Welfare Economics in Practice
When economists try to rule out value judgements, their ability to tackle practical matters is endangered; when they introduce into their welfare theories explicit value judgements that go beyond valuing individual utilities, those theories become non-welfarist.
But this book supports the view that there is more than this sharp well-known alternative. As we will argue, when (seemingly welfarist) economists engage with practice, they frequently step outside the welfarist framework. This is no accident because, in order to offer advice it is necessary to make value judgements and once value judgements are made, there is no reason to remain within the confines of welfarism. As the essays in this volume show, many economists have introduced non-welfarist elements into theoretical work if only implicitly or unconsciously.As we have explained, non-welfarism is about being open to information and values that go beyond individual welfare. A helpful way to think about this is through considering the restrictions on information relevant to social welfare implied by different approaches to welfare economics.
(1) The old welfare economics of Marshall and Pigou has been said to restrict welfare-relevant information to utility or economic welfare, believed to be measurable in terms of money. In this context, nonwelfarism means going beyond a focus on material wealth and aggregates of utilities measured in such terms. In the new welfare economics, welfarism involves a focus on a narrow set of acceptable notions of utility, either for operational reasons, or for the sake of scientific rigour, or by a deep belief that ordinal subjective well-being is all that counts for social welfare. In both cases, non-welfarism, therefore, can involve value pluralism: taking into consideration moral values other than utility, such as freedom, civil rights, equity and distributive concerns.
(2) The main feature of welfarism is that, for any concept of welfare, what is important for social welfare is individual welfare. As welfarism involves a focus on individual welfare, however that is defined, any information about groups or societies which is not reducible to information about individuals should be considered irrelevant. But such individualism sometimes fails to capture social welfare. Nonwelfarism can therefore mean taking account of information about societies that cannot be reduced to information about individuals.
(3) The history of welfare economics has known periods when welfarism has been defended on the basis of consumer’s sovereignty on the one hand and scientific rigour on the other. As a corollary, nonwelfarism has been often criticised for presenting measurement problems, including the technical difficulties in capturing non-con- sequentialist ethics, and for its possible drift into paternalism, notably due to the choice by external experts of relevant objective information. Those welfare economists who have supported a non- welfarist framework have faced these issues and posed solutions when they have engaged with practice.
One way to organise the book would, therefore, be to structure it according to these three different ways in which welfarism has been challenged: taking account of a wider range of information and values, overcoming individualism, tackling the problems posed by non-welfarism. The issue with such an approach is that, perhaps not surprisingly, most of the economists who challenged welfarism did so in multiple ways. For instance, Peter Cain's reading of Hobson reveals an economist who argued both against restricting attention to economic welfare and against individualism. Kotaro Suzumura's reading of Hicks and of the more recent evolution of normative economics concerns an argument against both monism of values and also the restriction of information on utility. The value of a less unequal distribution, as displayed in Backhouse's argument on Bergson and Samuelson, or in Yamazaki's chapter on Pigou, concerns both value monism and individualism. And so on.
We have, therefore, chosen to arrange the chapters chronologically. It is, however, useful to review the chapters in relation to the different ways in which the economists studied have departed from welfarism when they have engaged with practice.
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