Western Theoretical Welfare Economics

This dissertation endeavors to study western theoretical welfare economics (WTWE). WTWE has developing relatively rapidly since 1970s, with the difficulty of how to deal with the interpersonal utility conflicts.The dissertation consists of 4 parts, 12 chapters in all.The first part is introduction, which includes chapter 1 and 2.Chapter 1 studies the history of WTWE. Before 1870s, the western economics has keeping the ethics-related tradition. From 1870s to early 1900s, the so-called marginalist revolution begins the engineering-related tradition. 1920s comes the old welfare economics. New welfare economics is popular in 1930s and 1940s. In 1950s and 1960s, WTWE is puzzled by the impossibility theorems. From 1970s on, WTWE comes into a relatively rapid developing period, and produces more and more important influences.Chapter 2 shows the research situations of WTWE in china. The most early research begins in 1960s, further research in 1980s. Since the end of year 1998, when western welfare economist Amartya Sen is honored the Nobel Prize, western welfare economics (WWE) get more attention in china. The limitations of the research works in china are: not understand WTWE historically;not reflect fully the main fruits;lacking research into the relevant Marxist theories;lacking the comparing of WTWE with the relevant Marxist theories;not thinking seriously about the issues of our economic reform.The second part researches into WTWE, which is the main body and composed of chapter 3 through 9.Chapter 3 studies the fundamental problems of WTWE. WWE is an important branch of western economics, with the primary characteristics of obviously normative analysis and obtaining the social orderings as its target. WTWE is the pure theory of WWE, and is the base of applied welfare economics. The basic concepts of WTWE includes welfare, utility, preference, basic and non-basic value judgment, facts judgment, etc.Chapter 4 studies welfare criteria. Western scholars argue that Pareto criterion has such limitations: as a criterion about efficiency, it conflicts to some non-efficiency criteria such as liberalism;it doesn't apply to the cases that a policy makes somebody better while others worse. Hence other welfare criteria are put forward. As compensation tests, Kaldor criterion and Hicks criterion are intrinsically inconsistent. Scitovzsky criterion introduces dual tests but inconsistency remains. Samuelson puts forth the condition to avoid theinconsistency. Little criterion involves of redistribution formally. Ng Yew-kwang proposes the group-specific compensation tests, which makes important attempt to combine the existed tests and redistribution concerns. Welfare criteria theory, however, makes no substantial development ever since Pareto criterion.Chapter 5 studies western social welfare function theory. After going through the traditional utilitarian period, the theory goes into modern period with Bergson-Samuelson social welfare function. Studying Bergson-Samuelson swf produces Arrow SWF. Out of puzzle of Arrow impossibility theorem, many forms of the function appear, most of them back to traditional utilitarianism. Nevertheless, the theory doesn't all the time tackle well the difficulty of interpersonal utility conflicts.Chapter 6 studies western social choice theory. The theory can be traced back at least to 4 centuries B.C. and it tries to educe social ordering from individual orderings. Modern theory starts with Arrow impossibility theorem, which introduces other impossibility theorems, for example, the impossibility proposition of Kemp-Ng and Parks, Gibbard's oligarchy theorem, Sen's impossibility of a Pareto liberal, etc. Finally the information method reveals that the source of the impossibility is lacking sufficient utility information, and the possibility would increase as the information increase. In this way, some methods are proposed to settle down the impossibility, such as Little's method, single-peak method, revealing relative preferences, cardinalisation.Chapter 7 studies three fundamental theorems. The first theorem shows perfect competition is Pareto optimal. In spite of the second-best theory, it is again enforced by the third-best theory. The second theorem shows the existence conditions of perfect competition. That Arrow impossibility theorem is called the third fundamental theorem displays its important status in WTWE.Chapter 8 studies western equity and justice theories, which are necessary to get complete orderings by social choice. The equity theories include Equal Division Allocation, Fairness as absence of envy, Egalitarian Equivalent Allocations, Fair Equivalent Allocations, and so on. Justice theories can be classified into two kinds: Kantian Philosophy of Absolute Rights and Social Welfare Philosophy. Justice theories based on interpersonal utility comparison are Hare's theory, Rawls' theory, Harsanyi's theory, and grading principles of justice, etc.Chapter 9 studies some other theories of WTWE. Non-welfarism research is important since 1970s. Sen's framework of individual rights is the start point, which introduces many other researches. Welfarism is surely disputed by somebody, such as Sen versus Ng. Ng attributes the dispute to differentdefinition of basic value judgment. On the other hand, someone points out that lacking welfare concerns is the limitation of Rawls theory and Nozick theory.The third part is relevant Marxist theories, which is chapter 10. Marxian economics is based on the theory of productive forces. Marxists argue that all the capitalist productions are in the pursuit of surplus values or profits, not of meeting the basic needs;workers are unfreedom in not only consumption but production;workers are exploited by capitalists;there exists sever interests conflicts between working class and capitalist class;the capitalist development would finally damage the social welfare.The last part concludes the dissertation and consists of chapter 11 and 12.Chapter 11 gives overall evaluation of WTWE. The commonsense since 1970s is that the primary difficulty is how to tackle with the interpersonal utility conflicts, which needs more research into individual rights, freedom, social justice, and other non-utility factors. So comes the debate on welfarism and theories of equity and justice and so on. WTWE can't capture the essential features and follow still the existed framework of the mainstream. Comparison to the relevant Marxist theories shows that WTWE and the mainstream are separate, which leads to the necessity that WTWE doesn't tackle well the interpersonal utility comparison. Instead, the relevant Marxist theories are better.Chapter 12 thinks about the establishment of our socialist market economy. The main ideas are: 1.Economic growth is different from welfare increase. 2. Comprehensive understanding the efficiency of market economy and the capitalist market economy should be solved firstly when establishing our market economy. The reform of SOE should pursue not only efficiency but also justice and equity. 3. Establishing ethical system is necessary. "Do unto others as ye would that others should do unto you." The moral educations of next generations should start from this.