ABSTRACT
After having painted a picture of contemporary welfare economics with all its faults and inadequacies, the reader is better prepared to enter the very heart-land of social economics which, as already mentioned in Chapter 1, considers itself a separate school based on an alternative approach to normative economics. Rather than aiming at the most efficient satisfaction of individual preferences with a given set of basic resources, the focus now shifts directly to the common good, a concept that obviously cannot be distilled from the actual preferences of members of society. Clearly, in today’s society, as already in Sismondi’s time, the social order is far from harmonious; witness the conflicting interests between capital and labor. Everything seems to indicate that people have quite different tastes and preferences about the goals of society and few are ready to give up the privileges they now enjoy. It would be premature, however, to conclude from these observations that the common good either does not exist or is beyond comprehension. Instead, it will have to be tracked on a different path, one that builds on a normative view of people’s interests and goals. In other words, the question to be asked is not what people happen to like, but what they would like after reflection in the light of reason. Therefore, the norm must be valid for any and all rational agents. Equipped with the resulting principles, we should be well on the trail of the common good. The whole approach resembles what MIT economist Sidney Alexander labeled, decades ago, the Humanist Criterion: when faced with alternatives, a reasonable and well-informed person, free of personal and cultural bias, prefers one alternative over the others, one which is thereby shown to be preferable from a social point of view.1 This chapter will rely on logic and common sense, and the work of some scholars who have used these tools. The goal is to articulate a social economic alternative to Paretian welfare economics, but before engaging in this task, the reader should be made aware of a very recent development in the theory of modern welfare economics.
