Want a good example of the obscure ethical issue I’ve been calling the extent of the market in the context of normative neoclassical welfare economics? How about disabled people and the issue of accessibility? For some time now, I’ve been wanting to do a post on the extent of the market in the context of future generations, which I think is another good example, but eventually I realized that example raises some additional issues and maybe this one actually works better as the initial case.
Recall the issue of the extent of the market is basically what does normative neoclassical welfare economics say about the use of the market mechanism and, in particular, does it express the normative or ethical proposition that markets are always the best, optimal, most ethical mechanism for resolving interpersonal conflicts of needs, and desires, that is to say, to decide who gets what and what goes where. The most obvious potential alternative to the market mechanism in that respect is political democracy, although other decision mechanisms are also possible.
In previous posts, I’ve mentioned the issue of the extent of the market is related to distributional ethics but also subtly different. Distributional ethics are about the distribution of economic power, which directly affects the resolution of interpersonal conflicts of needs and desires based on relative economic power in markets. In contrast, the extent of the market is about the social decision to use markets at all, never mind how economic power is distributed. Extent of the market tends to be more apt when discussing situational ethics, while distributional ethics tend to be more apt when considering personal characteristics ostensibly relating to merit, fairness, material welfare, etc. Extent of the market is more about whether markets are the most ethical way to go, distributional ethics about whether the relative economic power governing market outcomes is ethically justified. However, the dividing line in many cases seems a little imprecise and may depend more on practical issues than any point of logic, per se. The example we’re considering today, the question of whether we, as a society, should use democratic government to promulgate and enforce regulations establishing accessibility requirements for disabled people, seems clearly more aptly discussed in the context of the extent of the market, although disabled people are identifiable by their personal characteristics and can wield economic power and one can at least imagine addressing the issue from the perspective of distributional fixes, so maybe it bears talking through.
Bad economics, of course, says simply if disabled people don’t have the economic power to make accessibility happen on the market now then no, we as a society should not worry about accessibility as a point of ethics. If it’s not here now from market forces alone, then it shouldn’t be. Ethical case closed. In contrast, good economics, reflecting the distributional indifference of real neoclassical welfare economics, doesn’t express that essentially status quo sentiment because the ethical status of the current economic power of disabled people is ethically indeterminate within that theory. Maybe disabled people should have more economic power? So neoclassical welfare economics is silent as far as the question of relative economic power goes, and hence also of the consequences of that economic power in terms of accessibility.
But is that kind of distributional fix based on adjusting relative levels of economic power even a realistic solution to the problem of providing accessibility for disabled people? What kind of economic power are we talking about? We’re talking about disabled people wielding so much economic power we expect businesses will provide accessibility based on market forces alone? That seems to involve quite a lot economic power changing hands. Not sure that’s an entirely plausible policy option. So should we just bypass market mechanisms and require accessibility via regulation as a point of ethics? What does neoclassical welfare economics say?
Well, that’s an interesting question because neoclassical welfare economics doesn’t say anything explicitly. It just dives into ostensibly optimal market structures assuming the existence of markets at a stage of decision making after the one we’re considering here. However, as I’ve suggested before, it seems inconsistent for neoclassical welfare economics to take such pains to avoid controversy in the area of distributional ethics only to make the absurdly controversial claim using non-market mechanisms is never an ethically acceptable approach to addressing social issues including resolving interpersonal conflicts of desires, or in this case, to make the absurdly controversial claim the only ethically acceptable way of addressing the issue of accessibility is providing disabled people sufficient economic power to make it happen on the market, no matter how difficult or impractical? As in the case of distributional issues, I don’t think neoclassical welfare economics can be properly interpreted as demanding only first best solutions, throwing up roadblocks, blocking policies designed to address controversial ethical issues one supposes it is meant to avoid.
However, the issue at hand runs rather deeper than that. The normative rationale provided in neoclassical welfare economics for using distributional fixes is, of course, to capture potential gains from disabled people choosing to their newfound economic power to move up their preference rankings more generally, thus arguably doing better than simply getting accessibility for the minimum level of resources to achieve that end alone. That seems sensible enough as far as it goes. However, I would suggest it’s quite controversial to suggest people cannot have ethical beliefs centered on particular issues such as accessibility that go beyond moving other people up the personal preference rankings of those other people. Indeed, that proposition seems to me an artifact of the ethical half theory structure of neoclassical welfare economics, basically the extent of the market version of the argument from bad economics that neoclassical welfare economics says distributional ethics are unimportant or irrelevant. One cannot have or evaluate a real instance of a market system without addressing in some way, explicitly or implicitly, controversial ethical concerns that go beyond it’s nice when people move up their preference rankings. One cannot identify an ethically correct way of distributing economic power using legal specifications of property ownership (property “rights”) without going beyond it’s nice when people move up their preference rankings. Indeed, one cannot envision any ethical basis for resolving interpersonal conflicts of needs and desires without going beyond it’s nice when people move up their preference rankings. So if neoclassical welfare economics contains the ethical proposition any such basis is ethically or normatively illegitimate, then the theory would be not only absurdly controversial, but philosophically implausible to anyone who holds ethical beliefs relating to resolving conflicts with other people, which is to say everyone.
No, I contend the only reasonable interpretation of ostensibly uncontroversial normative neoclassical welfare economics is that the choice to use or not use the market mechanism in the first place, as opposed to some other mechanism such as political democracy, is meant to also be exogenous to economic theory, similar to the way neoclassical welfare economics addresses the ethics of the distribution of economic power. That means that although one could always sit down and calculate a social “welfare loss” if we as a society decide to provide accessibility for disabled people via regulation because resources are not going to their most highly valued (by the market) use and so on, normative neoclassical welfare economics itself is agnostic on the issue of whether anyone should actually care about it.
Note the argument being presented here is entirely distinct from the argument one can always simply reject the ostensibly uncontroversial normative argument in neoclassical welfare economic in its entirety. Even if the normative or ethical inputs to that theory were as uncontroversial as advertised, no one is constrained to hold typical normative or ethical views. One may always decide neoclassical welfare economics is ethically implausible or unacceptable on some basis or other. All the more so when one considers the normative inputs are not really as uncontroversial as advertised once one identifies and evaluates them properly. In this post, I’m taking about what happens when one accepts the normative argument in neoclassical welfare economics and accurately expresses what it says. I’m not talking here about rejecting it at all.
What’s the bottom line here as a practical matter? If, as a point of ethics, one thinks the social cost of providing accessibility for disabled people is not worth the cost, then fine, congratulations, one should certainly always speak up on behalf of one’s own ethical beliefs. However, one should not pretend it’s simply a conclusion from normative neoclassical welfare economics based on ostensibly uncontroversial value inputs. That’s misleading. That’s not real. That’s not what neoclassical welfare economics really says under any plausible interpretation. No, that’s just one’s own normative or ethical belief or value judgment based on whatever ethical theory exogenous to neoclassical welfare economics one is relying upon to make that call. My mission, as always, is not to promote one ethical belief over another but to fight opaque and misleading bad economics, which creates confusion and conflict everywhere.
Let me just end this post with quick shout out to disability rights activist extraordinaire Paula Hardin for raising the issues that led to this week’s post.
Addendum
The laws, including the legal specifications of property ownership (property “rights”) that define economic power, contract law, tax law, inheritance, the provision of government benefits, and other policies used to define the distributional mechanisms that govern market outcomes, come from democratic government in the same way non-market solutions may come from democratic government. It would certainly seem to require some additional explanation or development if neoclassical welfare economics were to contain the normative proposition the former use of democratic government is ethically legitimate but the latter not.
