On Ethics, Economics and Public Policy
Chapter 5: The retreat to the margin
Chapter 5 discusses how the utilitarian concern with total utility was approached side on by considering the impact on economic outcomes of marginal changes in commodity choices and resource allocations. This allowed economists to focus on the process rather than the outcomes of market interactions, emptying the subject of an explicit moral charge. By the beginning of the twentieth century, economics had moved a long way from its utilitarian roots. The recognized inability to give sense to what it means to maximize utility or net happiness caused economists to narrow their gaze to the more tractable issue of explaining how prices (including wages and interest rates) are formed in freely operating market economies. Left behind, however, was an equal sense of something missing. What was the value to human actors of freely operating market systems? What justified the nature of economic organization and the social consequences resulting? What role should government have in monitoring and, perhaps, intervening in market processes? These are all basic ethical or normative questions the answers to which could not be read off from the utility and cost curves of the new microeconomics.
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