I probably mentioned it before, but one of the elements of neoclassical welfare economics I suspect may generate the sort of confusion that leads to bad economics is the presence of two levels of normative issues or ethics to consider: the ethics of the economist / observer, and the ethics of the subjects or theoretical ciphers. I sometimes have some fun with that issue in the context of a theoretical “one person world” meant to analyze “utility” in the absence of interpersonal conflict along the lines of whether we’re including the economist and his or her preferences about let’s say ethics, and the potential interpersonal conflict that involves, or whether we have in mind just the subject with the economist observing from on high, uninvolved, not really part of the world, like an impassive scientist studying an ant. But let’s just take a step back this week and look at this issue a little more soberly, shall we?
Theoretically, an economist can negate distributional indifference by applying his or her own exogenous ethics or by assuming the subjects all share the same ethics, or lack thereof, and the economist is just passing that information along. I suppose that’s what probably lies behind some common equivocations on terms one finds in bad economics relating to different meanings of “neutrality” or “indifference” to distributional issues and ethics, and also why some economists appear to have such difficulty perceiving exogenous normative content in bad economics. “The people have spoken. Economic power is distributed one way and not another. Laws surrounding markets exist. People support following the law. Everyone is fine with markets. It’s not me, it’s you.” It’s a nod to a sort of neutrality, but not the one relevant to economics. Neoclassical welfare economics lies above and beyond that sort of thing. Its normative propositions are based on “utility,” not particular forms of government or laws, however popular. Supporting a status quo legal regime relating to economic power and markets breaks neutrality in neoclassical welfare economics.
Neoclassical welfare economics theory itself entails a judgment about what is meant to be ethically controversial and uncontroversial for purposes of that theory: maximizing individual preference rankings (“utility”), when no conflict is present, is meant to be uncontroversial, other ethical propositions are meant to be controversial. That judgment is expressed in the definition of “utility” relevant to neoclassical welfare economics. It’s not up to individual economists to decide what they feel is ethically uncontroversial, to add random normative or ethical propositions as inputs of neoclassical welfare economics. It’s not up to individual economists to decide to treat random exogenous normative or ethical inputs as having the same status as “utility” because that economist believes or assumes most or all of the subjects support those inputs and they’re uncontroversial in that sense, etc. The theoretical potential for controversy is what matters.
At the risk of spelling it out one too many times, if one supports given, traditional, existing, status quo views on distributional ethics and other ethics exogenous to neoclassical welfare economics, one is not being neutral or indifferent to those ethics for purposes of neoclassical welfare economics. One is breaking distributional indifference and going beyond what can be supported using neoclassical welfare economics alone, that is, supported on the basis of “utility.” The economist / observer is taking a normative or ethical stance on what is given, traditional, existing, status quo, etc., albeit possibly from an interest in not doing so.
There is, of course, an area of economics, generalized “welfare analysis,” where economists apply their own random, idiosyncratic, subjective ethics, define “utility” however they like, add whatever assumptions and conditions they like, but that’s not neoclassical welfare economics. Generalized “welfare analysis” is basically just ethical philosophy done by economists, one supposes generally rather dodgy ethical philosophy because of the typical lack of training and isolation from serious philosophical critique, but I suppose some is better than others.
Note this applies as well to “public choice” economists who believe they’re not actively doing ethics as economists when they propose an ethically “ideal” voting scheme because they’re just talking about the ethical views, the preferences, of their theoretical subjects. The “ideal” voting scheme can only be defined relative to some subjective system of ethics. It’s not the role of economists to tell society what voting system is “ideal” or even when some issue should be resolved on the basis of voting as opposed to, let’s say, economic power in markets. It’s up to society to tell economists what voting system they find ethically acceptable, and when they think they should use it rather than economic power and market systems.
Resolving interpersonal conflicts of needs and desires on any basis is always an ethical position. Adopting any possible criteria, let’s say intensity of preferences, is an ultimately subjective ethical position. Others may disagree. It’s potentially controversial. It’s ethics, not science. Someone espousing ethics involving rights to property or whatever doesn’t care how intense one’s preferences are. Someone espousing ethics based on human welfare, traditional (non-economic) utilitarianism, doesn’t care how intense one’s preference are. It’s ethics, not science. If, let’s say, some bully has an intense preference to smash his or her diffident, nearly suicidal neighbor on the head with a rock, it’s an ethical choice to allow him or her to do that. If that’s your ethics fine, but represent. One person one vote democracy has a certain normative, ethical, justification. Voting indexed by, let’s say, some measure of intensity of preferences, has another. Voting indexed by, let’s say, a combination of intensity of preferences and economic power, pay to vote, has another. It’s fine to support whatever one supports, but acknowledge, evaluate, discuss the ethical choice involved. It’s ethics, not science.
Honestly, how many times do I have to say it? Ethical philosophy is different from science, value from fact, normative from positive, is from ought. There is no objective, scientifically correct ethics. There is no normatively or ethically “optimal” or “ideal,” except to an individual and in reference to his or her own ultimately subjective moral sense or moral sentiments. At the social level, there is only temporary compromise and agreement. If the economist / observer wants to leave his or her own ethical judgment out of the equation, then he or she should learn to stop at simply indicating the relevant ethics issues, the potentially significant tradeoffs, and letting the people decide how to resolve them. Economists should really give up their self-appointed role as ethical arbiters of society and stop trying to tell everyone else what is optimal or ideal.
