This chapter argues that, although Samuelson developed much of the standard welfare theory based on individualism and the Pareto criterion, he attached great importance to ethical judgments that went beyond welfarism. Following his teacher, Frank Knight, he consistently argued that welfare judgments had to be based on ethical assumptions, his social welfare function providing a way that the implications of alternative ethical judgements could be analyzed. He attached great importance to the distribution of income and his own ethical values involved non-consequentialist elements.

The chapter reflects on reasons economists have departed from welfarism when considering practical problems. Economists generally accept that using ethical values other than individual utility requires departing from neutrality but, if confronted with political contexts involving issues such as distribution, the environment or discrimination, they find it hard not to take an ethical position. Merit or public goods cannot be reduced to the satisfaction of individual utilities insofar as they are meaningful only in a social context. The individualism imposed by welfarism is also debatable when facing the interdependencies that exist between real-world individuals. Lastly, while welfare economics aims to avoid paternalism, reliance on preferences alone can be problematic. The paternalism implied by going beyond welfarism raises issues regarding democratic values such as agency and public reasoning that suggests that, instead of merely substituting non-welfarism for welfarism, there is a need for public debate on moral values. We conclude that economics, when inspired by theory and involved in practices with political consequences, should become more of a moral science.

The Introduction explains the concepts of welfarism and non-welfarism, relating it to the way economistss have typically approached the problem of welfare. Drawing on the chapters in the volume, it explores ways in which economists have departed from welfarism when tackling practical problems and discussing public policy.

There is today a resurgence of interest in the history of economics, but students often lack the opportunity of taking a systematic course that introduces them to the ideas, policies and writers who played a part in the development of economic thinking from the seventeenth century up to the present day. This book offers a partial solution to this problem by providing a template for students and teachers seeking orientation in the subject. It is based on the material that we have taught to third-year undergraduates at the University of Birmingham for several years, augmented with some material that one of us has covered with graduate students at the University of Oporto and at Erasmus University Rotterdam, expanding it a little beyond our 20 two-hour lectures. We have structured it in such a way that shorter courses could be based on a selection, and we make some suggestions regarding this below.

That this is not a conventional textbook will be apparent from the formal presentation of each lecture, beginning with aims, then providing an annotated bibliography and the relevant chronology before moving on to the subject matter of the lecture. Each lecture ends with a series of questions for discussion that could provide a framework for class discussion or individual reflection. In scope and presentation, then, there is a clear difference here from Roger Backhouse’s Penguin History of Economic Thought (published in North America by Princeton University Press as The Ordinary Business of Life), the textbook we recommend our students to read for initial orientation and which covers the history of economic thought from the ancient Greeks onwards. Likewise, chapter 2 of Keith Tribe’s Economy of the Word provides an extended overview of the transformation in the use of the word “economy” from the Greeks to the 1960s that provides a more discursive initial orientation.

From the 1920s onwards economic argument rapidly became more formalized and academic, so that what had hitherto largely been public economic debate increasingly becomes debate between academic economists. Before the 1920s economic thinking was both more diverse and less institutionally defined; indeed, part of the story we tell here is the conversion of a broad tradition of political economy into the new university discipline of economics.

Aims of the lecture

• 1. To demonstrate that, by the later 1880s, there was a broad international consensus that a “modern” economics centred on the choices made by an economic agent, and not on a framework of production and distribution involving land, labour and capital.

• 2. To emphasize that while Walras pursued a complex algebraic approach to this problem that provided the foundations of general equilibrium analysis, he regarded his work as part of this general line of thinking, not as separate from it.

• 3. To emphasize that while there was some diversity in approach to economic analysis, there was no imperative to reduce this variety to uniformity.

Bibliography

The reference text for Carl Menger is the four-volume Gesammelte Werke (Tübingen: Mohr Siebeck, 1968–70) edited by Friedrich von Hayek. For Walras the reference text is the fourteen-volume Oeuvres Économiques Complètes of Auguste and Léon Walras, edited by Pierre Dockès et al. (Paris: Economica, 1987–2005).

There are modern English translations of the principal works of Walras and Pareto. For Léon Walras, see Elements of Theoretical Economics: Or, The Theory of Social Wealth, (Cambridge: Cambridge University Press, 2014), and for Vilfredo Pareto see Manual of Political Economy, A Critical and Variorum Edition, Aldo Montesano, Alberto Zanni, Luigino Bruni, John S. Chipman and Michael McLure (eds) (Oxford: Oxford University Press, 2014).

An older but still usable translation of Menger’s Grundsätze published by the Ludwig von Mises Institute (2007) is available, but unfortunately it is marred by introductions by Peter G. Klein and Friedrich von Hayek that are best ignored for our purposes here. Indeed, much of the commentary to be found on the web relating to Menger and Walras is questionable, in terms of both scholarly reliability and judgement. Besides the work of Yagi and Endres noted here, you will generally find that commentary that is contemporary with the immediate reception of Menger’s work is far more illuminating than anything written since. The problem with commentary on Walras is rather different; the development of general equilibrium theory “creatively” modified Walras in a way that obscured the qualifications and reservations that he had made, progressively distorting later understanding of his work.