Bogusław Czarny
The Debate on the Nature of Welfare Economics in
the Contemporary Methodology of Economics
(version 30.08.2011)
It is my purpose here to describe the debate of economists whether welfare
economics is normative economics or positive economics. I will also present my
opinion on the subject matter of the controversy.
The discussion started with a debate between Ezra Mishan and Pieter
Hennipman in 1982-1984.1 As Mishan stated in the beginning, welfare economics
has a normative character and is “that branch of study which endeavours to
formulate propositions by which we may rank, on the scale of better or worse,
alternative economic situations” (Mishan 1965, p. 156). In other words, the
purpose of welfare economics is not “to describe how the economy works, but to
assess how well it works”; most economists probably have the same opinion to
date; see Ng 1992, pp. 6-7]. However, as a result of the debate with Hennipman,
Mishan abandoned this view and principally accepted Hennipman’s position that
welfare economics is part of positive economics rather than normative economics
(see: Mishan 1981; Mishan 1984a; Mishan 1984b; Hennipman 1982; Hennipman
1984a; Hennipman 1984b).2 Surprisingly, the debate between Mishan and
Hennipman reappeared in economic journals about twenty years later.
The first part of this paper presents the opinions of George Archibald,
Pieter Hennipman and Yew-Kwang Ng, who believe that welfare economics is
part of positive economics. The second part presents the opposite opinions of
1
An earlier debate about the status of Paretian welfare economics involving roughly the same
arguments as those of Mishan and Hennipman opposed respectively Lionel Robbins (1932) to
George C. Archibald (1959).
2
“I am compelled to recognise that my repeated reflections upon the embattled foundations of this
subject [welfare economics – B. Cz.] appear to be leading me unerringly, if somewhat reluctantly,
toward the immaculate conception of a neutral welfare economics as espoused by Professor
Hennipman. Indeed, I should like to place it on record that many of his observations, especially in
private correspondence with me, have served to activate my mind and caused me to think through
more carefully the logic of the positions I once held ... At all events, I am left in no doubt that if
we are now drawing closer, we are closer to him and not to me. In the event, there is no need to
extend this exchange of views further.” (Mishan 1984b, p. 234; see also Hennipman’s answer:
Hennipman 1984b, p. 238).
1
Mark Blaug. The third part presents counterarguments to Blaug’s position. The
paper concludes with the hypothesis that the dispute in question may derive from
the ambiguity of the terms “positive economics” and “normative economics”.
1. The New Paretian Welfare Economics as Positive Economics
The “new” (“ordinal”, “Paretian”) welfare economics was conceived in the 1930s
by John Hicks and Nicholas Kaldor and replaced the “old” (“cardinal”) welfare
economics developed by Alfred Marshall and Artur C. Pigou. It hinged on
Vilfredo Pareto’s new evaluation criterion of social welfare. According to the
Pareto principle, social welfare increases provided that some individual is better
off while no other individual is worse off. The Pareto optimum is a situation
where no individual can be made better off without making another individual
worse off. Pareto proved that perfect competition automatically leads to a Pareto
optimality. In other words, no reallocation of resources allocated by free
competition can make some individual better off while making no other individual
worse off.
Which particular Pareto optimality will be reached in an economy with
perfect competition depends on the initial allocation of resources among
individuals. Different allocation scenarios lead to different Pareto optimalities. As
a result, while the Pareto criterion segregates economic states into Pareto optimal
and non-optimal, it is unknown which of the infinitely many Pareto optimalities
determined by a free market based on different original allocations of resources is
better and which is worse. In brief, Pareto did not undertake to evaluate
reallocations which could increase or decrease collective satisfaction once Pareto
optimality was achieved.
According to George C. Archibald (see Archibald 1959), Pieter
Hennipman (see Hennipman 1976; 1982; 1984a; 1984b; 1992; 1993), YewKwang Ng (see Yew-Kwang Ng 1992), and others, the “new” welfare economics
is positive economics. It examines the effectiveness of means to an end which is e.
g. a Pareto optimality or the total surplus maximization. [For instance, economists
studying welfare economics recommend tradable pollution permits instead of
2
emission limits in order to maximize total surplus in an economy suffering
negative externalities.] Naturally, the analysis of the new welfare economics has
been developed and systematised over the decades. Yet, it still concerns means to
an end and as such it is (logically and/or empirically) verifiable. (Welfare
economics in this sense proves to be none other than theoretical foundation of
economic policy.)
For instance Archibald writes: “[t]he theorems of welfare economics are
thus theorems in positive economics; they are concerned with the relationship
between given ends and available means. (...) We have a single dichotomy in
economics, between positive enquiry into how something can be done, and
normative recommendations that it should be done” (Archibald 1959, pp. 320-1).
Hennipman follows the same train of thought when he claims, for instance,
that the statement: “monopoly, tariffs and externalities cause a welfare loss”
should not be read as a recommendation to take action in order to eliminate these
phenomena; it is one thing to prove the existence of a Potential Pareto
Improvement, while a call for action is quite a different thing (Hennipman 1976,
pp. 47, 50).
In turn, Ng notes that economists are divided on this issue, yet most of
them seem to believe that welfare economics is normative economics. According
to Ng, “[t]his seems to be a little curious, as a majority also regard economics as a
science. If economics is a science (which is positive), then welfare economics, as
a part of economics, should also be a positive study. But is welfare economics
perhaps not a part of economics? here is an apparent inconsistency” (Ng 1992, p.
6). Ng goes on to add: “If we define social welfare in some positive sense, and
confine ourselves to the study of economic factors affecting social welfare, then it
is a positive study” (ibid).
2. Blaug and the Normative Nature of the New Paretian Welfare Economics
Contrary to Archibald, Hennipman and Ng, Mark Blaug has for years claimed that
the new welfare economics “is avowedly and unashamedly normative” (Blaug
1992, p. 123). Blaug supports his position with the following arguments.
3
Argument One
According to Blaug, the new Paretian welfare economics contains value
judgements. In particular, Blaug claims that the very definition of Pareto
optimality is a value judgment. Blaug argues against Archibald and Hennipman,
accusing them of departing from conventional terminology and splitting hairs:
“No argument should be knocked down merely because it abuses linguistic
conventions, but the case for operating with two interpretations of Pareto
optimality, one of which is value-free and wholly within positive economics and
the other of which is value-laden and therefore part of normative economics, does
seem to be splitting hairs” (Blaug 1992, p. 126).
So Blaug thinks that the term “Pareto optmality” is “value-loaded” and
represents, explicitly or implicitly, a value judgment. In my opinion, by stressing
the “value-ladedness” of the term “Pareto optimality”, Blaug means that the term
has both a descriptive and a persuasive function. Before making the above quoted
statement, the author of The Methodology of Economics had used the term “valueladedness” in this very sense in his critique of Gunnar Myrdal (see Blaug 1992,
pp. 120-121). As I see it, the persuasive function of the term “Pareto optimality”
means that a reader could consider a Pareto optimality to be an obvious economic
goal (just like a reader of another paper in similar circumstances could consider
the maximum real GDP per capita to be a desirable objective).3
No wonder then that in this situation, according to Blaug, “welfare
economics is (...) that branch of economics concerned with the ethical criteria by
which we decide that one economic state of the world is more desirable than
another, and to speak of positive welfare economics is literally to revel in
paradoxical language” (Blaug 1992, p. 126). Blaug believes that the position
alternative to his, namely Archibald and Hannipman’s “positive” interpretation of
3
According to an alternative (but also value-laden) interpretation of some economists, Pareto
optimality is an effective means of the minimal benevolence principle which says, ceteris paribus,
that whatever makes people better off is morally good. In this approach, the recommendation to
reach a Pareto optimality is simply an instrumental value judgment (“we should reach a Pareto
optimality because it makes people better off”) (see Hausman, McPherson 2006, pp. 65, 67; cf.
Gloria-Palermo, Palermo 2005, pp. 67-68).
4
“Pareto optimality” and, generally, the “new” Paretian welfare economics, is a
“paradox,” as it requires “superhuman detachment” to abstain from making the
“’simple’ assumption that the elimination of Potential Pareto Improvement is
desirable ...” (ibid).
Argument Two
Second, acording to Blaug, welfare economics is normative because it relies on
three specific postulates which are value judgments like “Pareto optimality”.
These postulates are used to define “Pareto optimality” then used as an evaluation
criterion of social states. The postulates are in particular as follows:
a) Every individual is most competent about his or her welfare.
b) Social welfare depends only on the welfare of individuals.
c) Decrease in the utility of one individual cannot be offset by increase in the
utility of another individual.
Blaug says that the postulates are value judgments and that they obviously
determine the outcome of analysis like any other similar postulates put forth when
aggregating individual welfare functions (Blaug, 1985, pp. 591–592); cf. Blaug,
1975, p. 175; Blaug 1992, pp. 122–127).4 In his opinion then any definition of the
term “welfare” implicitly accepts a value judgment. The judgment concerns the
mode of aggregation of individual welfare functions.
Sometimes, Blaug seems even to claim that all of economics (and not just
the new welfare economics) is normative. For instance, in Economic Theory in
Retrospect Blaug says: “In evaluating a change in national income, we typically
accept base-year or final-year prices as if the choice involved no value judgement,
and we ignore concomitant changes in the distribution of income, thereby
attaching equal weights to the gainers and losers of the change” (Blaug 1985, p.
607). Blaug goes on to say: “The fact that the price system is a particular standard
of evaluation, namely, one that counts every dollar the same no matter whose
dollar it is, should not blind us to the fact that acceptance of the results of
Mishan made a similar argument before he changed his position, following Hennipman’s critique
(see Mishan, 1984a, p. 77).
4
5
competitive price systems is a value judgement ... Economists are constantly
engaged in making the fundamental value judgement that only certain types of
individual preferences are to count and, furthermore, to count equally” (Blaug
1985, p. 706).
In the end, in The Methodology of Economics Blaug states: “The concept
of Pareto optimality and the associated concept of Potential Pareto Improvements
should not be confused with theorems of positive economics. If this implies that
economists must give up the notion that there are purely technical, value free
efficiency arguments for certain economic changes, and indeed that the very terms
‘efficient’ and ‘inefficient’ are terms of normative and not of positive economics,
so much the better: immense confusion has been sown by the pretense that we can
pronounce ‘scientifically’ on matters of ‘efficiency’ without commiting ourselves
to any value judgements” (Blaug 1992, p. 127).
Argument Three
In order to substantiate his thesis that the new Paretian welfare economics is
“normative”, Blaug uses, occasionally, auxiliary arguments. For instance, he says
as follows: “If the invisible hand theorem5 is a theorem of positive economics, it
is empirically falsifiable because positive economics is that branch of economics
that contains all the falsifiable hypotheses of economics. But the invisible hand
theorem is not falsifiable ... Since the invisible hand theorem is not falsifiable, it
does not belong to positive economics but to normative economics” (Blaug 1992,
p. 127). Since “the meaning of the invisible hand theorem” constitutes “the
bedrock of the argument” (i. e. of the Archibald’s and Hennipman’s argument), it
follows, according to Blaug, that “[t]he concept of Pareto optimality and the
associated concept of Potential Pareto Improvements should not be confused with
theorems of positive economics” (Blaug 1992, pp. 126-127).
In summary, Blaug uses the arguments quoted above to support the claim
that welfare economics is normative. It is obvious that the removal of value
judgments from welfare economics would destroy it and impoverish the economic
5
Blaug refers to the theorem, that equilibrium on competitive markets is Pareto optimal.
6
science (for instance, welfare economics would be destroyed if economists
rejected Pareto optimality as an important evaluation criterion of welfare because
it is a value judgment). According to those economists who share Blaug’s opinion,
the advocates of a welfare economics free of value judgments are unrealistic.
3. Counterarguments. Commentary
In my opinion, Mark Blaug’s defence of the normative nature of the new welfare
economics failed (like its earlier defence launched by Ezra Mishan). This opinion
is based on the following counterarguments (corresponding to arguments 1-3 in
the preceding section).
Counterargument One
Naturally, it is quite easy to identify Pareto optimality with an implicitly accepted
ethical ideal.6 After all, the term “optimality” has positive connotations. The
definition is also easily read as a description of an absolutely desirable state.
Many readers who do not regularly use the economic jargon will probably agree
that a situation which makes some individual better off and no individual worse
off is an improvement. (That will however ignore the distribution of income. It is
possible that for some individual a change diminishing the Paretian optimality but
equalising individuals’ incomes may represent improved reallocation of resources
in the economy. In other words, for many equity is an autotelic value independent
of efficiency.)
In general, however, I believe that “Pareto optimality” is an example of a
term which may have been value-laden but has long become ethically neutral.7 In
Samuel Weston notes that “[i]n intermediate micro texts the Pareto criterion is typically
unobtrusively justified in an early chapter on the grounds that ‘no one would object to making
someone better off if this could be done without making anyone else worse off.’ Later this
becomes the standard for judging policies toward, for example, monopoly. This is extremely
misleading if it has the effect of teaching the fledgling economist that she has acquired a scientific
tool that renders arguments about property rights [or changed distribution of income in society –
B. Cz.], and so on superfluous” (Weston 1994, p. 15).
7
It is known that the persuasive or emotional effect of “value-laden” terms may weaken with time.
For instance, according to Fritz Machlup, the vocabulary of contemporary sociology has been
practically neutralised in this process (Machlup 1969, p. 117). In a similar vein, Terence
Hutchinson says that “words or concepts are not inherently or essentially normative, persuasive or
value-loaded, not even such words as ‘value’, ‘goods’ ... There is such a thing as ‘progress’ in
6
7
addition, where doubts arise, it is enough to agree on terminology for the sake of
the academic discussion and accept that the terms in question are treated as neutral
and value-free.
As for “linguistic conventions” which are allegedly “abused” by Archibald
and Hennipman, and their splitting hairs, posing “Pareto optimality” as a
definition free from value judgments rather than as an ethical ideal does not seem
to me to be “splitting hairs.” It serves an important function: it helps to prove that
statements of the new welfare economics are evaluated as true or false, and hence
they belong to positive economics. Why would Blaug arbitrarily choose only one
possible interpretation of “Pareto optimality”, thus preempting the outcome of the
debate on whether the new Paretian economics is positive or normative?
Counterargument Two
I believe that postulates accepted in defining the fundamental terms of the new
welfare economics, like “Pareto optimality,” are not value judgments, contrary to
Blaug’s claim (these postulates are, once again: a) Every individual is most
competent about his or her welfare. b) Social welfare depends only on the welfare
of individuals. c) Decrease in the utility of one individual cannot be offset by
increase in the utility of another individual). In my opinion, these postulates can
have a descriptive, and not evaluative, function (after being specified they can be
true or false). Their acceptance can contribute to creating useful economic theory.
In other words, their function in welfare economics is no different from that of
similar postulates in similar circumstances in other parts of economics. These
include, for instance, postulates accepted in the theory of the firm or in the theory
of consumer’s behaviour (e.g. “the firm maximises profit”, “the marginal utility of
goods purchased by the consumer decreases,” etc.) (cf. Hennipman 1984a, pp. 88
- 89; Archibald 1959).
logical and scientific analysis and an important element in this consists of the neutralizing of the
value-loads or persuasiveness of the everyday language economists start from” (Hutchison 1964,
p. 71).
8
The acceptance of such (or any other) postulates only implies certain
decisions about the method of analysis.8 The use of appropriate assumptions as a
tool of analysis leads to conclusions which are epistemologically relevant and/or
practically valuable. Otherwise, if the postulates are not useful as tools of enquiry,
the economic model can be adjusted (e.g. the Pareto optimality criterion can be
liberalised by accepting Hicks-Kaldor’’ “compensation payments” concept; the
postulate of the decreasing marginal rate of substitution of goods purchased by a
consumer can be rejected, etc.).
In general, I believe that the postulates mentioned by Blaug are accepted
as a result of methodological decisions and do not introduce moral, ethical,
esthetic or other value judgments to economic analysis. In this regard, welfare
economics is no different from other parts of economics or, generally, science.
Natural science also uses specific terms and definitions, which influence the
findings of scientists. In this context, it should be remembered that the proponents
of the ideal of value-free economics have long argued that they only claim that
economics can be value-free “in precisely the same sense as any of the physical
sciences” (for instance, John E. Cairnes made the claim over 150 years ago (see
Cairnes 1873, pp. 252-253, 261), and Milton Friedman said the same in the 1950s
(see Friedman 1953, p. 17)).9
Counterargument Three
Finally, I will tackle Blaug’s “auxiliary” argument. Blaug can classify the
definition of “Pareto optimality” and all of the “new welfare economics” with it as
“normative” because he considers normative economics to comprise unfalsifiable
Blaug himself calls such decisions “methodological value judgements” and in my opinion
erroneously claims that his “methodological value judgements” are the same as Ernest Nagel’s
“characterizing value judgements”. However, Nagel’s “characterizing value judgements” are
sentences like “This animal is aenemic” or “Smith is a good student” They only mimic real value
judgements made for the own sake of valued object and are empirically true or false (assuming
precisely defined classification criteria like the number of red cells in a sample from the animal’s
blood or the average test grades) (see Blaug 1992, pp. 114-115; Nagel 1960, pp. 492-493; cf.
Kaplan 1964, p. 92).
9
The same counterargument could apply to Blaug’s general suggestion that all economics is
normative. Again, examples of value judgments quoted by Blaug as allegedly accompanying
economic analysis are, in my opinion, methodological decisions rather than value judgments.
8
9
economic statements. However, this definition of normative economics departs
significantly from the historical tradition (see, e.g., Hutchinson 1964). For
instance, it means that normative economics includes, for example, all tautologies,
statements containing terms without observable designation, statements with
unspecified contents of ceteris paribus clauses, etc. In brief, I believe that this
thread of Blaug’s argumentation was conceived by the author of The Methodology
of Economics for the sake of the debate with the proponents of a different
classification of the new Paretian welfare economics, and as such it is an example
of polemical ad hocery.
As for Blaug’s view that “the very terms ‘efficient’ and ‘inefficient’ are
terms of normative and not positive economics” and his doubts whether “we can
pronounce ‘scientifically’ on matters of ‘efficiency’”, I believe that they concern
the persuasive power (“value-ladedness”) of the definitions of the quoted terms. I
have explored the issue of “persuasive language” earlier, in the part
Counterargument One.
In addition, Hennipman (in his debate with Mishan) presents the same
opinion on the issue: “It is true that expressions like optimal or efficient allocation
and their negative counterparts may at first sight suggest an approval or
disapproval in some general or absolute sense, but this impression cannot be
binding for economics. In the context of the theory the terms are part of a
technical professional vocabulary and have a special economic and thus relative
meaning. To hold that they are indelibly value-loaded and that owing to this
welfare economics is ineluctably normative is semantic mysticism” (Hennipman
1984a, p. 89).
To conclude this analysis, I believe
that the position of Archibald,
Hennipman and Ng, who consider welfare economics to be a set of statements on
the efficiency of means to an end (like Pareto optimality) which are
intersubjectively verifiable and thus belong to positive economics, to stand firm
after confrontation with Blaug’s critique.
*
10
The postscript to the debate came in Blaug’s short 1998 paper The PositiveNormative Distinction (Blaug 1998). Blaug enumerates examples of use of the
term “value judgment” and refers in this context to “consumer sovereignty” and
“Pareto optimality”. Blaug says: “Likewise, the modern doctrine of Pareto
optimality rests, among others things, on the fundament postulate of consumer
sovereignty – only selfchosen preferences count as yardsticks of welfare or, in
popular parlance, an individual is the best judge of his or her welfare – and it has
long been argued that consumer sovereignty is a value judgement par exellence,
implying that Paretian welfare economics is fundamentally normative. However,
Chris Archibald and Pieter Hennipman have argued instead that the theorems of
Paretian welfare economics are theorems in positive economics; on this view, the
axiom that individual preferences are to be taken as given for purposes of
assessing a potential Pareto improvement, without endorsing or approving of
these preferences…” (Blaug 1998, p. 373).
Having said that, however, Blaug will not dot the “i” and seems to
consider the question moot: “Be that as it may (my italics– B. Cz.), it
demonstrates the difficulty of deciding just what is value judgement and what
precise role postulates that look like value judgements play in economic analysis”.
Yet, this impression seems illusory; a bit further down in the same paper, Blaug
once again talks about “value judgements, such as consumer sovereignty or the
Paretian definition of an improvement in social welfare” (ibid).
4. Final Remarks
It is possible that for many welfare economics is normative because, whether or
not they believe the Pareto optimum to be an ethical ideal, they consider welfare
economics to be a set of judgments evaluating means to an end (e.g., Pareto
optimum). For the adherers of the popular classification of economics proposed
by John Neville Keynes, this means that welfare economics is normative
economics. After all according to Keynes, empirical and institutional enquiry
which provides practical recommendations concerning means to an end
11
constitutes “normative” art rather than “positive” science (see Keynes 1891, pp.
31 - 36). However, Mark Blaug does not make this argument.10
On the other hand, adherers of the opinion, that welfare economics is a
part of positive economics can - consciously or unconsciously – refer to Max
Weber and to his influential opinions about the place of value judgements in
social inquiry. They may recall his well-known claim: “It has never occurred to
anyone to question that one can start from an end … and discuss only the means
necessary to that end, and that this may result in a discussion resolved purely
empirically” (Weber 1917, pp. 500-501; my translation from the German). This
train of thought, typical of Weber and before him John Stuart Mill, may
encourage them to consider welfare economics to be positive economics.
The recurring disputes about the nature of the Paretian welfare economics
would thus turn out to be simple confusion stirred by the ambiguity of the popular
economic terms “positive economics” and “normative economics.” On the even
more deep level reason of these debates would be then ambiguity of the very term
“value judgements”. Many adherers to John Neville Keynes’s tradition by “value
judgements” may understand almost every “act of valuation” of anything by
anyone. On the other hand the followers of Max Weber by “value judgement”
may understand “acts of valuation” made only for the own sake of valued object
(and not, for instance, for its instrumental value).
On the other hand Blaug states that welfare economics is normative because it “is (...) that
branch of economics concerned with the ethical criteria by which we decide that one economic
state of the world is more desirable than another” (Blaug 1992, p. 126). So he refers to John
Neville Keynes in a different way. Keynes defined a normative science of economics as a
„normative” science about ethical norms and criteria necessary to formulate economic policy
prescriptions (e.g. the determination of the ideal of taxation) (see Keynes 1891, pp. 31-36).
10
12
Bibliography
Archibald, G. C. (1959) Welfare Economics, Ethics, and Essentialism, „Economica”, Vol. 26, No. 104, pp. 316–327.
Blaug, M. (1975) Kuhn versus Lakatos, or Paradigms versus Research
Programmes in the History of Economics, w: Method and Appraisal in
Economics, ed. Spiro J. Latsis, Cambridge University Press, Cambridge et al.,
1976.
Blaug, M. (1985) Economic Theory in Retrospect, Cambridge.
Blaug, M. (1992) Methodology of Economics. Or How Economists Explain, Cambridge University Press, Cambridge.
Blaug, M. (1993) Pieter Hennipman On Paretian Welfare Economics: A Comment, „De Economist”, Vol. 141, No. 1, pp. 127-129.
Blaug, M. (1998) The Positive-Normative Distinction, w: The Handbook of Economic Methodology, ed. J. B. Davis, D. W. Hands and U. Mäki, Edward Elgar,
Cheltenham et al.
Cairnes, J. E. (1873) Essays in Political Economy, Macmillan, London.
Friedman, M. (1953) On the Methodology of Positive Economics, in: Essays in
Positive Economics, University of Chicago Press, Chicago.
Gloria-Palermo, S, Palermo, G., (2005) Austrian Economics and Value Judgements: a Critical Comparison with Neoclassical Economics, „Review of Political
Economy, Vol. 17, No. 1, pp. 63 – 78.
Hausman, D. M., McPherson, M. S. (2006) Economic Analysis, Moral Philosophy
and Public Policy, Cambridge University Press, Cambridge.
Hennipman, P. (1976) Pareto Optimality: Value Judgement or Analytical Tool, in:
Relevance and Precision. From Quantitative Analysis to Economy Policy, ed. J. S.
Carmer, A. Heertje, A., P. Venekamp, North-Holland, Amsterdam.
Hennipman, P. (1982) Welfare Economics is in Impasse: Some Observations on
Mishan’s Vision, „De Economist”, Vol. 130, No. 4, pp. 457- 464.
Hennipman, P. (1984a) Normative or Positive: Mishan’s Half-Way House, „De
Economist”, No. 1, pp. 86-99.
Hennipman, P. (1984b) The Nature of Welfare Economics: A Final Note, „De
Economist”, Vol. 132, No. 2. p. 238.
Hennipman, P. (1992), The Reasoning of a Great Methodologist: Mark Blaug on
the Nature of Paretian Welfare Economics, „De Economist”, Vol. 140, No. 4, pp.
413-445.
Hennipman, P. (1993) Moving in Circles: Blaug Once Again on the Nature of
Paretian Welfare Economics, „De Economist”, Vol. 141, No. 2, pp. 290-294.
Hutchison, T. W. (1964) Positive Economics and Policy Objectives, Allen and
Unwin, London.
Kaplan, A. (1964) The Conduct of Inquiry: Methodology for Behavioral Science,
w: Values, Objectivity, and the Social Sciences, ed. G. Riley, Addison-Wesley,
1974.
13
Keynes, J. N. (1891) The Scope and Method of Political Economy, Macmillan &
Co., London.
Machlup, F., (1969) Positive and Normative Economics, in: ed. R. Heilbroner,
Economic Means and Social Ends, Presence Hall, New York.
Mishan, E. J. (1965) A Survey of Welfare Economics 1939–1959, in: Surveys of
Economic Theory, Vol. 1, Money, Interest and Welfare, London.
Mishan, E. J. (1981) Economic Efficiency and Social Welfare, Allen and Unwin,
London.
Mishan, E. J. (1984a) The Implications of Alternative Foundations for Welfare
Economics, „De Economist”, Vol. 132, No. 1, pp. 75-85.
Mishan, E. J. (1984b) Welfare Criteria: Concluding Comments, „De Economist”,
Vol. 132, No. 2, pp. 234–238.
Nagel, E. (1961) The Structure of Science. Problems in the Logic of Scientific Explanation, London.
Ng, Y-K. (1992) Welfare Economics: Introduction and Development of Basic
Concepts, Macmillan, London.
Robbins, L. (1932) An Essay on the Nature and Signifacance of Economic Science, Macmillan, London.
Weber, M. (1917) Der Sinn der „Wertfreiheit” der soziologischen und ökonomischen Wissenschaften, in: M. Weber, (1973) Gesammelte Aufsätze zur Wissenschaftslehre, C. H. Mohr, Tübingen 1973.
Weston, S. C. (1994) Toward a Better Understanding of the Positive/Normative
Distinction in Economics, „Economics and Philosophy”, Vol. 10, No. 1, pp. 1-17.
14
The debate on the nature of welfare economics in the contemporary methodology of economics
Abstract
In this article I describe the dispute about whether welfare economics is normative
economics or positive economics. The discussion began with the debate between
Ezra Mishan and Pieter Hennipman in 1982 – 1984. It led Mishan to accept
Hennipman’s view that welfare economics is a part of positive economics. Several
years later, the topic reappeared in economic journals. In the first part of the
article, I present views of George Archibald, Pieter Hennipman and Yew-Kwang
Ng, who treat welfare economics as a part of positive economics. In the second
part, I present contrary opinions of Mark Blaug. In the third part, I present
counterarguments which (in my opinion) undermine Blaug’s point of view. I end
with the hypothesis that the dispute results i. a. from the ambiguity of the terms
“positive economics” and “normative economics” prevailing since the times of
John Neville Keynes and Max Weber.
Keywords: methodology of economics, welfare economics, positive economics,
normative economics, value judgements in economics.
JEL: B41
Institutional affiliation
Poland, Warsaw School of Economics, Collegium of World Economy, Chair of
Economics II.
E–mail address: podstawyekonomii@gmail.com .
15