Philosophy, Welfare, and “The System of Natural Liberty”

Abstract

Examination of a theory of social policy frequently encounters, if carried far enough, a fundamental distinction between two basic philosophical, or epistemological, positions. To cite a well-known example from political theory, questions concerning the validity of law, the grounds of political obligation, or the proper relationship between society and the individual, are often found to turn on the contrast between (i) what is commanded or approved by legitimate authority on the one hand; and (ii) principles or rules discovered by reason and/or experience on the other.1 Basic to the first of these positions? hereinafter referred to as voluntarism?is the notion that the ethical postulates from which theories of social policy derive their normative character depend, in the last analysis, on an act of will?i.e., on the pronouncement of a supreme, sovereign authority. The decision of such a supreme authority is, according to this first point of view, the only plausible source from which to derive the normative axioms?i.e., value judgments?required for appraising social policies and institutions. According to the second philosophic position?designated hereafter as rationalism?the basic value judgments presupposed in conclu? sions concerning social welfare and social policy are derived, not from a supreme will or soverign authority, but somehow from positive facts discovered by experience and analysed by reason. According to this latter view, value postulates the validity of which depends only or ultimately on the decision of a sovereign authority would, irrespective of the status or claim to legitimacy of the authority itself, remain un? avoidably arbitrary.2 For students of political theory, the distinction between rationalism and voluntarism is an old one. The present paper would like to suggest, however, that what appears to be essentially the same philosophic distinction also has an important bearing in the interpretation of welfare economics. In the past quarter century, a great deal of effort has been