount of money people are willing to pay for the expected benefit from gaining of certain goods is assumed to indicate the intensity of desire). With regard to this, Shionoya states that, even though economic welfare as consciousness means satisfaction, it is difficult to measure; accordingly, Pigou assumes that demand price (the intensity of desire) represents the amount of satisfaction (Shionoya 1984, 366).2

Accordingly, with respect to the money measure as an index of econom­ic welfare, the following cases naturally occur. Suppose there are two consumption goods, and one has an effect only on the consumer’s personal pleasure while the other has the effect of benefiting not only the consumer but also other people. If, in this case, the intensity of consumer desire for the two goods is equal (i.e. demand prices are identical) there will be no difference in consequential economic welfare measured by the money scale. It follows that no qualitative difference in utility is reflected in such economic welfare, as measured by demand price. Does the same degree in intensity of desire necessarily mean the same degree in ethical good? On this matter, Shionoya observes the following. Pigou’s account conceives of homogeneous economic welfare, which should negate any qualitative difference.

On the other hand, though, we should not dismiss the fact that in 1903 Pigou was cautious about the limitation of such equivalence in his utility theory. evaluation of the two categories is possible, an overall assessment of the consequences on the entire welfare cannot be completed, and we are not allowed to advocate any prescription. Accordingly, Pigou is thought to leave the question unsolved (Shionoya 1984, 366-7). After all, the applic­ability of the money measure indicates Pigou’s admission of qualitative difference in utilities and incommensurability among them, which means deviation from typical utilitarianism. On these grounds, Shionoya asserts that Pigou’s position is not simply utilitarian, but rather it is a relativistic treatment of utilitarianism (Shionoya 1984, 367).

For example, Edgeworth, who claimed that pleasure was measurable, advocated two kinds of commensurability (replaceability). One is com- mensuration of different kinds of utilities in the same person. The other is commensuration of different utilities owned by different people, as in the case of social utility summation (Edgeworth 1881, 59). As is well known, Pigou admitted that amelioration in economic welfare could possibly be counterbalanced by deterioration in non-economic welfare. Shionoya sus­pected that this counterbalance could not be subject to arithmetic calcula­tion, because economic and non-economic welfare are different in quality, and it is not the latter but only the former to which the money measure can be applied.

4.2.3 Presupposed Egalitarianism: Incommensurability among People Next, let us move to the second point Shionoya used to argue that Pigou was non-utilitarian. Pigou’s welfare economics is constructed on the basis of a positive connection between national income and economic welfare, which is represented by the following two propositions. The first propos­ition is that an increase in the size of national income is conducive to increment in economic welfare and the second is that an increase in equality of income distribution is conducive to increment in economic welfare (Pigou 1932, 82, 89). Additionally, we should not fail to notice that each is subjected to the condition of ‘other things being unchanged’. The accompanying condition in the first proposition is ‘as long as distribution to the poor is not impaired’, whereas in the second it is ‘as long as national income is not hindered’.

Pigou demonstrated that, as long as an increase and equalization of income do not contradict each other, both tend to increase economic welfare. Regarding this proposition, Shionoya asserted that ‘[t]his idea deviates from the utilitarian thought’ (Shionoya 1993, 15). Let us examine the grounds of his assertion, which appears to be exceedingly important, below, though it requires a somewhat large quotation.

Although... his analysis in welfare economics is limited to economic welfare, the maximization of production in the first proposition means utility maximization.... But the first proposition is subject to the condition that other things are equal, indicating that the distribution of income to the poor should not be injured. Utility maximization as is prescribed by the utilitarian principle concerns the aggregation of utility for all individuals and does not admit any independent criterion with regard to the distribution of utility among individuals.

The second proposition is alien to utilitarianism. However, it is liable to be misunderstood as a utilitarian principle because the second proposition states that a transfer of income from the rich to the poor increases economic welfare.... The basis of the second proposition is the assumption of decreas­ing marginal utility and the assumption of equality of utility functions for the rich and the poor. The latter assumption, as well as the assumption of equal marginal utility of money for all individuals, involves interpersonal compari­sons of utility and is not a descriptive statement but a normative one. A factual statement may be rather that there are difference of temperament and taste between the rich and the poor.... If these actual differences are assumed, a transfer of income from the rich to the poor will decrease total utility. (Shionoya 1993, 15-16)

In other words, Pigou introduced the normative assumption of equal utility functions for the rich and the poor (Shionoya 1984, 370). If utility calculation involves people whose capacity for enjoyment is low (e.g. the poor), the prescription for utility maximization must be less distribution because those people are less effective at generating utility for society. However, because Pigou implicitly embraced an orientation towards equalizing the distribution of income, he normatively presupposed that everyone had the same utility function so that utility would be maximized by an equal distribution of income.

Further, Shionoya advocates that the ground for Pigou’s second propos­ition lies in natural right-based thought stipulating that all persons are equal and that both kinds of incommensurability may support a right­based moral theory, interpreting Pigou’s position as non-utilitarian (Shionoya 1984, 370-1; 1993, 16-17). For example, Edgeworth noted the claim that more distribution to the more able in capacity will achieve more aggregation of social utility (Edgeworth 1879, 398). On the other hand, note that Pigou did intend to enhance the character and capacity of the less able through the arrangement of education or discipline (Pigou 1912, 26).

4.2.4 Non-welfarist Information: Needs

It was A. K. Sen who first presented a non-welfarist aspect in Pigou, and Suzumura has expanded it. In fact, Sen has said:

In fact, the notion of individual rights had been used earlier by Pigou in discussing people's claims to ‘national minimum standard of real income' in his Economics of Welfare. He had characterized them in rather similar ways to what are now called ‘basic needs'. Underlying all this was, of course, Pigou's firm belief that such rights could be justified on utilitarian grounds (in this respect Pigou was in the Benthamite tradition of seeing rights as intrinsically non-important but instru­mentally crucial), but much of the discussion in Economics of Welfare on this takes place without going much into the basis or justification of these rights. Indeed, it is not even clear how consistent these Pigovian claims are with his general use of utility criteria to which he was totally loyal - in other sections of his book. (Gaertner and Pattanaik 1988, 74; italics in the original)

Suzumura takes this argument further.^[30] While he does not go so far as to claim that Pigou was non-utilitarian, he questions whether Pigou himself viewed his Economics of Welfare as a welfarist approach to social well­being. Evidence for this is found in the fourth edition of The Economics of Welfare, in which there is an argument on the minimum standard of real income, which clearly shows that Pigou used non-welfare information in making judgements about social well-being (Suzumura 2007,102). Pigou's minimum standard at issue is given below:

[I]t is desirable to obtain a clear notion of what precisely the minimum standard should be taken to signify. It must be conceived, not as a subjective minimum of satisfaction, but as an objective minimum of conditions. The conditions, too, must be conditions, not in respect of one aspect of life only, but in general. Thus the minimum includes some defined quantity and quality of house accommodation, of medical care, of education, of food, of leisure, of the apparatus of sanitary conveni­ence and safety where work is carried on, and so on. Furthermore, the minimum is absolute. (Pigou 1932, 759)

Suzumura notes that Pigou's idea of a minimum standard of real income resembles the idea that is referred to as ‘basic needs' in modern development economics. The issue of how much consistency and affinity such a non-welfarist notion could bear with Benthamite tradition-based welfare economics deserves comprehensive examination, as part of the problems of consistency and affinity between the Benthamite notion of public good and ideas about individual rights (Suzumura 2007, 102-3). This is because ‘Pigou might have thought that such rights could be justified on utilitarian grounds in the Benthamite tradition of regarding rights as intrinsically unimportant, but instrumentally crucial, but The Economics of Welfare is completely reticent concerning the utilitarian justification of these rights’ (Suzumura 2002, 6n11).

Suzumura also observes that ‘Pigou... made an early use of the non-welfarist notion of individual rights when he discussed people’s claim to “minimum standard of real income”, which “must be con­ceived, not as a subjective minimum of satisfaction, but as an objective minimum of conditions”’ (Suzumura 2002, 6nll). Suzumura’s conclu­sion is given as follows. There was a difficulty confronting Pigou. The problem, which he neither explicitly raised nor solved, was how to consistently incorporate the non-welfarist notion of basic needs that he admitted into the old welfare economics framework based on the utilitarian principle. However, we cannot find any trace of his efforts to squarely tackle this issue. Presumably, there seemed to be little time left for the scholar of old welfare economics to explore a way to systematically affiliate with the non-welfarist notion of basic needs and whose utilitarian foundation had already been demolished by the attack of Lionel Robbins in the beginning of the 1930s (Suzumura 2010, 108-9).

Even though they focused on different issues, like Shionoya, Suzumura similarly identifies a non-welfarist aspect in Pigou’s welfare economics and implies a need to reread Pigou’s work without starting from the assump­tion that it is utilitarian.

It is helpful to start by considering the context in which Pigou employed the need criterion discussed earlier. This is a formidable task but there are several significant hints. First, Pigou himself did not give any indication of where his need criterion came from. Second, Sidgwick, from whose texts (including The Methods of Ethics) Pigou confessed he obtained basic knowledge of ethics, indicates very little about the need criterion. Therefore, it is unlikely that Pigou’s need principle (specifically, his con­trast between desire and need in welfare economics (Pigou 1912)) is based on the writings of Sidgwick. Lastly, there is an interesting remark made by D. Collard (Collard 1981, 112; emphasis added):

The intellectual basis for favouring more equality (cet. par) was, of course, dimin­ishing marginal utility. When it came to policy measures, however, Pigou's egali­tarianism all but vanished. Following Marshall, he recognised that inequalities could be justified on grounds of differing needs as well as tastes: ‘people bearing high responsibility and using their brains much, need, to keep them efficient, more house room, more quiet, more easily digested food, more change of scene, than unskilled workers'. (Pigou 1953, 51)

We may observe provisionally that Pigou has basically procured an idea of need principle from Marshall (otherwise, perhaps from a kind of common sense). Nevertheless, what does Pigou's invocation of the need criterion mean? We may reasonably claim that when he engaged in practice (with reference to policy measure, such as the minimum), he virtually admitted the informational limitation of welfarism and had to step into the non- welfarist realm.

4.2.5 Non-welfarist and Non-utilitarian Justification of the Validity of the National Minimum^[31]

Next, we show another case of need as non-welfarism in Pigou's welfare economics: justification of the national minimum. He makes a demonstration as follows: ‘The policy of practical philanthropists is justified by analysis, in the sense that it can be shown to be conducive to economic welfare on the whole, if we believe the misery that results to individuals from extreme want to be indefinitely large' (Pigou 1932, 760-1; emphasis added). In short, Pigou is somehow attempting to justify the enforcement of the minimum on the basis of the aggregation of economic welfare (utility), to which Sen and Suzumura did not seem to pay attention. By securing the minimum for the destitute, we are supposed to obtain a substantial increment of economic welfare. As such, the policy of securing the minimum is justified on the basis of the calculation of utility, representing roughly the same logic seen in his second proposition.

However, what if it is not the case that ‘the misery that results to individuals from extreme want [is] to be indefinitely large'? To begin with, economic welfare can be obtained through the satisfaction of desire (preference) as measured by money. This refers to the satisfaction and pleasure we usually get under free transactions in the market (Pigou 1906, 379-80). Hence, satisfaction as economic welfare must be subjective in its character and it is necessary to investigate the following statement con­cerning the minimum:

[T]he minimum is absolute. If a citizen can afford to attain to it in all departments, the State cares nothing that he would prefer to fail in one. It will not allow him, for example, to save money for a carouse at the cost of living in a room unfit for human habitation. There is, indeed, some danger in this policy. It is a very delicate matter for the State to determine authoritatively in what way poor people shall distribute scanty resources among various competing needs. The temperaments... of different individuals differ so greatly that rigid rules are bound to be unsatisfactory. Thus Dr. Bowley writes: ‘The opinion is quite tenable that the poor are forced (by the effect of the law to enforce a minimum quality and quantity of housing accommodation) to pay for a standard of housing higher than they obtain in food, and that they would make more of their income if they were worse housed and better fed.' This danger must be recognised; but the public spirit of the time demands also that it shall be faced. A man must not be permitted to fall below the minimum in one department in order that he may rise above it in others. (Pigou 1932, 759-60; emphasis added)

Here it is certain that the welfare of one who prefers to make merry at the expense of living in an unfit house is not desirable. However, is it true that their misery is so indefinitely huge as to overcome, in utility calculation, any other consideration? Pigou himself implicitly admits that those who prefer drinking to sanitation would gain more satisfaction (economic welfare) if their choice was left free (accordingly, ‘the misery that results to individuals’ is not ‘indefinitely large'). In terms of rigorous utility calculation, the loss of economic welfare of the one who fails in just one or a few areas of the minimum standard could be socially compensated by substitutional increment in the utility of others, so that the enforcement of the minimum cannot be supported. Thus, the implication here seems that Pigou substantially admits that the obligation of securing minimum con­ditions for citizens must be valid regardless of the aggregation of social utility. Therefore, it must be impossible to Iullyjustifythe minimum on the ground of welfarism. However, the substantial basis for the minimum is the satisfaction of (non-welfarist) objective needs, as Sen and Suzumura argue above. If one’s condition is below the minimum, it is not one’s subjective satisfaction (economic welfare) that matters but the satisfaction of objective needs.

From what we have learned above, two more controversial points remain to be investigated: (a) even though the minimum’s criterion is not utility but objective needs, how much weight is it supposed to have in comparison to any other consideration?; and (b) how is the prescription of the minimum validated? Regarding (a), we can obtain a clue from the following remark:

[N]ot enough of these things [social resources] can be available both to meet the minimum needs of all and also to provide as much as better-to-do persons would like to buy. In that case it is in the national interest that better-to-do persons shall be directly prevented from buying as much of these scarce goods as they would like to buy. (Pigou 1952, 210-11; italics in the original)

In short, satisfaction of the (minimum) needs of all members of society takes social priority over satisfaction of the desires of the well-to-do. This indicates the following: even when the ‘satisfaction of primary needs' competes with other things such as ‘satisfying of the whims of the rich' (Pigou 1937, 21), ‘the satisfaction of some of the desires of the rich, such as gambling excite­ment or luxurious sensual enjoyment' (Pigou 1912, 10), ‘the satisfaction of the poor which is derived from excessive indulgence in stimulants', ‘satis­factions purchased by the rich - those, for example, connected with litera­ture and art' (Pigou 1912, 11), it is evident from the related propositions in Pigou's argument that the satisfaction of the primary needs of people are to be socially prioritized, no matter what the need may be or for whom. Thus, satisfaction of needs is given priority despite the amount of economic welfare otherwise gained. Namely, satisfaction of ‘more urgent needs' (Pigou 1937, 21), ‘reasonable needs' (Pigou 1914, 55), and ‘primary needs' (Pigou 1912, 11) take priority over any other consideration. And further,

I hold, some system of standards should be set up, and the lapse below any one of them should be made the occasion of intervention by the public authorities. For this position a good defence can, in many instances, be made upon grounds of economy; for expenditure of State moneys, so arranged as to maintain the efficiency of the poor, may often be profitable expenditure. But, even where this ground fails, the policy that I have sketched is amply main­tained: for it is no more than the acceptance in fact of the compelling obligation of humanity. (Pigou 1914, 37; italics in the original)

Now, with respect to (b) validation of the minimum, it follows from this passage that Pigou recognized that the policy of the minimum standards can be justified by considerations of both economy and of the (compelling) obligation of humanity. It is to be noted that the former is supposed to correspond to welfarist justification, whereas the latter is supposed to correspond to non-welfarist justification. Even though Pigou did not dwell on the latter factor, it is barely conceivable that he based it on the aggregation of subjective satisfaction, namely economic welfare. It can be regarded as a non-welfarist and non-utilitarian approach.

In ‘The Principle of the Minimum Wage' (Pigou 1913), Pigou observes that the doctrine of the minimum standard can be defended by various methods of reasoning. He mainly points out the three foundations for this doctrine as follows: the first is the absolute sacredness of human life, the second is the intrinsically crucial equality principle (related to distribu­tion), and the last is teleological or consequential justification of the prescription of minimum standards (Pigou 1913, 645-6). Apart from the first reason which he regards as somewhat intuitive and less sophisticated, the second and the third can be viewed as being of ethical importance. Since Pigou does not commit himself to either of them there, he, from the beginning, seems to have embraced both the reasonings for the validity of the minimum arrangement, although he relied on exclusively the third (teleological and welfarist) justification in Wealth and Welfare and The Economics of Welfare.

4.2.6 Methodological Individualism

Another critical aspect of welfarism (or utilitarianism) is ‘methodological individualism' in ethical axiology. Methodological individualism stipulates that everything that is valuable to society, and every aspect of public morality can be reduced to individuals' interests. To put it another way, individual interest is the ultimate foundation for all moral judgements, and public goods such as equality or justice that cannot belong to any individ­ual are assumed to have no intrinsic value (cf. Singer 2011).^[32] We can surely say that if one deviates from methodological individualism in ethics, one should be regarded as neither welfarist nor utilitarian. The following argument takes this perspective as a criterion to judge whether Pigou is welfarist or non-welfarist, or utilitarian or non-utilitarian, concluding that Pigou has, in principle, shown the possibility of deviation from welfarism or utilitarianism.

It is widely believed that Pigou espoused welfarism, whose ingredients are various states of conscious life. Under the banner of welfarism, how­ever, the difference between monistic hedonism and (possibly) multiple non-hedonistic value accounts should be dismissed. Different from either the Benthamite or Sidgwickian comprehensive but simple account of hedonistic value, Pigou's welfare comprises multiple ingredients such as character, virtue, ethical personality, and of course happiness. His plural­istic account of value can be regarded as very close to that of Rashdall^[33] and Moore. In spite of being multiple, all elements still come under the category of conscious states, therefore, his account of good may be regarded as ‘refined hedonism' (cf. Baldwin 1990).

Although Pigou's concept of welfare is formally presented in Wealth and Welfare in 1912, he made a puzzling remark in the second edition of The Economics of Welfare, which differs in a very subtle way from what he had said in the first edition. In the first edition, it is stated that ‘[w]elfare... is a thing of very wide range. There is no need to enter upon a general discussion of its content... welfare includes states of consciousness only, and not material things' (1920, 10; emphasis added). This statement is precisely the same as in Wealth and Welfare. However, in the correspond­ing passage in the second edition, we find the statement ‘that the elements of welfare are states of consciousness and, perhaps, their relations' (1924, 10; emphasis added). There were no further changes in later editions. But what did Pigou mean by this remark? We can find a clue in A Study of Public Finance (1928) where he mentions the relation between states of consciousness again. In the beginning part of this work he wrote: ‘[I]t is held by certain ethical philosophers that the only elements of good are states of consciousness. If this is so, equity, which is a relation between states of consciousness, clearly cannot be an element of good, or, apart from its effects, have any ethical value. The issue thus raised is an important one' (Pigou 1928, 8; emphasis added).

Incidentally, as Hongo (2007, 71) first noted, the element of ‘the direct social and other relations of people with one another' is regarded as an intrinsic good (i.e. an element of welfare) in ‘Memorandum' (Pigou 1907). Later, however, in 1928, Pigou refers not to ‘people' but ‘states of con­sciousness (good)', and we should regard ‘the relation' there as the rela­tionship between good things (i.e. equity as one of patterns of distribution). Therefore, it follows from what we have already seen that Pigou, in the second edition of The Economics of Welfare, indicates the possibility of including certain norms of justice or equality in welfare as intrinsic goods.^[34] At any rate, no matter what it may mean, the ‘relation' is to be regarded as a kind of public good not capable of being reduced to individuals’ consciousness (prudential values). At this point, Pigou devi­ated from methodological individualism in axiology. To be certain, justice or equality cannot be individual goods, and if Pigou asserts that they are intrinsically good, he is seen to renounce welfarism (an individualistic axiology) in the strict sense of the term. Although the issue of why this change occurs remains to be further investigated, let us summarize the above with his own descriptions: ‘Others hold that equality in the distribu­tion of good is itself an element in good, and that a serious lapse from equality is in itself an evil so great as to outweigh any indirect loss of good that is likely to result from arrangements designed to prevent the occur­rence of such a lapse’ (Pigou 1913,645-6; emphasis added). In addition, ‘ [t] his view, it will be noted, is incompatible with the view - widely held among students of ethics - that good resides solely in states of conscious­ness’ (Pigou 1913, 646n1). In regard to that, the following statement will come to be of significance: ‘Inequality of income... is thus... an evil in itself (Pigou 1937, 21; emphasis added). After all, Pigou appears to have come to hold both mutually incompatible views regarding whether equal­ity is intrinsic good or not.

Additionally, we can detect one more pieces of evidence: ‘it may well be held that variety is in itself a good, and that a group of varied persons, each a little less than perfect, will be better than a grope of persons all perfect and all exactly alike’ (Pigou 1923, 81; emphasis added). Surely, ‘variety’ is to be considered not a private but a public good; accordingly, as long as he contends that it is intrinsically important, here, he, just as in the previous case in the second edition of The Economics of Welfare, can be thought of as deviating from methodological individualism in the theory of good, which may lead to a non-welfarist (or non-utilitarian) interpretation of his thought. Whether it may be methodological individualism or welfarism, however, these are notions formed afterwards, because he did not actually bear them in mind at that time. Although the issue of what we should think of this matter can be viewed as an academic problem, here we would like to present only the points at issue.

consistent with our finding and interpretation of ‘relations’ (certain equality as the intrinsic good) in the second edition of The Economics of Welfare. According to Shionoya, if we are to observe the genuine command of utility maximization, Pigou might assume the poor could not be considered. Then, in order for equal distribution to be secured (even in a utilitarian criterion), he must presuppose equal utility function among all. Thus, as long as whatever equality is presupposed without justification by utilitarian reasoning, Pigou’s dependence on the equality, whether explicitly or implicitly, leads to non-utilitarian understanding of him as observed by Shionoya.

4.3