The Revival of MoralPhilosophy and Musgrave’s ‘Economy and Society’
Musgrave’s late remarks on merit goods and the idea of community were influenced by the revival in moral and political philosophy which became visible in the early 1970s. In their quest for the foundations of moral thinking that would be compatible with modern social sciences, philosophers provided intellectual tools with which to criticise welfare economics.
From 1967 onwards, a group of American philosophers, lawyers, and political theorists which included John Rawls, Robert Nozick, and Michael Walzer gathered once a month on the East Coast under the heading of the Society for Ethical and Legal Philosophy. Although they had quite contrasting views, members of the Society were united by their rejection of utilitarianism and a commitment to save moral questions from the subjectivist and relativistic perspective that had been dominant for part of the century (Nagel 2013; Forrester 2019, 40). In fact, logical positivism, and its empiricist cousin, emotivism, had already started to decline in philosophy departments after the Second World War (Forrester 2019,4). Yet, they continued to form the - often implicit - philosophical backbone of economists’ view of science at least until the 1970s (Davis 1990; McCloskey 1994, 3 ff.).The reception of Rawls’s Theory by economists focused mostly on some technical points such as the maximin rule and the index of primary goods (see Roemer 1996, 163 ff.; Hawi 2016, 291 ff.). The fact that Rawls’s argument relied on a rational choice framework and that he borrowed many elements from economic theory helped to start a fruitful dialogue between economists and philosophers on the normative basis of society in a democracy.[117]
By mid-decade, the influence of Rawls on economists was already substantial. It can be perceived, for instance, in the way Robert D. Cooter framed the problem he dealt with in his PhD dissertation at Harvard, a dissertation that was supervised by Jerry Green and none other than Musgrave and Rawls themselves.
Cooter criticised the narrow psychological, sociological, and moral foundations of economic theory:[W]elfare economics has limited itself to identifying Pareto efficient changes, which is a narrow, stifling concept of rational ethics. This arbitrary demarcation of economics has been maintained by dedicated theorists whose motive is to preserve the scientific rigor of the subject, and by vulgar technicians who curry favor by apologizing for whatever those in power wish to do. (Cooter 1975, ii)
Cooter argued that welfare economics was ‘captive of a defunct philosophical theory, namely positivism and its cousin [behaviorism]'. In a prophetic statement, he remarked that in recent years ‘the conditions have become favorable for writing good moral philosophy. As the various ethical schools recover their vitality, welfare economics will be the beneficiary' (iii). For Cooter, ‘the proper foundation of welfare economics is a characterization of the fundamental principles embodied in the moral and legal framework'.[118]
A year later, Musgrave started to teach a graduate seminar to Harvard PhD students titled ‘Economy and Society' in which he discussed and contrasted various sociological and philosophical underpinnings of economics.[119] The course was named in honour of Max Weber, whom Musgrave greatly admired. Part of the course was dedicated to methodological issues, addressing for instance Weber's position on value judgements and on objectivity in the social sciences. Moreover, Musgrave also presented the fundamentals of Weberian sociology. He stressed how Weber conceptualised society as a multidimensional social structure. Economic phenomena had to be understood in historical processes, yet individual action was basic. In this respect, Weber (1922) identified different types of individual social action, of groupings, and of relationships. Among the latter, Weber presented a modified version of the typology of Tonnies as communal versus associative relationships - one which Musgrave mentioned in his course.11 The seminar provided Musgrave with an opportunity to revisit some authors of his youth which he had stopped referring to in the central part of his career.
According to the first course syllabus for 1976, Musgrave planned to devote the largest part of the semester to the philosophical underpinnings of society, including an assessment of ‘recent formulations’ of more or less classical doctrines by Rawls (1971), Nozick (1974), and Unger (1975). Among his three Harvard colleagues, Musgrave was definitely more sympathetic to Rawls. Nozick and Unger presented extreme visions: a rigorously individualistic Lockian political philosophy on one side, and a Hegelian theory of organic groups culminating in an appeal to God on the other side.
In what follows I highlight passages from texts that Musgrave must have read since he assigned them to his students of the Economy and Society seminar. Musgrave did not leave annotations of his readings, so it is impossible to assert with certainty to what extent he was influenced by them. These passages, together, suggest a genealogy of Musgrave’s later remarks on merit goods (Section 10.4).
Rawls envisioned society as a ‘cooperative venture for mutual advantage’. One of Rawls’s challenges was to make room for the value of community in human life, but from an individualistic basis: ‘The essential idea is that we want to account for the social values, for the intrinsic good of institutional, community, and associative activities, by a conception of justice that in its theoretical basis is individualistic’ (Rawls 1971, 264).[120] [121] In the third part of the book, Rawls formulated a theory of the development of the sense of justice which drew from Jean-Jacques Rousseau, Immanuel Kant, John Stuart Mill, Jean Piaget, and notably his Harvard colleague, Lawrence Kohlberg. Between the first stage of the morality of authority and the highest stage of the morality of principles, Rawls discussed the morality of association. Through participation in a web of associations, humans developed a sense of the importance of friendship, trust, and fairness, all of which are important for the stability of society as a cooperative venture: ‘Thus we may suppose that there is a morality of association in which the members of society view one another as equals, as friends and associates, joined together in a system of co-operation known to be for the advantage of all and governed by a common conception of justice’ (1971, 472). For Rawls, a sense of justice came normally with being human: ‘a person who lacks a sense of justice, and who would never act as justice requires except as self-interest and expediency prompt, not only is without ties of friendship, affection, and mutual trust, but is incapable of experiencing resentment and indignation’ (487). From this anthropological viewpoint, Rawls condemned the ‘simplifying motivational assumptions’ of the ‘so-called economic theory of democracy’ (492). Referring to Buchanan and Tullock and to Downs, among others, Rawls remarked that the ‘constraints of a competitive market’ cannot be applied in the case of constitutional procedures: The leading political actors are guided therefore in part by what they regard as morally permissible; and since no system of constitutional checks and balances succeeds in setting up an invisible hand that can be relied upon to guide the process to a just outcome, a public sense of justice is to some degree necessary. It would appear, then, that a correct theory of politics in a just constitutional regime presupposes a theory of justice which explains how moral sentiments influence the conduct of public affairs. (493) In 1977, Musgrave reorganised his lecture on the philosophical underpinnings around four traditions: the utilitarian tradition, the Kantian tradition, the contractarian tradition, and the communal tradition. The first one was subdivided in philosophical works (Bentham, Mill, Sidgwick) and welfare economics (Edgeworth, Pigou, Bergson, and Samuelson). The second one comprised Kant and Rawls; the third one, Locke, Nozick, and Buchanan. The communal tradition was presented as a utopian strand of thought embracing Rousseau, Hegel, and Marx. The precise impact of these readings of the ‘communal tradition’ on Musgrave’s idea of community is impossible to identify, since he did not leave detailed notes. Whether Musgrave was reading these classics for the first time or not, they constituted rich intellectual resources to challenge the standard neoclassical conceptualisation of the relation between individuals, society, and the state. 10.4