chapter  8
Creative activity and well- being for a new economic growth
Pages 27

The concept of ‘consumer sovereignty’ is rather standard in economics, but Scitovsky was dissatisfied with it. His analysis extended the concept to the lives of individuals in order to study human welfare, rather than only economic welfare.1 Nevertheless, Scitovsky still regarded the sovereignty of individuals as most important for freedom, and criticised how this sovereignty was being eroded in the modern economy. ‘Consumer sovereignty’ consists of two necessary components: ‘preference satisfaction’ and ‘freedom to choose’. ‘Preference satisfaction’ means that ‘the goodness or success of productive effort can be judged only in the light of consumers’ preferences’ (Hutt 1936: Ch. 16). The normative implication is that producers should be maximally efficient in satisfying consumers’ preferences, which are taken as given. ‘Freedom to choose’ implies ‘the controlling power exercised by free individuals, in choosing between ends’ (Hutt 1940: 66). The normative implication is that external intrusions into consumers’ choices should be minimised.2 According to Scitovsky, the individual’s main choices, ‘if not his only choices’ (Scitovsky 1992 [1976]: 78), are those that concern the pursuit of creative activity instead of defensive activities alone (see Table 5.1 in Section 5.1). Only the first option may be both rewarding during its pursuit, and, if successful, able to increase the individual’s life skill, thus affecting her preferences. Therefore, instead of ‘preference satisfaction’, it would be more appropriate to talk of ‘pursuit satisfaction’ (see Schubert 2012), which is a dynamic and uncertain process and assumes a flow dimension. Instead of ‘freedom to choose’, it would be more appropriate to talk of ‘agency freedom’. This latter term is borrowed from Sen,3 but it should be amended as the freedom to explore, and even to create, new opportunities made possible by the individual’s life skill, which has a stock dimension. Developing this skill can thus expand the individual’s ‘freedom to choose’ over time. The individual’s sovereignty is therefore a broader concept than consumer sovereignty. In particular, it does not require preferences to be consistent over time, because, for example, the individual may

change her preferences order in developing her life skill. Moreover, the individual’s sovereignty includes a type of freedom which is not only non-rival, that is, ‘my freedom does not limit your freedom’ but also enhances others’ freedom, that is, it can extend others’ freedom of choice and trigger others’ agency freedom. Scitovsky’s approach extends beyond economic welfare towards human welfare because he included in the individual’s pursuit of creative activity extraeconomic goods like companionship, interesting work, skilled leisure, and enjoyable learning (see Section 2.1 and Chapter 3). Taking up this insight of Scitovsky’s could help renovate the foundations of the traditional welfare economics laid down in the 1950s and 1960s (Mishan 1960; Arrow and Scitovsky 1969; Atkinson 2009). This renovation is facilitated by the new attention paid to the foundations of welfare economics by two recent branches of economics: the Economics of Happiness, which focuses on a direct measure of individual welfare, and Behavioural Economics, which focuses on the ‘anomalies’ in the individual’s ability to satisfy her preferences.