Welfare economics and public policy: A re-examination

Abstract

Classical liberal political economists such as Rowley and Peacock (Welfare economics: a liberal restatement, York studies in economics. Martin Robertson, London, 1975) expressed serious reservations about the way Welfare Economics came to be used in the formulation of public policy. In this chapter the sources of this discontent are outlined and the liberal critique explored. Austrian, Ordo-Liberal, Public Choice and Transactions Cost elements are separately considered. None of these approaches on its own quite sums up the overall critique, which really amounts to a survey of the difficulties of reconciling neoclassical marginal economics and modern techniques with Classical Liberal Political Economy.