ABSTRACT
One of the problems with the mechanistic approach, which has dominated mainstream economic thought since the late 19th century, is its neglect of the social and socio-psychological context in which the economic system functions. Kenneth Arrow has indicated that a social welfare function can only be a valid concept if social objectives can be derived from the preferences of individuals. Some believe that the concept of a social welfare function is best abandoned altogether and others adopt the point of view that economists may accept any given such function without concerning themselves with how it is obtained. But the essential point remains that attainable social welfare, whatever people take it to be, remains a matter of culture, namely what people have been accustomed to regard as fair. A particular concatenation of historical circumstances provided industrial society with a culture, which suited a widely shared type of economic progress.
