I had some fun the other day talking about popular confusion relating to the idea of a “welfare state.” I thought I might do a more serious treatment this week, focusing on the role of neoclassical “welfare" economics and bad economics in the conservative style.
I mentioned before a “welfare state” is simply a state of whatever form, say a democracy, that accepts, in a democracy based on voter support, and in the USA on the US Constitution as well, that the well-being or welfare of the citizenry is part of its concern or mission. I noted before some conservatives, Republicans, especially, seem confused by the concept and often lambaste “welfare state” thinking while obviously supporting welfare state thinking themselves, talking about what’s best for Americans, and so on. The welfare state, or at least its rhetoric, is not a particularly leftist idea. Right wing fascism, for example, at least professes an interest in the welfare of the people. Right wing conservatives, Republicans in the USA bang on about what they suppose best for Americans. Although one does hear anti-welfare state rhetoric commonly enough, and it’s certainly possible to imagine a state opposed to thinking about the people’s welfare, most real states try to work it in somehow, if only by proposing welfare will be enhanced if they ignore it. I propose one prominent source of confusion about the welfare state may be traditional neoclassical welfare economics and the erroneous misinterpretation of it: anti-democracy bad economics in the conservative style. Let’s talk about it.
I’ve discussed, often, how the normative argument in neoclassical welfare economics is based on a peculiar, idiosyncratic definition of “utility” that removes it from interpersonal ethics entirely. That’s what gives the theory its distinctive ethical half-theory status. However, I haven’t made a point about discussing the peculiar, idiosyncratic definition of “welfare” that is then built upon it, which again has no interpretation in the interpersonal context. In that theory, one cannot say whether “welfare” (defined only with respect to preference ranks of individuals) is higher if we give a scarce hamburger to a starving man rather than to an overweight, sated man, whose health is at risk from over consumption of hamburgers. Under that ethical half-theory, we won’t know how best to allocate the hamburger until we define economic power, distribute it, then decide if people are to resolve that conflict of preferences on the market or directly via some other mechanism per democratic government. Once we agree those ethics of economic power, we can apply “welfare” arguments based on “utility” as the preference ranks of individuals, to figure out who should get the hamburger, based primarily on economic power but also interest, ability to pay plus willingness to pay.
This odd way of speaking in neoclassical welfare economics is then exacerbated in bad economics in the conservative style, where ethics relating to the definition, distribution, use of economic power are slipped in, adding normative content not in neoclassical welfare economics. The added normative content in bad economics in the conservative style typically has nothing to do with well-being or “welfare” as conventionally defined, so the normative argument in bad economics in the conservative style may be said to be opposed to consideration of welfare. However, because bad economics in the conservative style is based on a misinterpretation of neoclassical welfare economics, it is often couched in the language of neoclassical welfare economics, so still about “utility,” “welfare,” and so on.
The very understandable and predictable result is that many conservatives are confused about whether they’re meant to be interested in “welfare,” support markets as socially optimal or “welfare” maximizing, or they’re meant to oppose thinking about “welfare.” In the ethical half-theory of neoclassical welfare economics, in which all issues relating to interpersonal ethics, resolving interpersonal conflicts of preferences, have been arbitrarily removed, a discussion of “welfare” relating to the only issues left seems sensible. But, of course, when interpersonal ethics are reintroduced, issues considered in reality, and in contexts involving true factual premises, one must reconsider the relevance of any notions of “welfare” that may apply in those contexts, as per plain English usage. It’s related to the confusion about whether neoclassical welfare economics and related bad economics in the conservative style represent sincere forms of ethical “utilitarianism” or not, given the neglect or opposition to typical notions of utility in the interpersonal context.
If one cares to start dispelling the confusion academic economists have generated about this topic, think first the definition of “welfare” and how the definition meant for the fairy land of economic theory differs from conventional definitions in the real world and why. Think if whatever notion of “welfare” one may have in mind may be applied in interpersonal contexts, then understand the corresponding discussion of “utility” and “welfare” in neoclassical welfare economics cannot be applied to resolving interpersonal conflicts of preferences. Consider next that if neoclassical welfare economics does not address the ethics of resolving interpersonal conflicts of preferences, but applied bad economics in the conservative style promotes particular resolutions, how the necessary values got there, what they might be. Finally, consider if those additional values, exogenous to neoclassical welfare economics, that are slipped into bad economics in the conservative style (values about economic power), have anything to do with conventional notions of well-being, welfare, utility, and so on.
Don’t get hung up on the term “welfare.” People can, and do, play word games with the term “welfare.” Think of the substance. Use different words for different definitions or takes on “welfare.” Don't just sit there like a patsy and let academic economists con you. I’ve suggested one way to avoid confusion generated by neoclassical welfare economics is to replace “utility” with “preference rank of individual X.” Maybe with “welfare” as well, a less confusing formulation may be found that clarifies the difference from plain English welfare.
