1993 Moving in Circles_Blaug Once Again on the Nature of Paretian Welfare Economics

7/30/2019 1993 Moving in Circles_Blaug Once Again on the Nature of Paretian Welfare Economics

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DE ECO NO M IST 141, NR. 2 , 1993

O P M E R K I N G E N E N A A N T E K E N I N G E N - C O M M U N I C A T I O N S

M O V I N G I N C IR C L ES : B L A U G O N C E A G A I N O N T H E N A T U R E O F P A R E T I A NW E L F A R E E C O N O M IC S

1 A D O D G E D D I S C U S S IO NIpse dixit. N o w a t l a s t w e s h o u l d k n o w i t f o r g o o d a n d a l l: t h e r e is n o s u c h t h i n g a sp o s i t iv e w e l f a r e e c o n o m i c s , w h a t e v e r p r o o f to t h e c o n t r a r y m a y b e s u b m i t te d . T h e s ec o n t e s t a t i o n s a r e b e s t a i r i ly d is m i s s ed . S u c h i s t h e t e n o r o f P r o f e s s o r B l a n g ' s r e j o i n d e rt o m y c r i t ic a l a c c o u n t o f h is o f t e n e x p r e s s e d v ie w o n t h e i n h e r e n t l y n o r m a t i v e c h a r a c t e ro f P a r e t i a n w e l f a r e e c o n o m i c s ( B la u g , 1 9 93 , H e n n i p m a n , 1 99 2) .

W e a g r e e t h a t i t m a t t e r s w h e t h e r t h is s u b j e c t i s r e g a r d e d a s p o s i ti v e o r n o r m a t i v e a n dt h a t t h i s i s s u e i s p a r t l y a q u e s t i o n o f w o r d s b u t b a s i c a l l y a q u e s t i o n o f s u b s t a n c e . F o r t h er e s t w e r e m a i n , a s B l a u g ' s re p l y il lu s t r at e s , s e p a r a t e d b y a n a p p a r e n t l y u n b r i d g e a b l ec h a s m . I t n e e d n o t , b y i t s e l f , c a u s e s u r p r i s e t h a t B l a u g u p h o l d s h i s c e n t r a l t h e s i s . T h em a n n e r i n w h i c h h e d o e s s o is , h o w e v e r , r a t h e r p e c u l i a r i n w h a t p u r p o r t s t o b e as c i e n ti f ic d i s c o u r s e . I n t h e m a i n h e m e r e l y r e a f f ir m s , i n a n a p o d i c t i c to n e , h i s p o s i t i o n ,t h o u g h , a s w i ll p r e s e n t l y b e c o n s i d e r e d , w i t h a t a c i t b u t n o t a b l e s h i f t i n th e t e r m s o f t h ed e b a t e . H e f a i ls t o a d d r e s s t h e o b j e c t i o n s I r a i s e d t o h is a r g u m e n t s a n d i g n o r e s t h ea m p l e e v i d e n c e I p r e s e n t e d t h a t t h e a l l e g e d l y n o n - e x i s t e n t p o s i t iv e t h e o r y e n j o y s af l o u r is h i n g l if e. N o r d o e s h e p a y a n y a t t e n t i o n t o o t h e r a u t h o r s I m e n t i o n e d w h o s h a r em y o p i n i o n . H e a l so p e r s i st s , f r o m t h e v e r y s t a r t ( ' t h e P a r e t i a n c r i te r i o n is n o r m a t i v eb e c a u s e i t i s b a s e d o n s e v e r a l v a l u e j u d g m e n t s ' ) , i n t h e t a u t o l o g i c a l o r c i r c u l a r st y l e o fr e a s o n i n g I c e n s u r e d i n m y p a p e r , a n d w h i c h m a d e m u c h o f h is f o r m e r w r i t in g s o n t h es u b j e c t u n p e r s u a s i v e .

F r o m h i s n e w c o n t r i b u t i o n , i f i t m a y b e c a l l e d t h a t , i t i s a l l t o o c l e a r th a t B l a u g h a sm a d e n o a t t e m p t t o f re e h i m s e l f f r o m h i s o ld p r e c o n c e p t i o n s a n d t o l o o k a t t h e p r o b l e ma f re s h . I t a p p e a r s t h a t e v e n n o w h e h a s n o t f u l ly g r a s p e d t h e m e a n i n g o f a v a l u e - fr e ea l l o c a t i o n t h e o ry . H e n c e , a f t e r h i s m e a g r e r e s p o n s e , t h e r e a d e r s a r e n o n e t h e w i se r . T h eq u e s t i o n w h y , o f a ll e c o n o m i c s u b j e c ts , w e l f a re e c o n o m i c s a l o n e c a n n o t b e p o s i t i v e , s t il ll a c k s a s a t i s f a c t o r y a n s w e r .

S o , w h a t m i g h t h a v e b e e n a f r u i t fu l ex c h a n g e , li k e t h a t w i th M i s h a n r e f e r r e d to i n m yp a p e r , e n d s i n d e a d l o c k . B u t o u r r e a d e r s, p a r t i c u l a r l y th e m o s t q u a l if ie d , w i ll n o t r e g a r dt h is o u t c o m e a s a d r a w . T h e y m a y s p e c u l a te w h e t h e r B l a u g i s u n a b l e o r u n w i l l in g toe n g a g e i n a g e n u i n e d i s c us s io n . F o b b e d o f f w i t h a s t ri n g o f q u e s t i o n a b l e d o g m a t i ca s s e r t i o n s t h e y a r e l i k e l y t o f e e l t h a t h e d o e s n o t t a k e t h e m a l t o g e t h e r s e r io u s l y .


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O P M E R K I N G E N E N A A N T E K E N I N G E N / C O M M U N I C A T I O N S 2912 Q U A S I - N O R M A T I V EI n h is b r i e f c o m p a s s B l a u g m a n a g e s t o c o n f o u n d t h e i s su e s i n v o l v e d st il l f u r t h e r t h a n h eh a d d o n e b e f o r e , w h i c h m a y l e a d t h e u n w a r y a s t r a y i n a s l ip p e r y f ie ld . A m o s t t r o u b l e -s o m e f e a t u r e i n t h i s r e s p e c t a r e s o m e n e w l i n g u i s ti c t w i s ts .

I n t h e i n t r o d u c t o r y s e m a n t i c p a r a g r a p h s ( i n w h i c h B l a u g d o e s n o t w a s t e a w o r d o nt h e h a p l es s v e r b a l ' p r o o f s ' f o r th e n o r m a t i v e n a t u r e o f th e s u b j e c t) h e w r it e s a s i f I d o n o tk n o w w h a t v a l u e j u d g m e n t s a r e . H e s t at e s t h a t ' t o i m a g i n e t h a t v a l u e j u d g m e n t s c a n b es h o w n t o b e t r u e o r f a l s e i s t o c o m m i t a c a t e g o r y - m i s t a k e . ' T h e i n t ri g u i n g q u e s t io nr a i s e d b y h i s p r e s e n t i n g th i s t r u i s m i s w h y B l a u g b e l i ev e s t h a t I ( a n d p r e s u m a b l y o t h e rd e f e n d e r s o f t h e p o s i t i v e a p p r o a c h ) n e e d t h i s e l e m e n t a r y le s s o n . T h e o n l y r e a s o n I c a nt h i n k o f is th a t a d o p t i n g a s a n u n a s s a i l a b l e a x i o m t h a t w e l f a re e c o n o m i c s i s b a s e d o nv a l u e j u d g m e n t s , h e c o n c l u d e s t h a t t h i s c a n o n l y b e d e n i e d b y p e r v e r s e l y i n t e r p r e ti n gt h e s e j u d g m e n t s a s i f t h e y w e r e p o s i t i v e p r o p o s i t i o n s . T h e d i f f ic u l t y o f t h is e x p l a n a t i o ni s t h a t i t e x p o s e s B l a u g a s g u i l t y o f a b l a t a n t p e t i t i o p r i n c i p i i a n d g r a v e l y m i s r e p r e s e n t i n gh i s o p p o n e n t s ' v ie w _ I f th i s s o u n d s o f f e n s iv e a n d h a r d l y c r e d i b l e , o n e c a n o n l y w o n d e rw h a t t h e p o i n t o f h is i n s t ru c t i o n m i g h t b e .

B l a u g ' s a s s u m e d t e a c h e r ' s r o le a p p e a r s i n a c u r i o u s li g h t w h e n o n e l o o k s a t h i s o w nu s e o f la n g u a g e . H e t r i e s t o f a u l t m e f o r n o t e x p r e s s i n g m y o p i n i o n o n h i s d e f i n i t io n o fp o s i ti v e a n d n o r m a t i v e e c o n o m i c s a n d t h e d i ff e re n c e b e t w e e n v a l u e j u d g m e n t s a n dm e t h o d o l o g i c a l u d g m e n t s . I n f a c t, it is c l e a r f r o m m y p a p e r t h a t n o d i s a g r e e m e n t a b o u tt h e s e n o t i o n s e x i s t e d b e t w e e n u s , w i t h t h e e x e p t i o n th a t I o b j e c t e d (l ik e o t h e r s h a v ed o n e ) t o h i s e x t e n s i o n o f th e c o n c e p t ' n o r m a t i v e ' t o u n t e s t a b l e s t a t e m e n t s n o t e x p r e s s -i n g a n e t h ic a l ap p r a is a l_ I n t h is s e n se ' n o r m a t i v e ' b e c o m e s a h o m o n y m o f th e w o r d a s i tis c o m m o n l y u n d e r s t o o d . T h i s p a i r c o r r e s p o n d s w i t h th e d o u b l e m e a n i n g o f 'p o s i t iv e . 'W h i l e ' n o r m a t i v e ' i n t h e u s u a l p a r l a n c e i s t h e o p p o s i t e o f ' p o s i t i v e ' i n t h e s e n se o f' v a l u e - f r e e , ' i n B l a u g ' s a d d i t i o n a l i n t e r p r e t a t i o n i t i s t h e c o u n t e r p a r t o f ' p o s i t i v e ' i n t h es e n s e o f e m p i r i c a l l y t e s ta b l e . T h e f i rs t c o u p l e o f o p p o s i t e s i s g e n e r a l l y u s e d , a l s o b yB l a u g , i n t h e d i s p u t e a b o u t t h e n a t u r e o f w e l f a re e c o n o m i c s ; t h e s e c o n d o n e i s o f li m i t e ds i gn i f i cance to t h i s i s sue .

W h e r e a s i n m y c r i t i c a l r e v i e w t h i s t e r m i n o l o g i c a l q u e s t i o n i s a m i n o r p o i n t , i n B l a u g ' sn e w t r e a t m e n t i t i s a m a j o r o n e . H e f i r s t d e f i n e s , i n a c c o r d a n c e w i t h n o r m a l u s a g e ,n o r m a t i v e a s ' i n v o l v i n g e t h i c a l p r o p o s i t i o n s . ' C o n f u s i n g l y , h e c o n t r a s t s t h is t o ' p o s i t i v ee c o n o m i c s , ' d e f in e d a s i n v o l v i n g 'p r o p o s i t i o n s t h a t a r e e i t h e r t r u e o r f a l s e .' I t r e m a i n s ,h o w e v e r , u n c l e a r w h e t h e r h e u s e s ' p o s i t i v e ' c o n s i s t e n t l y i n t h is w a y , e s p e c i a l l y w h e n h ed e n i e s t h e p o s s i b i l i t y o f p o s i t iv e w e l f a r e e c o n o m i c s . I n t h i s c o n t e x t t h e t e r m m u s tn e c e s s a r i l y d e n o t e ' v a l u e - f r e e , ' o n p e n a l t y o f g e t t in g e n s n a r e d i n a c o n c e p t u a l t a n g l e (s e ea b o u t th e d u a l m e a n i n g o f ' p o s i t i v e ' H e n n i p m a n , 1 99 2, p. 42 7 ).

O f c o u r s e t h e t w o n o t i o n s o f ' n o r m a t i v e ' m u s t b e j u s t a s s t ri c tl y d i s ti n g u is h e d , w h i c hB l a u g f a i ls t o d o . I n s p i t e o f h is i n i t ia l d e f i n i ti o n , i n t h e f o l l o w i n g p a r a g r a p h s t h ea l t e rn a t i v e m e a n i n g o f ' n o r m a t i v e ' ( a n d b y i m p l i c a t io n th a t o f ' v a l u e j u d g m e n t s ' ) h a s ap r o m i n e n t p l a c e. T h i s s e m a n t i c n o v e l ty c o m e s i n p a r t i c u l a r t o t h e f o r e i n B l a u g ' s d i sc u s -s i o n o f t h e fi r st P a r e t i a n p o s t u l a t e . H e r e h e c o n t e n d s t h a t t h i s i s a v a l u e j u d g m e n t a n dt h e r e fo r e b e l o n g s t o n o r m a t i v e e c o n o m i c s b e c a u s e t h e b e l i e f t h a t i n d i v i d u a l s k n o w w h a tis b e s t f o r t h e m ( ' c o n s u m e r s o v e r e i g n t y ') c a n n o t b e r e f u t e d b y a n a p p e a l t o f a c ts . H ec l a i m s t h a t t h i s i n s i g h t s u ff ic e s ' t o v i n d i c a t e m y p o s i t i o n . '

H e c r o w s v i c t o r y t o o s o o n . A l l h e h a s d o n e i s t o r e d e f i n e f o r t h e o c c a s i o n t h e t e r m s' v a lu e j u d g m e n t ' a n d ' n o r m a t i v e ' t o s u i t h is p u rp o s e _ F o r d e m o n s t r a t i n g t h a t w e l f a r e


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292 DE ECONOMIST 141, NR. 2, 1993economics is normative in the sense of being concerned with 'ought statements,' 'ap-praising jud gme nts ' (Blaug, 1980, pp. 130, 132) or 'ethical assessments' (Blaug, 1993, p.127) this device is evidently worthless. The int roduct ion of his pseudo-va lue judgment sis not merely a verbal matter; by side-tracking the debate onto an irrelevant line heevades the problem the whole controversy is about, i _ e . the ethical commitment ofwelfare economics.

Untestabi lity recurs in connec tion with Blaug's third postulate as a characteristic ofinterpersonal comparisons of utility, but here it is handled quite differently. Despite thesimilarity in this regard to the first postulate, he rejects the view that these comparisonsare value judgmen ts, calling them instead 'unte stable statements of facts.' On account ofthis property he qualifies their Pare tian exclusion as a sound methodological judgment .Then he argues that because such judgments also cannot be disproved by facts, they 'arejust as normat ive as value judgments,' He considers this conclusion as one more reasonwhy 'Pare tian welfare economics belongs to normative economics. ~

This is a dazz ling solut ion indeed, with the staggering implica tion that, since method-ological judgments are ind ispensable for all science (Blaug, 1980, p. 132), this is with onestroke of the pen declared to be, in its entirety, normative. It is only a pity that hisargume nt does not support the claim that the Pareto criterion is normative because it isbased on value judgments. Obviously, this verbal juggling has nothi ng whatsoever to dowith the view that welfare economics provides ethical judgments.

The question presents itself whether Blaug's retreat into his quasi-normative con-structions signifies tha t he has relinquished all hope of substantia ting his thesis, the realissue in dispute, remaining only intent on saving by any mea ns the label 'normative.' Ormight this move reflect a confused state of mind?

3 MORE MISREPRESENTATIONSIn his defence Blaug shows himsel f adept at put ting words in to my mout h I never voicedor which I explicitly opposed and at tu rni ng a deaf ear to the sensible things I actuallysaid. The example given in the preceding section is not the only one. Another case inpoint is his statement that 'everyone agrees' that the Paretian theory assumes that 'everyindividual is the best judge of his or her welfare.' It is very odd that he still has notnoticed that the neutral version of this theory does not make this supposition. Thus thequestion whether or no t consumer sovereignty in this sense is a value judgmen t has nobearing on positive allocation theory. Here is a second reason why his proclaimedvictory is a sham.That I do not accept Blaug's definition also entails the answer to this pertinentquest ion how I could possibly deny tha t 'the premise of consumer sovereignty is a valuejudgment.' One feels impelled to ask in return how Blaug can possibly deny that con-sumer sovereignty may be conceived as a situa tion or state of things related to thefulfilment of preferences, without a t once attach ing a value jud gment to it. One finds

I As reported in my article (1992, p. 416) Blaug previously regarded the postulate itself as a valuejudgment. I suggested thaL it might better be seen as a methodological judgment. Now he does sotoo, but he continues to designate it as normative by changing the meaning of this word. So muchfor my not paying enough attention to 'the critical distinction between "value judgments" and"methodological judgments." '


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OPMERKINGEN EN AANTEKENINGEN/COMMUNICATIONS 293that he has a ready answer: it is a value judgme nt because, in fact, consumer sovereigntyis not put into practice without restrictions. Apparently he now switches to the ethicalmeaning of 'value judgm ent'; untestability as a sufficient condition for this qualificationhas no place in the argumen t which only points to an incontestable fact. Though he callsits att ributio n here 'a question of logic,' he is logically mistaken. What he really showsis something patently distinct, namely that consumer sovereignty is subject to valuejudgments, which no one in his senses would deny. Consumer sovereignty, as an existingsituation or as an idea, has this property in comm on with practically all phenomenaeconomics and the other social sciences are concerned with: human actions, beliefs,insti tutions and their consequences, like competit ion, democracy, war and peace orwhatever. If for this reason the related concepts were to be seen as value judgments,precious little would remain of positive (non-normative) social science.

This misjudgmen t displays the same unwillingness to separate in welfare economicstheoretical analysis and evaluation or advocacy which fundamenta lly vitiates Blaug'sposition on the subject as a whole. In line with this tendency he misconstrues, in furtherobscure comments on consumer sovereignty, my view on the first postulate. He arguesthat it is wrong to interpre t it no t as a value judgme nt but in a value-free sense on theground that the indivi duals' preferences are taken as given. 'We are told,' he writes, thatvalue judgments 'are the sort of prepositions we take for granted and do n ot criticise.'He castigates this reasoning as 'indeed a strange use of language,' to prove, he means tosay, that the postulate is not a value judgment . This it truly is, but the tale itself is sheerfabrication. Taking preferences as given is an established convent ion,e.g. in the theoryof consumer behaviour. I simply followed this procedure. No one, myself included, hasever mainta ined that this formula implies that preferences are exempt from criticism.

Blaug might have done better to note that the possible disapprova l of preferences andthe ensuing disagreement with the first Paretian value jud gme nt is a crucial topic in myarticle and one of the main reasons for rejecting the prescriptive function of welfareeconomics.2 Blaug's rebuke is all the more bizarre as he turns the real relationshipupside down. It is not the neutral but the normative version which, by means of the 'bestjudge ' clause, condones all preferences. Accordingly, I cannot make head or tail of howhis talk about acting without question on the belief in the taboo of cannibal ism couldserve to illustrate my reasoning. At my best guess it is a wholly misplaced triumphalreductio at absurdum of the neutral postulate as he misunderstands it.

Blaug's grumbling at the neutral version of the second postula te also springs from amisinterpretation. He calls it extraordinary that I do not regard the concept of socialwelfare, defined, as is usual in Pare tia n welfare economics, 'solely in terms o f the welfareof individuals', as necessarily a value judgment . Despite my clear explanat ion he contin-ues to believe that this view entails a denial of wider comm uni ty interests and 'theorganic theory of the state.' With this objection Blaug reappears as a captive of hisnormative presuppositions. It would be justified if the kind of welfare economics Ipropose would propagate, as he seems to presume, social welfare in this sense as anoverriding policy goal, excluding other concerns. This, as Blaug could know, by defini-tion it does not; it considers this aim as a conceivably desired one among other, possibly

2 It is also rather ironic that I mentioned 'infractions of consumer sovereignty' as an exampleBlaug might have given for his view that the Paretian value judgments are not generally accepted(Hennipman, 1992, p. 438).


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294 DE ECO NO M IST 141, NR . 2 , 1993c o n f l i c ti n g , o b j e c t iv e s . S o i t is j u s t a s w e l l t h a t h e h a s r e s i s t e d ' t h e t e m p t a t i o n t o r a i la g a i n s t ' t h i s u t t e r l y h a r m l e s s n o t i o n .

4 A D I S M A L E P I L O G U EI n h i s f in a l p a r a g r a p h B l a u g l a u n c h e s a f ie r c e a t t a c k o n p o s i t i v e w e l f a r e e c o n o m i c s ,b e g i n n i n g w i t h th e i n d i c t m e n t t h a t I a m ' w r o n g i n l o g ic a s w e ll a s in l a n g u a g e ' - a b i tt h ic k , s o m e m a y t h i n k . H e b l a m e s t h e n e u t r a l i n t e r p r e t a t i o n f o r it s a r r o g a n c e b e c a u s e i tp r e t e n d s t h a t e c o n o m i c s c a n ' w i t h o u t e v e r i n v o k i n g a s i ng l e v a l u e j u d g m e n t ' d e l i v e r' p r o n o u n c e m e n t s i n f a v o u r o r , s a y , c o m p e t i t i o n a n d f r ee t r a d e . ' T h e o l d c h a r g e o fs e l f - d e c e p t i o n i s d u l y r e p e at e d _

R e c t i f y i n g B l a u g 's m i s p e r c e p t i o n s i s a n n o y i n g l y r e p e ti ti v e . H i s i n d i g n a n t p o s t u r i n ge x h i b i t s i n a n e x t r e m e f o r m h i s i n g r a i n e d p r e j u d i c e s , p r o f o u n d m i s a p p r e h e n s i o n a n dt e n d e n t i o u s d e b a t i n g s t y l e . I t i s o n e o f t h e p r i n c i p a l th e m e s i n m y e s s a y t h a t p o s i t i v ea l l o c a t i o n t h e o r y d o e s n o t m a k e p r o n o u n c e m e n t s l i k e t h o s e B l a u g h a s i n v i ew a n d t h a ti t m o d e s t l y c o n f in e s i ts e l f t o i n s t r u m e n t a l a d v i c e w i th r e g a r d t o p o l i c y p r o b l e m s . O n t h eo t h e r h a n d , i t f u ll y re c o g n is e s t h e l e g i ti m a c y a n d a c t u a l i m p o r t a n c e o f t h e n o r m a t i v ea p p l i c a t i o n s s u c h a s B l a u g i n d i c a te s , s t re s s in g t h a t t h e s e a r e b a s e d o n v a l u e j u d g m e n t s .I t i s d i s t r e s s i n g t o b e c o n f r o n t e d , a s t h e c l i m a x o f a s e r ie s o f w a r p e d a l l e g a t io n s , w i tht h i s e g r e g i o u s d i s t o r t i o n . S u c h a n o b d u r a t e b i a s is t h e m o r e a m a z i n g a s b a s i c a l l y i t i s a l l,h o w e v e r B l a u g o b f u s c a t e s i t, n o t a m a t t e r o f a r c a n e s u b t le t ie s b u t o f v e r y si m p l e d is t in c -t io n s w h i c h , w i t h l it tl e e f f o r t, a l a y m a n c o u l d u n d e r s t a n d . O n e m u s t t a k e f o r g r a n t e dt h a t t h i s o f f e n c e i s n o t d e l i b e r a t e . T h e m i l d e s t e x c u s e f o r t h i s m i s s t e p w o u l d b e t h a tB l a u g h a s n o t r e a d m y p a p e r w i t h th e c a r e o n e m i g h t e x p e c t , s o m e t h i n g o n e s u s p e c t e da l l a l o n g . B u t i n a l l l i k e l i h o o d t h e d e c i s iv e f a c t o r i s t h a t h e i s s o s t r o n g l y w e d d e d t o h i si d O e f i x e a b o u t t h e u n d e n i a b l y n o r m a t i v e c h a r a c t e r o f w e l f a re e c o n o m i c s t h a t e v e n th em o s t t h o r o u g h e l u c i d a t i o n c a n n o t s h a k e h i s c o n v i c t io n . S o I a m a w a r e t h a t a s e c o n da t t e m p t t o m a k e h i m s e e t h e l i g h t i s a t h a n k l e s s t a s k . T h e b e s t o n e c a n s a y is t h a t e v e na g r e a t s c h o l a r m a y h a v e h is f o i b le s a n d b l i n d s p o ts .

P . H e n n i p m a n *

R E F E R E N C E SBlaug, M. (1980), The Methodology of Economics or How Economis ts Explain , Cambridge

- - (1993), 'Pieter He nnipm an on Paret ian We lfare Economics: a Com men t , ' De Economist , 141,pp. 127-129.Hennipman, P . (1992) , 'The Reasoning o f a Grea t Methodologi s t : M ark Blaug on the N ature o fParet ian W elfare Economics,' De Economist, 140, pp. 413M45.

* Emeri tus Professor of Economics, Universi ty of Am sterdam .

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