Economic welfare as ethical concept and economic policy

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Purpose– Paper argues that the proper approach to the topic of economic welfare should include an appreciation that markets are not characterized by an endogenous tendency towards equilibrium. The economists, Schumpeter, Keynes and Minsky are right in this regard as opposed to Adam Smith and contemporary economic orthodoxy. However, today’s liberal political theories largely assumes the tendency towards equilibrium and so are inadequate to deal with economic issues such as economic welfare which arise in conditions of non-equilibrium. The purpose of this paper is to propose Winfield’s reconstruction of Hegel’s social philosophy as more fitted to deal with market realities.Design/methodology/approach– Paper starts with a debate within economics and uses it as a basis to evaluate different schools of normative philosophy. Paper concludes by showing how the preferred philosophy is capable to rule between different economic policies responding to economic disequilibrium.Findings– Hegelian philosophy has capacity to adjudicate between economic policies to resolve market failure that contemporary liberal theory lacks.Practical implications– Paper provides the ethical justification for economic policies that have heretofore only been recommend by economists.Originality/value– Paper points to the largely overlooked fact that most contemporary political theory assumes market equilibrium. Paper argues that Hegelian philosophy provides the ethical justification for certain post-Keynesian economic policies, a position no one else is making.