Quiet Revolution in Welfare Economics

Description

This ambitious work presents a critique of traditional welfare theory and proposes a new approach to it. Radical economists Robin Hahnel and Michael Albert argue that an improved theory of social welfare can consolidate and extend recent advances in microeconomic theory, and generate exciting new results as well. The authors show that once the traditional "welfare paradigm" is appropriately modified, a revitalized welfare theory can clarify the relationship between individual and social rationalitya task that continues to be of interest to mainstream and nonmainstream economists alike. Hahnel and Albert show how recent work in the theory of the labor process, externalities, public goods, and endogenous preferences can advance research in welfare theory. In a series of important theorems, the authors extend the concept of Pareto optimality to dynamic contexts with changing preferences and thus highlight the importance of institutional bias. This discussion provides the basis for further analysis of the properties and consequences of private and public enterprise and of markets and central planning. Not surprisingly, Hahnel and Albert reach a number of conclusions at odds with conventional wisdom. Originally published in 1990. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905. CONTENTS THEOREMS FIGURES ACKNOWLEDGMENTS INTRODUCTION 0.1 The Unnoticed Crisis 0.2 Our Argument PART ONELIMITS OF TRADITIONAL WELFARE THEORY TRADITIONAL WELFARE THEORY 1.1 Classical Utilitarianism 1.2 Neoclassical WelfareTheory 1.3 The New Contractarian Approach 1.4 Neoclassical Objections to Classical Utilitarianism 1.5 Neoclassical Incompleteness 1.6 Contractarian Objections to Neoclassical Theory 1.7 Comparing the Three Approaches 1.8 Strengths ofTraditional Welfare Theory THE LABOR PROCESS 2.1 The Labor Exchange 2.2 Economic Discrimination 2.3 Segmented Labor Markets 2.4 Influence ofthe Traditional Paradigm EXTERNALITIES AND PUBLIC GOODS 3.1 Theory of Public Finance as of 1970 3.2 Previous Treatments 3.3 Influence ofthe Traditional Paradigm ENDOGENOUS PREFERENCES AND INSTITUTIONS 4.1 Endogenous Preferences 4.2 Previous Treatments 4.3 Evaluation ofPrevious Treatments 4.4 Institutions and the Neoclassical “Blind Spot” 4.5 Institutional] Economics Fails to Come to the Rescue 4.6 What Is at Stake PART TWOA NEW WELFARE THEORY A NEW WELFARE PARADIGM 5.1 People and Society 5.2 The Human Center 5.3 The Institutional Boundary 5.4 Complementary Holism 5.5 A Qualitative Model ofthe Economic Sphere A NEW WELFARE THEORY 6.1 Formalizing Endogenous Preferences 6.2 Endogenous Preferences and Welfare Theorems 6.3 Evaluating Human Development PART THREE NEW RESULTS MARKETS 7.1 Laying Old Debates to Rest 7.2 Misconceiving Public Enterprise Market Economies 7.3 New Criticisms ofMarkets: Snowballing Individualism 7.4 Markets as Cybernetic Disasters 7.5 Market Roles and Incentives 7.6 Market Inefficiency 7.7 The Prevalence ofExternalities and Public Goods 7.8 An Imperfection Theorem 7.9 “Snowballing” Nonoptimality PRIVATE ENTERPRISE 8.1 Ownership and Income Distribution 8.2 Weaknesses in Conflict Theory 8.3 Reformulating Conflict Theory 8.4 An Imperfection Theorem 8.5 Snowballing Nonoptimality 8.6 A Double Indictment CENTRAL PLANNING 9.1 A Centrally Planned Public Enterprise Economy 9.2 Round One: Efficiency ofCentral Planning 9.3 Round Two: The “Modern Debate” 9.4 Round Three: The “New Debate” 9.5 An Imperfection Theorem 9.6 Snowballing Nonoptimality 9.7 Central Planning and the Coordinator Class CONCLUSION 10.1 Limits ofTraditional Welfare Theory 10.2 A New Welfare Paradigm and Theory 10.3 New Results 10.4 Toward a New Economic System NOTES INDEX