The Ethics and the Economics of Minimalist Government

The Ethics and the Economics of Minimalist Government

Timothy P. Roth

Because it is technically flawed and morally bankrupt, the author argues, the economist’s consequence-based, procedurally detached theory of the state has contributed to the growth of government. As part of the Kantian–Rawlsian contractarian project, this book seeks to return economics to its foundations in moral philosophy. Given the moral equivalence of persons, the greatest possible equal participation must be promoted, persons must be impartially treated and, because it is grounded in consequentialist social welfare theory (SWT), the economist’s theory of the state must be rejected. Ad hoc deployment of SWT has facilitated discriminatory rent seeking and contributed to larger government. In contrast, this book argues that equal political participation and a constitutional impartiality constraint minimize rent seeking, respect individual perceptions of the ‘public good’ and underwrite the legitimacy of government. Economists, moral philosophers and political scientists will find this book a unique contribution to the literature.

Chapter 4: Enter the Economists

Timothy P. Roth

Subjects: economics and finance, public choice theory, public sector economics, politics and public policy, public choice


4.1 CONSEQUENTIALIST SOCIAL WELFARE THEORY The ‘economic’ approach to government finds expression in the normative application of utilitarian social welfare theory. This, in turn, is a reflection of the ‘relentlessly utilitarian’ nature of economic theory’s core ontology (Hahn 1982, p. 187). Utilitarianism in the hands of economists differs, however, from the philosophical tradition. In particular, whereas ‘ideal’ utilitarians generally seek a priori the ‘good’ which should be promoted, economists identify welfare or the ‘public good’ with utility (Warke 2000, p. 374). Moreover, whereas Bentham’s hedonic utilitarianism contemplated constitutional reforms intended to ensure that ‘utilitarian processes would prevail in the public arena’ (Warke 2000, p. 379), social welfare theory is institutionless. Finally, whereas utilitarianism is, perforce, a part of the corpus of moral philosophy, social welfare theory is intendedly value-free. All this notwithstanding, it remains true that utilitarianism as contemplated by most philosophers, and social welfare theory as deployed by economists are, first and foremost, theories of pubic action (§ 3.1). 4.2 EFFICIENCY AND EQUITY Central to the social welfare theoretic enterprise is the distinction between ‘efficiency’ in the sense of Pareto optimality, and ‘equity’. While the former contemplates the efficiency or welfare frontier, the latter involves appeal to the social welfare function. While a critical appraisal of both constructs is deferred until Chapter 6, we have already encountered the social welfare function (Chapter 3). For the moment, our interest centers on the efficiency frontier. As is well known, the instantaneously prevailing efficiency frontier is determinate, given...

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