ABSTRACT
This chapter explores the assumptions about human welfare and its measurement made by neoclassical economics through its prioritization of efficiency and economic growth. These values originate in the Protestant work ethic, a moral system developed by Puritan theologians in the seventeenth century. During the Industrial Revolution, the work ethic split into “conservative” and “progressive” versions, reflecting the values of capitalists and workers, respectively. Neoclassical economics mostly adopts the conservative view, which neglects values central to both the original work ethic and its progressive successor. These neglected values include distributive justice, meaningful work, the development of skills and virtues in everyone, and social relationships of equality and sympathy. Radical and heterodox schools of economic thought today continue the progressive work ethic tradition of many leading classical economists and have developed measures of human welfare, such as the capabilities approach, to capture these values. This chapter illustrates the value conflicts between neoclassical and heterodox economists through a critique of the neoclassical theory of compensating differentials. Neoclassical economists would do well to follow their classical predecessors by making the values embedded in their measures of welfare more explicit and engaging their critics’ moral arguments. Such debates would advance the objectivity of economics.
Readers may be interested in these Handbook chapters as well: Heather Douglas, “Science and Social Justice”; Cristian Larroulet Philippi, “Values and Measurement.”
