Social Welfare, State Intervention, and Value Judgments

Social Welfare, State Intervention, and Value Judgments (PDF):

Whatever their conclusions about market efficiency, the theorists of the new welfare economics quite clearly demonstrated that the state must necessarily fail in its efficiency-maximizing task unless it rules out failure by resorting to its own arbitrary value judgments. In other words, if the state promotes efficiency, it is only efficiency as the state arbitrarily defines it by taking from Peter and giving to Paul.

.. the state cannot intervene to “create” wealth without making value judgments in favor of some individual preferences and against others. The very idea that the state should try to increase social welfare is itself a value judgment. Nothing a priori indicates that these value judgments are less arbitrary than the value judgment against any state meddling with social welfare.

On the contrary, if we want to economize on value judgments or ethics, the rule
against the state’s meddling with social welfare seems more natural and more acceptable. De Jasay’s thesis that there should be a general presumption against state intervention is consistent with this view:

If consequentialism is circular, depending in all cases involving harm or interpersonal comparisons on a value judgment about its own validity, the standard argument for letting the state do all the good we can find for it to do, and accordingly allowing politics to have unrestricted scope, falls to the ground. Its collapse releases and activates the basic presumption against coercion, a presumption that can be derived either from an axiom about the practice of choice, or from a social convention of “live and let live,” of letting each do what he will if doing so involves, roughly speaking, no harm to others. Accepting, and acting on, this presumption also presupposes a value judgment, but it is one that demands far less of our moral credulity that any consequentialist alternative I can think of.