In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make “political” decisions, and the market mechanism, typically used to make “economic” decisions. In the emerging democracies with mixed economic systems, Great Britain, France, and Scandinavia, the same two modes of making social choices prevail, though more scope is given to the method of voting and decisions based directly or indirectly on it and less to the rule of the price mechanism. Elsewhere in the world, and even in smaller social units within the democracies, social decisions are sometimes made...

The viewpoint will be taken here that interpersonal comparison of utilities has no meaning and, in fact, that there is no meaning relevant to welfare comparisons in the measurability of individual utility. The controversy is well-known and hardly need be recited here. During the entire controversy, the proponents of measurable utility have been unable to produce any proposition of economic behavior which could be explained by their hypothesis and not by those of the indifference-curve theorists.¹ Indeed, the only meaning the concepts of utility can be said to have is their indications of actual behavior, and, if any course of...

I will largely restate Professor Bergson’s formulation of the problem of making welfare judgments¹ in the terminology here adopted. The various arguments of his social welfare function are the components of what I have here termed the social state, so that essentially he is describing the process of assigning a numerical social utility to each social state, the aim of society then being described by saying that it seeks to maximize the social utility or social welfare subject to whatever technological or resource constraints are relevant or, put otherwise, that it chooses the social state yielding the highest possible social...

To clarify further the difficulties in constructing a social welfare function, let us consider another proposed form, the compensation principle. This term has been used to denote two different, though related, methods of forming social choices from individual orderings.¹ One is the dictum that, if there is a method of paying compensations such that, if society changes from stateyto statexand then makes compensations according to the rule, each individual prefers the resultant state to statey(or each individual either prefers the resultant state to stateyor is indifferent between them and at least one...

The discussion of particular social welfare functions in Chapter III, Section 6, and Chapter IV suggests strongly that it will be very difficult to construct a social welfare function consistent with Conditions 1–5. The example of the Scitovsky compensation principle, as given in Chapter IV, Section 2, indicates that there is likely to be a difference between the case where the total number of alternatives to be ranked is two and the case where the number exceeds two. Indeed, if there are two alternatives, it is possible to construct such a social welfare function. Condition 1 must, of course,...

One important possibility is to impose on the individual preference scales two conditions which in fact have almost invariably been assumed in works on welfare economics: (1) each individual’s comparison of two alternative social states depends only on the commodities that he receives (and labor that he expends) in the two states, i.e., he is indifferent as between any two social states in which his own consumption-leisure-saving situations are the same or at least indifferent to him;¹ (2) in comparing two personal situations in one of which he receives at least as much of each commodity (including leisure and saving...

Suppose that we do not assume in advance the shape of the preferences of any one individual, but we do assume that all individuals have the same preferences for social alternatives. This implies a social-minded attitude and also a homogeneous society. If we consider the preferences in question to refer not to expressed preferences but to the preferences which would be expressed if the corruptions of the environment were removed, the assumption of unanimity is the idealist view of political philosophy.¹ In this case, the obvious way of defining the social welfare function is to choose some one individual and...

When the first edition of this book was prepared, the relevant literature was summarized in four pages. Since 1951 there has been a considerably greater volume of discussion. In preparing a second edition, I felt that the most useful procedure would be to append to my previous discussion a series of reflections inspired by the recent discussions. Despite their high quality, I do not find it obligatory to prepare a revision of the text itself. It is not the results that have been significantly affected¹ but their interpretation and the relation to other contemporary work. There is no attempt here...