Welfare Economics and the Theory of the State

Welfare Economics and the Theory of the State

Welfare Economics and the Theory of the State

Welfare Economics and the Theory of the State

Excerpt

This introduction discusses the pertinent developments in welfare economics since the publication of the first edition of the book. Its outline therefore follows the major developments in the subject which have occupied this decade and a half.

Curiously, the bulk of the pure theoretical work which was produced in this period made its appearance at its beginning and at its end. The work of Graaff which serves as the pinnacle and codification of the work of the 1940's was already well on its way when this book was published, and the revolutionary applications of the activity analysis approach of Koopmans, Arrow and Debreu had also either been written or were soon to appear. Only recently has there been another outburst of contributions towards the pure theory, many of them important and stimulating.

This introduction begins, therefore, with a report on the earlier developments during our period in the area of basic welfare theory. From there it turns to the most significant subject-matter of the interim period, the application of welfare economics to a variety of concrete problems of public policy. This work showed that the abstractions of the welfare economist could serve some function outside the ivory tower and that they could offer significant assistance to the policy maker, the practical man of action. The third major subject of the introduction is the recent work on the theory of externalities. The generalized concept of external economies and diseconomies and its relevance for the supply of public services has become a commonplace in recent years. But as these concepts came into more frequent and more routine use by some, others noticed some important conceptual difficulties which stemmed from these ideas and from the proposals that were based on them. In its final sections this introduction discusses some significant developments in the theory of the state, which recently have once again begun to make their appearance.

In writing this essay I have attempted to produce a coherent description of the positive contributions to the structure of the welfare analysis that emerge from recent writings. By and large, I will . . .

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