THERE seems to be a fundamental inconsistency in the currently accepted opinions concerning the classical economists. We have been brought up on the belief that their main concern is to show that the equilibrium process of the free market will lead to a more efficient allocation of resources among different industries than State interference.1 On the other hand, we have been frequently told that the classical analysis is vitiated by the labour theory which conceives the economic problem as the struggle of man against nature in producing material wealth. It has been said that the classical economists confuse the "economic problem" consisting in the choice between alternative methods of using given resources to maximise the satisfaction of given wants with the "technical problem" of physical productivity; and that consequently they are guilty of a "materialist bias" (cf. Robbins, Nature and Significance of Economic Science, Chaps. I-III).

It will be seen that these two opinions, held implicitly and simultaneously by many economists, are inconsistent with each other. The first credits the classical economists with an essentially correct, if rather rough, solution of the problem of allocating scarce resources which, according to the second, they understand only imperfectly.

This inconsistency is fundamental, for the two opinions attribute to the classical economists two entirely different outlooks on the nature of the central economic problem.

When we say that the central problem of the classical economists is to allocate resources efficiently among different industries, we imply (i) that they start from the assumption of a given quantity of resources and (ii) that they are mainly concerned with the maximisation of consumers' wants as expressed by their market demands

For recent examples of this belief see A. P. Lerner, Economics of Control, p. 67; T. d. Scitovsky, "A Note on Welfare Propositions in Economics", Review of Economic Studies, Nov 1941, pp. 77-8.


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Theories of Welfare Economics


Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 244

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?