This ambitious work presents a critique of traditional welfare theory
and proposes a new approach to it. Radical economists Robin Hahnel and
Michael Albert argue that an improved theory of social welfare can
consolidate and extend recent advances in microeconomic theory, and
generate exciting new results as well. The authors show that once the
traditional "welfare paradigm" is appropriately modified, a revitalized
welfare theory can clarify the relationship between individual and
social rationalitya task that continues to be of interest to mainstream
and nonmainstream economists alike. Hahnel and Albert show how recent
work in the theory of the labor process, externalities, public goods,
and endogenous preferences can advance research in welfare theory. In a
series of important theorems, the authors extend the concept of Pareto
optimality to dynamic contexts with changing preferences and thus
highlight the importance of institutional bias. This discussion provides
the basis for further analysis of the properties and consequences of
private and public enterprise and of markets and central planning. Not
surprisingly, Hahnel and Albert reach a number of conclusions at odds
with conventional wisdom.
Originally published in 1990.
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