SO long as we confined our discussion to generalities we could
make some statements which were not purely destructive. How-
ever, we were thereby largely avoiding the field of welfare economics.
We have attempted to distinguish the cases in which rationality on
the part of the citizens may lead them to desire the intervention of
government. Having done this, are we now in a position to tender
objective, unambiguous advice on specific problems? Can we say,
in any given case, that the government should, or should not,
intervene? Further, if we could give a verdict in favour of interven-
tion, are we able to recommend the type and extent of the inter-
vention? Here, as I indicated earlier, ¹ I have serious doubts.

We can obviously make recommendations about certain types of
business practice such as those involving the use of physical violence
as an instrument of monopolization, stock market manipulation, or
even the problem of unemployment, for there are here involved
patent misuses of resources which are frowned upon under the
system of value judgments usually accepted by the economist. But
if we ask ourselves, once our resources are all in some sense usefully
employed, whether they are, or how they can be, best employed (the
problem of ideal output), or whether anything should be done about
their existing employment, then the answer is much more difficult.

Here welfare economics seems to have produced its most widely
cited results, and it is here that the bulk of the analysis has been
directed; but how much confidence can we have in the results?
We are given rules, often guardedly and with many provisos. In a
completely nationalized economy, subject to the usual reservations,
firms should sell their wares at prices equal to marginal costs. But
if the costs of production of firms are interrelated so that marginal
costs to the firm and to society differ, why should these goods be
offered at their marginal cost to the firm producing them? And if in
addition there are external economies of consumption, why should

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