THIS book traces the development of welfare economic thought from Adam Smith to the present day. It is not, however, merely an historical study. It also attempts to find out what types of welfare analysis are likely to prove most useful for the purpose of practical economic policy.
A history of welfare economics differs from a monograph on the development of a particular branch of economic theory in that its subject-matter is much the same as that of a general history of economic thought. The treatment, however, is different. Firstly, since a different standpoint is adopted, a rather different perspective is given to many familiar economic doctrines, particularly the classical economic doctrines. Secondly, since welfare economics by its nature is concerned with how efficiently the economic system works, even an historical study of it develops into a practical estimate of the relative usefulness of different theories of welfare economics.
In welfare economics at least, the better technique of modern economic analysis does not detract from the practical importance of the lessons to be learned from older types of analysis, for the following reason. A given type of welfare analysis cannot be discussed without reference to the particular problems it is designed to solve. These particular problems in their turn cannot be fully appreciated without considering the fundamental attitude towards the central Economic Problem which underlies them.
Now the nature and significance of economic activity may be viewed from different standpoints and it is not possible to demonstrate by logic which of these standpoints is right or wrong. The only available method of judging their relative merits is to consider how significant each of them is. Again many criteria of significance are possible and the one I have adopted is purely quantitative and free from value judgments. Thus I define economic welfare as consisting in the quantities of satisfaction of given individuals' wants, postulating that comparisons of economic welfare must proceed under the assumption of constant wants and that once the system of wants has changed, the problem is not one of economic welfare but of general social welfare which cannot be analysed in purely scientific and quantitative terms. I then assess the relative