What are
these goals? They are not easy to discover: the
mainstream of the economics profession has not encouraged
-- and may even be hostile to -- a broad exploration
of economic goals and their relationship to human
wellbeing. The casual reader of economics textbooks
or other expositions might be excused for concluding
that efficiency is the primary goal and value for
economists; but if that observation is stated, it
will quickly be refuted by the contention that efficiency
can never be a final goal -- it is only a means
to other ends.
What other
ends? The most thoughtful answers are likely to
cite human wellbeing as the ultimate goal of the
activities studied and aided by all the social sciences.
However, human wellbeing is a hard thing to define
and to measure, and so the discourse of economics
often slips into the easy alternative of holding
up some measure of material wealth -- its level
and/or its growth -- as final goals. When the discussion
is brought to this point, few would defend material
wealth as a fully adequate proxy for human wellbeing.
However, it has been difficult to bring to prominence,
within the economics profession, the issues that
are raised if we inquire: “What if in some
circumstances the intermediate, economic goals of
growth and wealth do not lead to -- even lead us
away from -- our final goals? How should we then
change our economic behavior, and the economic theory
that explains and supports that behavior?”
In recent
years, a spate of writings on these issues has emerged
building on work from older traditions of considering
“the good society.” There is also growing
interest in questions of valuation -- e.g., debates
over treating nonmarket values as externalities,
as well as attempts to evaluate the negative value
of pollution, and the positive value of the contributions
of health and safety regulations to human life and
health. And there is a lively public and (to some
degree) academic debate over indicators that might
be used as alternatives to GNP/GDP.
This renewal
of interest in the deeper meaning of economic success
is encouraging, but it has not yet become ingrained
in the profession. Meanwhile, it sometimes appears
that even where Western, capitalist economies have
succeeded in achieving the intermediate goals of
increasing material wealth, they have done so at
the expense of the underlying human values. Development
policy, as it evolved since the second World War,
has generally been geared to the achievement of
a rather narrow set of goals almost exclusively
focusing on the macroeconomic issues of growth of
productive capacity along with growth in the output
of marketed goods and services. In a 1930 essay,
John Maynard Keynes anticipated the many-fold increases
in labor productivity that have actually occurred,
and assumed that the resultant prosperity would
solve “the economic problem.”(2) In fact,
among a large fraction of the human population --
at least as many as the 1.6 billion who were on
the planet at the start of the century -- global
wealth has not translated into the elimination of
health-injuring poverty or soul-numbing drudgery.
Indeed, rapid GDP growth is sometimes accompanied
by increasing inequality and misery, while the environmental
impacts of growth threaten reversals in the future
-- which will, again, fall most heavily on the poor.
In rich countries inequalities have recently been
widening, and even individuals at the upper end
of the consumption pyramid do not seem to be achieving
the happiness, self-respect, or serenity that some
might cite as the purpose of material progress.
Capitalism has emerged as the world’s triumphant
economic system, but, as success comes tantalizingly
in sight, there is an uneasy concern that something
has gone wrong.
The hypothesis
behind this book is that an important piece of what
has gone wrong is to be found in the way we define
and justify the economic goals we pursue, and that
an essential part of the solution must be found
in a reexamination of economic goals -- starting
with the definitions current within the economics
profession. That hypothesis will be investigated
in the articles summarized in this volume, and in
the essays that introduce each part.
THE “FRONTIERS”
PERSPECTIVE
The comments made above reflect a position that
should be spelled out, because it is basic to the
selection of articles that go into each book in
this series, as well as we have selected the topics
for our six projected books.
The series,
Frontier Issues in Economic Thought, by definition
does not deeply explore positions that are centrally
held in the core of the economic discipline. This
is because the starting point for selection of our
Frontier topics is the observation that there are
subjects that should, because of their human importance,
be central to a science, such as economics, that
describes and prescribes a significant range of
human activities. However, among these humanly crucial
topics are some that are not given core attention.
Among the
important topics that have been marginalized in
this way are the six that have, so far, been selected
for this series. They are:Vol 1: A Survey of Ecological
Economics (published 1996)
The fact
that the Frontiers series has been designed to give
a new emphasis to relatively neglected issues makes
this, by definition, a somewhat unusual endeavor.
Having chosen topics that lie outside of the mainstream,
we have found (not surprisingly) that those who
have thought much about our topics also tend to
reject certain of the standard neoclassical positions.
We do not know whether this rejection is the result
of such thoughtfulness, or whether the direction
of causation runs the other way. Perhaps a predisposition
not to believe in the standard worldview causes
people to ask further questions about the relationships
in question.
An insistence
on recognizing the crucial role of values in economics
turns out to be a common characteristic among all
six volumes. Values serve as motivators and guides
for economic behavior, and as bases for setting
economic goals and for judging the success of economic
policies. The idea that economic policies can be
judged purely “positively” according to
their contribution to efficiency merely pushes the
normative issue back a step; for the choice of efficiency
as a desideratum, and the definition of efficiency,
are, again, value-laden. A leading reason for economists’
reluctance to recognize this is methodological:
values are hard to define, hard to identify, and
hard to analyze in a way that fits with what is
thought of as “scientific.”
More generally,
the core of economics has increasingly been filled
with topics that are amenable to the methods and
techniques that are popular in the field (i.e.,
those whose exercise is welcomed by the editors
of leading economics journals, and can assist young
academic economists to promotion and tenure). Topics
that are not amenable to the type of abstract modeling
that has been favored in recent decades have been
pushed to the margins of the field. But if it appears
unscientific to abandon the most sophisticated available
methods of analysis, it is even more so to ignore,
for methodological convenience, crucial aspects
of the content of one’s discipline.
It was interesting
to discover, in researching Frontiers’ Volume
1, was that the young discipline of ecological economics
is relatively bold in exploring value issues, even
though the topic it most obviously adds to standard
economics -- the natural world -- can, at least
sometimes, be studied as a set of value-free objects.
One fact with value-laden implications that emerged
from A SURVEY OF ECOLOGICAL ECONOMICS had
to do with long vs. short views of time. As firms,
individuals, or other economic actors adopt a longer
time perspective, the likelihood grows that private
interests will converge with the public interest
in social and ecological health and wellbeing. (To
give an example: a farmer acting on informed concern
for the future will avoid excessive chemical application,
preserving the soil fertility and also reducing
downstream run-off.) It is especially important
to build this fact, and its implications, into the
core of economic theory.
To derive
a subtler point that emerged from Volume 1 and led
toward Volume 2 (THE CONSUMER SOCIETY), try
the following test. Ask an environmentalist to enter
into a thought experiment in which technological
breakthroughs make possible, with no environmental
harm, the use of virtually unlimited amounts of
energy and materials. Then ask, “Are you content
to have society continue on its present high-consumption
path?” A common answer -- “No” --
will indicate something about the underlying reason
for many people to participate in the environmental
movement: it establishes a value-system expressive
of the feeling suggested earlier -- that something
has gone sour in the pursuit of what had been thought
of as “progress.” Scenarios of a continued
pursuit of material consumption as society’s
highest goal are unappealing to many, even under
imaginary circumstances where all the environmental
problems are solved. A focus on environmental problems
sometimes serves as the practical expression of
a deeper malaise.
Volume 2,
THE CONSUMER SOCIETY, zeroed in on the evidence
that, after the satisfaction of basic needs has
been achieved, a generalized increase in consumption
(the covert or open goal of most current economic
discourse) adds little or nothing to human wellbeing.
The exception is when it is declared to do so by
definition, as when an article begins with some
variant of the too-common statement, “since
utility is unobservable, we will use consumption
as a proxy for utility.” This finding left
us with the question: if consumption is not the
definition of utility, or wellbeing, that economists
should use, what is?
So we come
to the present book. Working on it has been extraordinarily
exciting and challenging -- even more challenging
than the first two volumes, because the subject
is less defined. In all of the Frontiers books,
one of the benefits to the reader is the fact that
the selection of articles to summarize has been
made on the basis of an unusually extensive literature
search. The range over which we had to search in
the first two books was at least relatively circumscribed.
“Ecological Economics” is a new
field with its own journal and a relatively small
number of other outlets where much of the work in
the area is appearing. “The Consumer Society”
was a somewhat more amorphous topic, but still not
so vast as “Human Wellbeing and Economic
Goals.” Thus, both of the first two books
were able to aim at comprehensiveness. While financial
and human resources have limited us to surveying
the literature that is printed in English and accessible
in the United States, within this (regrettable)
limitation we felt that we were making our selection
out of a nearly complete set. We knew where to draw
the limits of the topics, and we extended our search
out to those limits.
Work on the
present topic has required constant decision-making,
not only on the question, “Which of these articles
covering topic X will be most useful to Frontiers
readers?” We have also faced, even more than
with the other volumes, the questions: “Should
topic X be represented at all? If so, with what
emphasis?” Our ability to make these decisions
was aided by extensive correspondences with a number
of colleagues in a wide variety of disciplines.
Yet we cannot pretend to be comprehensive,for virtually
every discipline in the social sciences or the humanities
has a full literature on some aspect of our topic.
At the same time, the topic of Volume 3 has probably
received even less attention as a defined subject,
in recent years, than any of our other Frontiers
topics. Thus, even more than in the other volumes,
we must offer selectivity as our strength.
Since
HUMAN WELLBEING AND ECONOMIC GOALS ranges so
widely over other disciplines, it is perhaps necessary
to offer one further disclaimer. It is not the purpose
of the editors to colonize other disciplines, or
to expand the influence of economics. Instead, we
hope to facilitate communication in many directions,
across many boundaries. From the economics perspective,
there is much to be learned, and this discipline
stands to be enriched by shifting emphasis onto
some areas that are now relatively neglected, even
when these are subjects on which it is not fruitful
to use the standard neoclassical tools and assumptions.
THE ORGANIZATION
OF THIS VOLUME
Much of the effort involved in producing this volume
went into the process of selection and organization
of material into the ten parts that appear here.
Part 1 presents
a sampling of introductions to the themes and perspectives
that appear in contemporary discussion of economic
wellbeing.
Because we
are especially interested in the issue of how wellbeing
should be understood for economic purposes, an obvious
focus for this book is the relationship between
“utility,” as conceived in economics,
and the broader human concepts of “wellbeing”
or “welfare.” Economists have been addressing
these topics for at least 200 years. The discussion
of utility, utilitarianism, and the “invisible
hand” that continued through the nineteenth
century is the subject of Part 2.
The nineteenth
century closed with the appearance of a new, seemingly
more scientific and successful paradigm, namely
neoclassical economic theory. More recent developments
in welfare economics, social choice theory, and
other approaches to wellbeing appear in Part 3.
The twentieth century is closing on a note of dissension
and disappointment of many earlier hopes for a theory
of welfare, together with selected promising new
insights.
Despite difficulties
and complexities in the theory of welfare economics,
there has been a steady growth in applications of
the theory to practical problems, in the form of
cost-benefit analyses and valuation of environmental
and other externalities. Part 4 takes up these issues,
focusing on the question of which nonmarket values
can be made commensurate with the “measuring
rod of money” -- and how society can take seriously
those values that are not easily quantifiable.
Philosophers
and economists are popularly supposed to take very
different views of the world -- a supposition that
is by no means without basis. However, in recent
years a number of bridges have been thrown over
the gap between the two disciplines. In Parts 5,
6 and 7, we have collected work by authors from
both side of the chasm (as well as from several
other disciplines), starting, on the philosophers’
side, from the attempt to define what is “the
good,” or “a good life;” on the economists’
side, from ideas of utility, and the attempt to
give it non-tautological meaning via such notions
as preference, efficiency, or freedom of choice.
We have sorted
these bridging works into three levels. Part 5 presents
efforts to deal with difficulties that have arisen
in attempts to use information about individual
preferences as a proxy for information about the
individual good. Here the emphasis is on critiques
of utility theory, along with some efforts to revise
it into something more subtle and more comprehensive.
Another criticism
of utility theory has stressed the fact that individuals,
even in their economic roles, are not solitary Robinson
Crusoes, but are generally best understood as participants
in a network of social relationships. In Part 6
we review work that emphasizes these linkages, especially
with regard to ethical norms and citizenship. The
point is made that economic efficiency, as well
as other aspects of the quality of our lives, depends
critically upon these linkages. We are asked to
consider whether our approach to economic life,
and the theory behind it, is actually corrosive
of such social bonds.
Part 7 moves
to a more macro view of these issues, bringing into
focus the social issues of justice, the objectives
of egalitarianism, and the conflicts that arise,
in the arenas of freedom and justice, between the
rights of individuals and the health of society.
Another macro
view is provided in Part 8, where the question --
“What are the goals of economic activity?”
-- is featured in a consideration of the economic
development of nations. This is looked at from two
directions: one, the concept of development as applied
to the third world; the other, reflections on the
European style welfare state. Both approaches provide
opportunities to consider the relationship between
human wellbeing and the goals espoused by economic
policy makers and by the political figures they
advise.
For more
than half a century the dominant measure of economic
wellbeing on the macro level has been either GNP
(Gross National Product) or GDP (Gross Domestic
Product). These measures have recently come under
sustained attack from a number of directions. This
issue is central to the issue of how to bring economists,
philosophers, sociologists, political commentators
and activists to a workable, common understanding
of wellbeing -- so much so that Part 9 is devoted
to critiques of existing methods (such as GNP/GDP)
for evaluating the contribution of economic activity
to human wellbeing, while Part 10 consists of a
single essay that summarizes and compares eight
different approaches to assessing the economic success
of a nation.
In this volume
of the Frontiers series we have departed from our
usual approach in two places. One is in the way
we have dealt with alternatives to GNP. As just
noted, Part 10 is not a collection of summaries,
but, instead, a single essay providing an overview
of the issues involved in devising and using something
like a GDP figure. The other major departure is
in our treatment of the work of the economist Amartya
Sen (and, to some extent, that of the philosopher
Martha Nussbaum, with whom much of Sen’s use
of the Aristotelian approach was developed).
Sen has written
a very large number of articles that have built
upon one another and developed, over time, the still-evolving
conception of capabilities and human functioning.
As he prefers not to have his articles appear in
summary form, it is fortunate that there exist several
articles (one by Robert Sugden is summarized in
Part 7; two more, by David Crocker, are summarized
in Part 8) which, together, cover about fifteen
of the critical papers in this corpus. By developing
unusually long summaries of these secondary sources,
and writing a review essay of our own (for Part
5), we have been able to cover this important topic
much more effectively than would have been possible
with summaries devoted to single articles.
CONCLUSION
The need for assistance from beyond the borders
of economics is evident in the questions that have
motivated the Frontiers series. These embrace and
extend the question cited initially as the starting
point for the present book. Over all, the series
asks:
