Sen, Amartya K. (1992). Inequality Reexamined: Harvard University Press.
Chapter 1: Equality of What?
We have to address two questions if we are going to deal with issues of equality: firstly, we must ask, “Why equality?” and secondly, we must ask, “Equality of what?” Sen wonders whether or not we need to answer the first question if we have already argued in favor of the later. He claims that, “…question (1) in this analysis looks very much like the poor man’s question (2)” (12).
Sen then explores different normative theories, and finds that they each have an egalitarian core: it is less a question of why equality and more a question of equality of what that is answered by these philosophers. For example, even those who are seen as being critics of equality eventually settle in an are of equal treatment. For example, if a theorist posits that people are inherently unequal in their abilities, they should be equally supported in light of the beginning inequality. Even Nozick believes that people’s property rights should be equally treated. Sen wonders, must all ethical theories have a character of equality in order to be valid?
We are all fundamentally unequal. We are born with different endowments, different situational opportunities and different constraints. Thus, in constructing an ethical theory, we must be concerned with determining a space where we can all achieve equality. We must prune certain mutually exclusive opportunities to identify equality in the interest of promoting one of these branches of equal opportunity. We must choose one item on that we can be equal at the expense of the consequences of this decision, which is the inequality of individuals in a different realm.
Also, liberty and equality can find places in that they butt heads. Sen points to Nozick as being an ethical theorist who is routinely identified as being anti-egalitarian. This is because he is so heavily focused on the promotion of ideals of liberty. Sen believes that this logic is, “…altogether faulty” (22). It is not that liberty and equality stand in juxtaposition with one another, but rather that liberty is one of the goods that can be equally distributed, like income or justice.
This brings into question the very nature of the use of equality in the determination of ethical standards. “If equality can possibly speak with so many voices, can we take any of its demands seriously?” (23). The answer is yes. Sen goes on to claim that, “…the need to value equality in some space that is seen to be particularly important is not an empty demand” (24). He also claims that, “…equality can be a particularly powerful and exacting demand” (24). Finally, he explains that equality in so many different realms doesn’t at all lessen the powerful effect of equality, but rather is indicative of the difficulty of individuals to come together to agree on what should be valued.
In fact, the plurality of these different focuses can actually help to construct an ethical argument. Sen explores Rawl’s theory of fairness and finds that there is a plurality of foci: there is a focus on primary good equality on one side and freedom or well-being on the other provides for an interesting approach to ethical reasoning. “The plurality of focal variables can make a great difference precisely because of the diversity of human beings” (28).
Sen ends the chapter by evaluating a standard measure of equality: income. He finds it to be wholly lacking. Income equality is a rough measure that goes a long way to obscuring other important metrics of inequality and equality because it is so analytically elegant and relatively easy to apply. Because these approaches are so widely used and easily deployed, they go a long way to obscuring other ways of measuring equality. Other important measures of inequality, like freedom and well-being, can be affected in many different ways by different levels of income; the two variables do not move together in lock-step.
Friday, May 16, 2008
Monday, May 12, 2008
Adelman and Robinson: Income Distribution Policy in Developing Countries
Adelman, Irma, Sherman Robinson and World Bank. (1978). Income distribution policy in developing countries : a case study of Korea. Stanford, Calif.: Published for the World Bank [by] Stanford University Press.
This work begins by explicitly wanting to move the development debate away from a trickle-down economic approach to an approach that focuses more heavily on distribution.
“The model has five essential distinguishing features. It solves for prices endogenously in both factor and product markets. Its solution is based on achieving a measure of consistency among the results of individual optimizing behavior by a large number of actors…It incorporates income distribution, monetary phenomena, inflation, and foreign trade. It is dynamic, with imperfect intertemporal consistency. And, finally, it allows for varying principles of market clearing and institutional behavior” (3).
“The model operates by simulating the operation of factor and product markets with profit-maximizing firms and utility-maximizing households. It can thus be characterized as a computable general-equilibrium (CGE) model and is broadly in the neoclassical tradition, though it has a number of disequilibrium, non-neoclassical features. The overall model consists of a static, within-period adjustment model linked to a dynamic, intertemporal-adjustment model” (3).
“Basically, what differentiates our model from other multisectoral models is that it solves endogenously for wages and prices in a multifactor, multiconsumer, multiproduct world in which firm and consumer behavior is based on the optimization of separate objective functions. These features are emphasized in the simple CGE model” (19).
“The discussion of the model is organized around the activities of firms as buyers of factors and sellers of output and the activities of consumers as suppliers of factors and buyers of output. The circular flow identities which require that no income and no outputs be unaccounted for, is maintained in the model not only by production adjustments (as in other models), but also by price and factor income modifications. It is this feature that distinguishes CGE models from other economy-wide models” (20).
This work begins by explicitly wanting to move the development debate away from a trickle-down economic approach to an approach that focuses more heavily on distribution.
“The model has five essential distinguishing features. It solves for prices endogenously in both factor and product markets. Its solution is based on achieving a measure of consistency among the results of individual optimizing behavior by a large number of actors…It incorporates income distribution, monetary phenomena, inflation, and foreign trade. It is dynamic, with imperfect intertemporal consistency. And, finally, it allows for varying principles of market clearing and institutional behavior” (3).
“The model operates by simulating the operation of factor and product markets with profit-maximizing firms and utility-maximizing households. It can thus be characterized as a computable general-equilibrium (CGE) model and is broadly in the neoclassical tradition, though it has a number of disequilibrium, non-neoclassical features. The overall model consists of a static, within-period adjustment model linked to a dynamic, intertemporal-adjustment model” (3).
“Basically, what differentiates our model from other multisectoral models is that it solves endogenously for wages and prices in a multifactor, multiconsumer, multiproduct world in which firm and consumer behavior is based on the optimization of separate objective functions. These features are emphasized in the simple CGE model” (19).
“The discussion of the model is organized around the activities of firms as buyers of factors and sellers of output and the activities of consumers as suppliers of factors and buyers of output. The circular flow identities which require that no income and no outputs be unaccounted for, is maintained in the model not only by production adjustments (as in other models), but also by price and factor income modifications. It is this feature that distinguishes CGE models from other economy-wide models” (20).
Wednesday, May 7, 2008
Hayek: The Use of Knowledge in Society
Hayek, F. A. (1945). "The Use of Knowledge in Society". American Economic Review, 35(4), 519-530.
”What is the problem we wish to solve when we try to construct a rational economic order?” (521). Hayek begins by wondering how it is necessarily possible for people to structure an economic order. If there is full transparency and information, then there really isn’t a problem. However, as Hayek rightly notes, there is not full transparency or information: it is impossible to know fully the desires of their neighbor. The problem is thus, “…the utilization of knowledge not given to anyone in its totality” (520).
All economic activity, whether centralized or decentralized, according to Hayek, involves planning. “Which of these systems is likely to be more efficient depends mainly on the question under which of them we can expect that fuller use will be made of the existing knowledge” (521). If we are looking for experts to use this knowledge, it then becomes a complicated problem of choosing the expert. “What I wish to point out is that, even assuming that this problem can be readily solved, it is only a small part of the wider problem” (521).
Scientific knowledge, or the knowledge of experts, will never be the full extent of knowledge. There are other kinds of knowledge that each person possesses that goes above and beyond this professional, elitist knowledge. This is the knowledge of a particular time and space, in the words of Hayek (522). This is a knowledge of needs, desires and goals that can never be fully understood by scientific knowledge.
Additionally, the need for economic planning tends to take place when issues of change arise. This presents a situation in that the scientist must explore her own knowledge and eventually determine a course of action. However, Hayek claims that the type of knowledge that is accessed by these scientists is not necessarily the correct type of knowledge for the situation at hand. In reality, the type of knowledge that must be accessed in order to make economic policy decisions is of a particular time and place, it is owned by a particular individual. This type of knowledge can not be evaluated in the realm of statistics.
There then remains the problem of how you provide the necessary information about the current situation to the person with the knowledge of a particular time and space. Hayek wonders how much information this person requires and eventually concludes that they do not need more information than that is provided them by their immediate surroundings. They only need to know the cost of producing something, that there is more or less of a factor in supply and that the price of various goods has changed and to what level they have changed. These prices eventually act as a tool for coordinating the actions of the many people in a market place; they are the catalyst for bringing the many individuals with particular information of a time and space together to make informed collective decisions.
At the end of the piece, he takes issue with Professor Schumpeter’s formulation of market interaction, where people are taking into consideration very large amounts of knowledge that border on full knowledge. First of all, it is crucial for Hayek to assume that the fullness of knowledge is unattainable. Secondly, he uses this assumption to make the claim that large groups of people with limited knowledge must come together to make decisions. Thirdly, he determines that prices are the mechanism whereby these individuals are able to come together to achieve socially optimum levels of production and consumption, or, rather, economic equilibrium that is, by definition, particular to a time and a space.
”What is the problem we wish to solve when we try to construct a rational economic order?” (521). Hayek begins by wondering how it is necessarily possible for people to structure an economic order. If there is full transparency and information, then there really isn’t a problem. However, as Hayek rightly notes, there is not full transparency or information: it is impossible to know fully the desires of their neighbor. The problem is thus, “…the utilization of knowledge not given to anyone in its totality” (520).
All economic activity, whether centralized or decentralized, according to Hayek, involves planning. “Which of these systems is likely to be more efficient depends mainly on the question under which of them we can expect that fuller use will be made of the existing knowledge” (521). If we are looking for experts to use this knowledge, it then becomes a complicated problem of choosing the expert. “What I wish to point out is that, even assuming that this problem can be readily solved, it is only a small part of the wider problem” (521).
Scientific knowledge, or the knowledge of experts, will never be the full extent of knowledge. There are other kinds of knowledge that each person possesses that goes above and beyond this professional, elitist knowledge. This is the knowledge of a particular time and space, in the words of Hayek (522). This is a knowledge of needs, desires and goals that can never be fully understood by scientific knowledge.
Additionally, the need for economic planning tends to take place when issues of change arise. This presents a situation in that the scientist must explore her own knowledge and eventually determine a course of action. However, Hayek claims that the type of knowledge that is accessed by these scientists is not necessarily the correct type of knowledge for the situation at hand. In reality, the type of knowledge that must be accessed in order to make economic policy decisions is of a particular time and place, it is owned by a particular individual. This type of knowledge can not be evaluated in the realm of statistics.
There then remains the problem of how you provide the necessary information about the current situation to the person with the knowledge of a particular time and space. Hayek wonders how much information this person requires and eventually concludes that they do not need more information than that is provided them by their immediate surroundings. They only need to know the cost of producing something, that there is more or less of a factor in supply and that the price of various goods has changed and to what level they have changed. These prices eventually act as a tool for coordinating the actions of the many people in a market place; they are the catalyst for bringing the many individuals with particular information of a time and space together to make informed collective decisions.
At the end of the piece, he takes issue with Professor Schumpeter’s formulation of market interaction, where people are taking into consideration very large amounts of knowledge that border on full knowledge. First of all, it is crucial for Hayek to assume that the fullness of knowledge is unattainable. Secondly, he uses this assumption to make the claim that large groups of people with limited knowledge must come together to make decisions. Thirdly, he determines that prices are the mechanism whereby these individuals are able to come together to achieve socially optimum levels of production and consumption, or, rather, economic equilibrium that is, by definition, particular to a time and a space.
Friday, May 2, 2008
Cuddington, et. al.: Disequilibrium Macroeconomics in Open Economies
Cuddington, John T., Per-Olov Johansson and Karl-Gustaf Löfgren. (1984). Disequilibrium macroeconomics in open economies. Oxford, England: B. Blackwell.
This work examines fixed-price models, where prices are exogenously imposed on the model.
This work examines fixed-price models, where prices are exogenously imposed on the model.
Backhaus: From Walras to Pareto
Backhaus, Jürgen G. and J. A. Hans Maks. (2006). From Walras to Pareto. New York: Springer. http://www.loc.gov/catdir/toc/fy0704/2006923764.html
http://www.loc.gov/catdir/enhancements/fy0819/2006923764-d.html
Walras was the predecessor to Pareto as the chair of Political Economy at the University of Lausanne.
This is an edited volume that explores both Walras and Pareto, but not together. Actually, it’s quite strange. There is a useful chapter from my perspective that deals with Walras and philosophy of social science issues. In this chapter, the author, Jan van Daal, positions Walras as understanding that his general equilibrium model was an ideal-type model, and that there is a continuum that runs through pure economics, to applied economics to social economics and then through theories of family and government.
UPDATE:
From the van Daal chapter:
Walras separated his thinking on science into Pure and Applied. van Daal presents a 2x2 box with pure and applied on the x axis and nature/person on the y axis (person is then separated into person viz. nature and person viz. person).
He then situates Walras' main texts. Pure Economics occupies the box where Pure science and Nature interact.
http://www.loc.gov/catdir/enhancements/fy0819/2006923764-d.html
Walras was the predecessor to Pareto as the chair of Political Economy at the University of Lausanne.
This is an edited volume that explores both Walras and Pareto, but not together. Actually, it’s quite strange. There is a useful chapter from my perspective that deals with Walras and philosophy of social science issues. In this chapter, the author, Jan van Daal, positions Walras as understanding that his general equilibrium model was an ideal-type model, and that there is a continuum that runs through pure economics, to applied economics to social economics and then through theories of family and government.
UPDATE:
From the van Daal chapter:
Walras separated his thinking on science into Pure and Applied. van Daal presents a 2x2 box with pure and applied on the x axis and nature/person on the y axis (person is then separated into person viz. nature and person viz. person).
He then situates Walras' main texts. Pure Economics occupies the box where Pure science and Nature interact.
Fisher: Disequilibrium Foundations of Equilibrium Economics
Fisher, Franklin M. (1983). Disequilibrium foundations of equilibrium economics. Cambridge [Cambridgeshire] ; New York: Cambridge University Press. http://www.loc.gov/catdir/description/cam022/82025105.html
http://www.loc.gov/catdir/toc/cam026/82025105.html
What does equilibrium mean in an economic setting in any case? Why would the study of equilibrium be of interest? Some people say that the study is uninformative because if the economy is in some way in disequilibrium, then the study of economics is theoretically off the mark. We can say that a market is in equilibrium if we define equilibrium so narrowly that it doesn’t explain much of anything. We can also say that an economy is in equilibrium if we endow agents with quasi-omniscient abilities.
There is much more to this analysis that specifically explores the nature of economic modeling vis-à-vis economic stability, equilibrium and disequilibrium in the first chapter that will not be touched on in this abstract.
From the beginning of chapter 2: “In my view, there have been four major developments in the history of modern stability analysis. These are (1) the realization that the subject was one which had to be studied in a context with a formal dynamic structure; (2) the realization that global, rather than simply local, results could be obtained; (3) the introduction of non-tâtonnement processes; and (4) closely related to this, the insight that attention paid to specifying the disequilibrium processes involved could lead to far more satisfactory results than could be obtained by restricting the excess demand functions” (19).
In chapter 2, Fisher explores the concept of tâtonnement. Stability analysis began with Samulson and Hicks. These, “…observed that the subject could only be rigorously studied in a framework specifying the equations of motion of the system when not in equilibrium”. Hicks suggested that Walras’ theory of tâtonnement be formalized which was realized through, “…a set of price adjustment equations that formed the basis for nearly all later work” (20).
Fisher highlights problems with the basic equilibrium equation (20), and argues that there are flaws. For example, he believes that in reality, it is impossible to translate, for example, excess demand into efficient price changes. He goes on to claims that the auctioneer who adjusts prices according to the prevailing sentiment of the consumers in the room is, “…at best an inconvenient fiction” (21).
There is also embedded in the above equation assumptions about consumers wanting to take action when their demand doesn’t agree with the dictated price, as well as their ability to take action. “…so that, even though the excess demand involved may be for a good dated in the far future, 1990 toothpaste, for example, individuals who will want that good in the far future begin immediately to attempt to acquire it” (22). “I shall refer to this as the ‘Present Action Postulate.’ It is implicit in the entire stability literature, although seldom explicitly stated. Perhaps this is because it need not be faced explicitly as long as we remain in a world in which the adjustment of prices to equilibrium can be safely supposed to take place before the dates on any commodities…come due and all acquisitions must be made before any are needed for consumption or production – the Arrow-Debreu world in which all markets and trades occur at the beginning of time and never again. Elegant as such a model is, however, it is not truly satisfactory when applied to real economies developing over time” (22).
Tâtonnement: The Lyapounov Second Method is explored. It requires a rest point, which is, “…a point at which the process does not move. In the models we shall be considering, rest points are in one-to-one correspondence with points that are in some sense also economic equilibria…” (24). “A rest point is said to be globally stable if the system converges to it from every set of initial conditions. This, of course, is a very strong property. In particular, if there is more than one rest point, then no particular rest point can be globally stable in this sense since if the process begins at some other rest point it will never leave it” (24). The next term introduced is that of an adjustment process: “An adjustment process…is said to be globally stable if, for any set of initial conditions, there is a rest point to which the system converges. The difference, of course, is that it doesn’t have to be the same rest point for all initial conditions” (25). “Finally, it is useful to distinguish this from the definition of the quasi-stability of an adjustment process. For convenience of language, let us suppose that the variables involved are prices only…Starting with any initial condition, consider an infinite sequence of prices. Such a sequence may not have a limit…but it may nevertheless have one or more limit points (roughly, points to smaller and smaller neighborhoods of which the sequence keeps returning). If every limit point of every such sequence is a rest point of the adjustment process, then that process is said to be quasi-stable” (25).
The book moves to a non-tâtonnement trade model: “One such development was the abandonment of the tâtonnement assumption of no trading out of equilibrium which had wound up in a dead end and the introduction of what are rather inelegantly called ‘non-tâtonnement’ processes. Since that is not a very informative name, I shall refer to them as ‘trading processes.’ It is important to remember that, while this stage of development permits trading out of equilibrium, most of the work to be discussed does not permit consumption or production to take place until equilibrium has been reached. One must think of participants as swapping titles to commodity stocks while prices…adjust. Only after the music stops do people go home and enjoy what they have.” (25).
There is an examination of the Edgewood process, which is seen as being inadequate.
The Hahn Process is then explored. “The central assumption of the Hahn Process is as follows. At any one time, after trade has taken place, there may of course be either unsatisfied demand or unsatisfied supply for some commodity, say, apples. However, we suppose that markets are sufficiently well organized that there are not both. In other words, there may be people who wish to sell apples at the current prices and cannot or there may be people who wish to buy apples at the current price and cannot, but there are not, after trade, simultaneously both unsatisfied sellers and unsatisfied buyers” (31).
“Note the different roles played by utilities in the Edegeworth and Hahn Processes. In the Edgeworth Process, the utilities actually achieved by individuals…rise while trading is going on. In the Hahn Process, target utilities—the utilities which they would achieve if they could complete their transactions—fall out of equilibrium. One way of looking at it is to say that in disequilibrium plans are not all compatible and that, in the Hahn Process, the adjustment is such that people have to lower their expectations until equilibrium is reached and everyone can in fact attain the utility he anticipates” (32). One key assumption of the Hahn Process is that no one ever runs out of money.
It continues down the path of micro-economic analysis.
The book concludes that, when producers and consumers take their decisions in a state of market disequilibrium, the model will eventually fall into equilibrium (hence the title). This model avoids some of the crucial misgivings of other models, specifically the tâtonnement model which necessarily needs to make large cuts in demand, which is unrealistic.
I skipped much of the middle of this book, its focus on micro-analysis and the equations.
http://www.loc.gov/catdir/toc/cam026/82025105.html
What does equilibrium mean in an economic setting in any case? Why would the study of equilibrium be of interest? Some people say that the study is uninformative because if the economy is in some way in disequilibrium, then the study of economics is theoretically off the mark. We can say that a market is in equilibrium if we define equilibrium so narrowly that it doesn’t explain much of anything. We can also say that an economy is in equilibrium if we endow agents with quasi-omniscient abilities.
There is much more to this analysis that specifically explores the nature of economic modeling vis-à-vis economic stability, equilibrium and disequilibrium in the first chapter that will not be touched on in this abstract.
From the beginning of chapter 2: “In my view, there have been four major developments in the history of modern stability analysis. These are (1) the realization that the subject was one which had to be studied in a context with a formal dynamic structure; (2) the realization that global, rather than simply local, results could be obtained; (3) the introduction of non-tâtonnement processes; and (4) closely related to this, the insight that attention paid to specifying the disequilibrium processes involved could lead to far more satisfactory results than could be obtained by restricting the excess demand functions” (19).
In chapter 2, Fisher explores the concept of tâtonnement. Stability analysis began with Samulson and Hicks. These, “…observed that the subject could only be rigorously studied in a framework specifying the equations of motion of the system when not in equilibrium”. Hicks suggested that Walras’ theory of tâtonnement be formalized which was realized through, “…a set of price adjustment equations that formed the basis for nearly all later work” (20).
Fisher highlights problems with the basic equilibrium equation (20), and argues that there are flaws. For example, he believes that in reality, it is impossible to translate, for example, excess demand into efficient price changes. He goes on to claims that the auctioneer who adjusts prices according to the prevailing sentiment of the consumers in the room is, “…at best an inconvenient fiction” (21).
There is also embedded in the above equation assumptions about consumers wanting to take action when their demand doesn’t agree with the dictated price, as well as their ability to take action. “…so that, even though the excess demand involved may be for a good dated in the far future, 1990 toothpaste, for example, individuals who will want that good in the far future begin immediately to attempt to acquire it” (22). “I shall refer to this as the ‘Present Action Postulate.’ It is implicit in the entire stability literature, although seldom explicitly stated. Perhaps this is because it need not be faced explicitly as long as we remain in a world in which the adjustment of prices to equilibrium can be safely supposed to take place before the dates on any commodities…come due and all acquisitions must be made before any are needed for consumption or production – the Arrow-Debreu world in which all markets and trades occur at the beginning of time and never again. Elegant as such a model is, however, it is not truly satisfactory when applied to real economies developing over time” (22).
Tâtonnement: The Lyapounov Second Method is explored. It requires a rest point, which is, “…a point at which the process does not move. In the models we shall be considering, rest points are in one-to-one correspondence with points that are in some sense also economic equilibria…” (24). “A rest point is said to be globally stable if the system converges to it from every set of initial conditions. This, of course, is a very strong property. In particular, if there is more than one rest point, then no particular rest point can be globally stable in this sense since if the process begins at some other rest point it will never leave it” (24). The next term introduced is that of an adjustment process: “An adjustment process…is said to be globally stable if, for any set of initial conditions, there is a rest point to which the system converges. The difference, of course, is that it doesn’t have to be the same rest point for all initial conditions” (25). “Finally, it is useful to distinguish this from the definition of the quasi-stability of an adjustment process. For convenience of language, let us suppose that the variables involved are prices only…Starting with any initial condition, consider an infinite sequence of prices. Such a sequence may not have a limit…but it may nevertheless have one or more limit points (roughly, points to smaller and smaller neighborhoods of which the sequence keeps returning). If every limit point of every such sequence is a rest point of the adjustment process, then that process is said to be quasi-stable” (25).
The book moves to a non-tâtonnement trade model: “One such development was the abandonment of the tâtonnement assumption of no trading out of equilibrium which had wound up in a dead end and the introduction of what are rather inelegantly called ‘non-tâtonnement’ processes. Since that is not a very informative name, I shall refer to them as ‘trading processes.’ It is important to remember that, while this stage of development permits trading out of equilibrium, most of the work to be discussed does not permit consumption or production to take place until equilibrium has been reached. One must think of participants as swapping titles to commodity stocks while prices…adjust. Only after the music stops do people go home and enjoy what they have.” (25).
There is an examination of the Edgewood process, which is seen as being inadequate.
The Hahn Process is then explored. “The central assumption of the Hahn Process is as follows. At any one time, after trade has taken place, there may of course be either unsatisfied demand or unsatisfied supply for some commodity, say, apples. However, we suppose that markets are sufficiently well organized that there are not both. In other words, there may be people who wish to sell apples at the current prices and cannot or there may be people who wish to buy apples at the current price and cannot, but there are not, after trade, simultaneously both unsatisfied sellers and unsatisfied buyers” (31).
“Note the different roles played by utilities in the Edegeworth and Hahn Processes. In the Edgeworth Process, the utilities actually achieved by individuals…rise while trading is going on. In the Hahn Process, target utilities—the utilities which they would achieve if they could complete their transactions—fall out of equilibrium. One way of looking at it is to say that in disequilibrium plans are not all compatible and that, in the Hahn Process, the adjustment is such that people have to lower their expectations until equilibrium is reached and everyone can in fact attain the utility he anticipates” (32). One key assumption of the Hahn Process is that no one ever runs out of money.
It continues down the path of micro-economic analysis.
The book concludes that, when producers and consumers take their decisions in a state of market disequilibrium, the model will eventually fall into equilibrium (hence the title). This model avoids some of the crucial misgivings of other models, specifically the tâtonnement model which necessarily needs to make large cuts in demand, which is unrealistic.
I skipped much of the middle of this book, its focus on micro-analysis and the equations.
Thursday, May 1, 2008
Waltzer: Welfare, Membership and Need
Waltzer, Michael. (1984). "Welfare, Membership and Need". In Michael J. Sandel (Ed.), Liberalism and its critics: Readings in social and political theory (pp. vi, 272 p.). New York: New York University Press.
For Waltzer, the structures of societies are, at least in part, naturally determined. “Men and women come together because they literally cannot live apart” (201). This premises life on social interaction and the proximity of individual humans. This also brings about the fulfillment of a social contract, or a tacitly held agreement by different members of a community that they are part of a unified group.
Once membership is identified, it is possible for a community to begin to identify that the members of a community owe something to one another. “Membership is important because of what the members of a political community owe to one another and to no one else, or to no one else in the same degree” (200). This membership entitles people to receive the benefits determined by the society.
What a person is entitled to receive from society are called “socially recognized needs”. Socially recognized needs, in Waltzer’s construction, are needs that a society begins to understand as being fundamental for living the good life. “The social contract is an agreement to reach decisions together about what goods are necessary to our common life, and then to provide those goods for one another” (200).
However, this agreement is not necessarily straightforward or simple to explain.
Waltzer examines the nature of needs, finds that they are elusive, that people are not clear about what exactly the need, that needs are expansive and not static and that needs can be identified as either particular or general (201-3). This varied, nuanced account of what constitutes a need requires a complex metric for determining how a society arrives at the definition of a socially recognized need.
In evaluating the nature of welfare distribution and need reorganization, Waltzer identifies different features of need satisfaction. Firstly, he claims that coercion is clearly an aspect of need satisfaction in a large group, because, “…some minority of actual people don’t understand, or don’t consistently understand, their real interests” (206). Additionally, our author points out that any need satisfaction is necessarily, “…redistributive in character” (207).
This brings Waltzer back to one of the initial concepts that he used to construct his argument. He expands on his earlier definition by saying that the social contract is, “…an agreement to redistribute the resources of the members in accordance with some shared understanding of their needs, subject to ongoing political determination in detail” (208). Therefore, we have an argument about the nature of the welfare state that depends on the satiation of needs determined by a community that can be amended at any time through the political process.
Waltzer then applies this approach to the US medical system. He highlights that the US does not do an excellent job of fulfilling the recognition of the basic needs of the society. The reasons, for Waltzer, are the following: “…the community of citizens is loosely organized; various ethnic and religious groups run welfare programmes of their own; the ideology of self-reliance and entrepreneurial opportunity is widely accepted; and the movements of the left, particularly the labour movement, are relatively weak” (210). These structural weakness of the US demographics, history and culture has led to their inability to fulfill the basic needs of their citizens.
The argument is the made that medical rights are, in fact, a socially recognized need for Americans. Originally, medical treatment was basically for the wealthy, but this changed over time. Progressively, as the influence of the church abated and the influence of secular organizations increased in prominence, citizens believed that they increasingly had a right to good medical care. “People will not endure what they no longer believe the have to endure” (213).
Additionally, Waltzer makes the case that these needs can not be satisfied by the market alone. “Needed goods are not commodities” (215). The goods that are provided by market forces are different from the goods that are provided by the state. Needed goods are not goods that can be bought and sold, as they are basic for the substance of human life.
The piece ends with Waltzer making the case that the fulfillment of basic medical needs in the US needs to happen because they are a socially recognized right. He then presents an adapted Marxist formulation to highlight the argument made: “From each according to his ability…to each according to his socially recognized need” (217). However, the identification of those needs, members of a community or the proper path to mitigate those needs is not necessarily straight forward: the devil is in the details.
For Waltzer, the structures of societies are, at least in part, naturally determined. “Men and women come together because they literally cannot live apart” (201). This premises life on social interaction and the proximity of individual humans. This also brings about the fulfillment of a social contract, or a tacitly held agreement by different members of a community that they are part of a unified group.
Once membership is identified, it is possible for a community to begin to identify that the members of a community owe something to one another. “Membership is important because of what the members of a political community owe to one another and to no one else, or to no one else in the same degree” (200). This membership entitles people to receive the benefits determined by the society.
What a person is entitled to receive from society are called “socially recognized needs”. Socially recognized needs, in Waltzer’s construction, are needs that a society begins to understand as being fundamental for living the good life. “The social contract is an agreement to reach decisions together about what goods are necessary to our common life, and then to provide those goods for one another” (200).
However, this agreement is not necessarily straightforward or simple to explain.
Waltzer examines the nature of needs, finds that they are elusive, that people are not clear about what exactly the need, that needs are expansive and not static and that needs can be identified as either particular or general (201-3). This varied, nuanced account of what constitutes a need requires a complex metric for determining how a society arrives at the definition of a socially recognized need.
In evaluating the nature of welfare distribution and need reorganization, Waltzer identifies different features of need satisfaction. Firstly, he claims that coercion is clearly an aspect of need satisfaction in a large group, because, “…some minority of actual people don’t understand, or don’t consistently understand, their real interests” (206). Additionally, our author points out that any need satisfaction is necessarily, “…redistributive in character” (207).
This brings Waltzer back to one of the initial concepts that he used to construct his argument. He expands on his earlier definition by saying that the social contract is, “…an agreement to redistribute the resources of the members in accordance with some shared understanding of their needs, subject to ongoing political determination in detail” (208). Therefore, we have an argument about the nature of the welfare state that depends on the satiation of needs determined by a community that can be amended at any time through the political process.
Waltzer then applies this approach to the US medical system. He highlights that the US does not do an excellent job of fulfilling the recognition of the basic needs of the society. The reasons, for Waltzer, are the following: “…the community of citizens is loosely organized; various ethnic and religious groups run welfare programmes of their own; the ideology of self-reliance and entrepreneurial opportunity is widely accepted; and the movements of the left, particularly the labour movement, are relatively weak” (210). These structural weakness of the US demographics, history and culture has led to their inability to fulfill the basic needs of their citizens.
The argument is the made that medical rights are, in fact, a socially recognized need for Americans. Originally, medical treatment was basically for the wealthy, but this changed over time. Progressively, as the influence of the church abated and the influence of secular organizations increased in prominence, citizens believed that they increasingly had a right to good medical care. “People will not endure what they no longer believe the have to endure” (213).
Additionally, Waltzer makes the case that these needs can not be satisfied by the market alone. “Needed goods are not commodities” (215). The goods that are provided by market forces are different from the goods that are provided by the state. Needed goods are not goods that can be bought and sold, as they are basic for the substance of human life.
The piece ends with Waltzer making the case that the fulfillment of basic medical needs in the US needs to happen because they are a socially recognized right. He then presents an adapted Marxist formulation to highlight the argument made: “From each according to his ability…to each according to his socially recognized need” (217). However, the identification of those needs, members of a community or the proper path to mitigate those needs is not necessarily straight forward: the devil is in the details.
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