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Home , Arthur Cecil Pigou

Donald Winch Wealth and Wellbeing

A Talk given at University College London, 21 June, 2010

I

Wealth and Wellbeing is such a grandiose juxtaposition that it seems bound to arouse suspicion. I’d be wary of anyone who presented themselves as an expert on this subject without further explanation. My fear would be that they were either about to sell me something or trying to convert me to a new religion capable of increasing my wealth and wellbeing at the same time. Neither of those is part of my intention. I’m also bothered by words that have been so successful in hoovering up all the positive connotations that they don’t appear to have any precise antonyms. What about ‘illth’ and ‘ill-being’ then? To which my response has to be that those terms have not exactly caught on widely yet, though ‘illth’ has been around for a century and a half. rightly claim to be able to understand the processes that underlie the generation of wealth and its distribution. They have also made claims to understand, in the words of one of the founding fathers of welfare , Arthur Cecil Pigou, ‘that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of ’.1 The relationship of economic welfare to total welfare has always been more problematic and claims by economists to understand what constitutes wellbeing are much rarer -- or rather I should now say used to be much rarer -- certainly more hedged around with caution and modesty. 2 In the first part of this talk I’ll stick to my last as an intellectual historian by reminding you of an episode in the history of economics that rested on an ambitious attempt to measure wellbeing in relation to wealth. I say ‘remind’ because the economics of the exercise is far simpler than the historical circumstances that made it seem important to take up that specific

1 Economics of Welfare, p. 11 2 To quote Pigou again: ‘The real objection then is, not that economic welfare is a bad of total welfare, but that an economic cause may affect non-economic welfare in ways that cancel its effect on economic welfare.’(p.12).

1 challenge in the first place. Speaking as someone who gave up economics for intellectual history a long time ago, the difficult bit will come at the end, when I try to suggest what light the episode sheds on the modern revival of in the political of happiness or wellbeing.

II

Coming from someone who published a book last year with the highly immodest title, Wealth and Life, these opening apologies may strike you as a late attack of false humility. But as most students of nineteenth-century cultural debates will recognise, the book’s title is merely an echo of a famous slogan originally propounded in 1862 by John Ruskin in Unto This Last, the place where ‘illth’ was coined at the same time: ‘There is no Wealth but Life: life including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others.’

Ruskin was borrowing from William Wordsworth, who had written in The Excursion that ‘We live by Admiration, Hope, and Love’; and both of them were invoking a higher conception of wellbeing to trump estimates based on material wealth. Staking claims to the moral high ground by asserting the inferiority of mere wealth as the source of human wellbeing is one of the oldest moves in an ancient game. One has only to recall biblical injunctions about rich men, camels, and the eyes of needles. But it’s also worth noting that warnings concerning the moral pitfalls of individual wealth have often been coupled with commendations of charity and public spirit, signs of recognition of the communal advantages of wealth, not least in the building of churches, schools, hospitals, libraries, and other forms of public monument. In deference to , I like to call these examples of ‘durable magnificence’, where his contrast was with non-durable forms of luxury expenditure as in the case of lavish hospitality. When applied to goals that serve a collectivity -- a city, region, or nation – durable wealth of this kind might have only positive

2 moral connotations for wellbeing. Adam Smith, long supposed to have been an upholder of an ethic of acquisitive individualism, a stern advocate of private frugality, was much in favour of the indirect benefits of durable magnificence and the classical-renaissance view of communal enrichment which it embodied. I shall not have time to deal with this subject properly, so let me commend the discussion that surrounds the following conclusion in Book

II of the Wealth of Nations. ‘Noble palaces, magnificent villas, great collections of books, statues, pictures, and other curiosities, are frequently both an ornament and an honour, not only to the neighborhood, but to the whole country to which they belong. Versailles is an ornament and an honour to France, Stowe and Wilton to England.’ (WN, II.iii.39) There may be something here that is relevant to what I want to say later, but first let me revert to Wordsworth and Ruskin. Although they were not the first to take the high moral line on the disjunction between wealth and wellbeing, they were doing so within a cultural and intellectual context that lent support to the idea that, individually and collectively, England’s industrial wealth had been acquired at the expense of wellbeing. A romantic political and moral vision had been pitted against that embodied in the writings of political economists and utilitarians, secular and theological. If stood for material wealth, moral economy stood for a higher conception of wellbeing. Robert Malthus, a theological utilitarian and the author of the most significant work on political economy since the Wealth of Nations, became the butt of attacks by the Lake poets throughout the first three decades of the nineteenth century, with Robert Southey, Wordsworth, and Samuel Taylor Coleridge taking turns to administer his punishment. The cudgel was then passed to Thomas Carlyle and to his disciple, John Ruskin, who used it against political economy for the next three decades. Carlyle coined three well-known phrases that sum up key aspects of the attack: the ‘dismal science’, the ‘cash nexus’, and the ‘condition-of-England’ debate. The first two were meant to characterize the impoverished nature of the economists’ world, while the last of them provided a label under which the so-called ‘industrial’ novels of the 1840s and 50s by Benjamin Disraeli, Elizabeth Gaskell,

3 Charles Kingsley, and Dickens could be gathered. Dickens’s contribution to the genre, Hard

Times for these Times, was dedicated to Carlyle. It may not be the best of his novels, but it supplied an enduring symbol and caricature of political economy and utilitarianism in the shape of one of the leading characters, Thomas Gradgrind -- a caricature that continues to be recycled, often inappropriately, in condemnations of nineteenth-century industrial capitalism. By the 1880s Arnold Toynbee in some famous lectures on the Industrial Revolution seen as social catastrophe could sum up and declare victory by saying that ‘the bitter argument between economists and human beings has ended in the conversion of the economists’.3 One could take issue with this on historical grounds by pointing out that Adam Smith and , long before Ruskin had appeared on the scene, had respectively drawn attention to the moral drawbacks associated with the and the ecological consequences of espousing as the chief means of raising living standards. Toynbee’s judgement that the quarrel was over by the 1880s was also decidedly premature. Ruskin enjoyed a revival of interest at the end of his life which coincided with the turn of the century. Despite Ruskin’s description of himself as ‘a violent Tory of the old school’, replete with many of the authoritarian opinions of Carlyle, he acquired new disciples such as John Atkinson Hobson and Richard Tawney, with New Liberal and Labour sympathies respectively. These self-styled ‘economic humanists’ ensured that the joint critique of economics and modern economic life was sustained before and after WW1. It didn’t end there. Many people of my generation will recall the impact made by

Raymond William’s book on Culture and Society in 1958, a book that lent its name to the entire tradition and proclaimed that the values embodied in the debate were still worth fighting for under the banner of a new kind of socialism that was morally superior to mere Labourism and to a Fabianism that was fatally tainted by its association with Benthamism. Williams was later to join forces with a fellow Leavisite, E. P. Thompson, who was engaged in a similar quest in his books on William Morris and the making of the English working class.

III

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4 I have hastily sketched this background because it helps to explain my interest in the conflict between the political economists who studied wealth creation and the self-appointed spokesmen for life or human wellbeing. You won’t be surprised to learn that I retain sufficient loyalty to my upbringing to reject the tendentious characterization of this conflict as one involving human beings versus economists. Part of my purpose in writing a book on wealth and life was to show that the debate took place as much within political economy as in opposition to it. [The presumed moral polarities can easily be reversed: many economists were more humane, in some conventional sense, than their romantic critics. [Ricardo’s observation] Although wealth and life is a running theme in the book, there is an essay in which I deal with a late nineteenth- and early twentieth-century attempt to estimate the differences between wealth and wellbeing for the purpose of articulating policies that would increase wellbeing. It is one of a pair of essays on , holder of the Cambridge Chair, author in 1890 of the most influential textbook on the discipline since John Stuart Mill’s

Principles held the field, a textbook that was the first to use Economics rather than Political Economy as the name of the science. As the leader of what was becoming a professional academic pursuit, Marshall was keen to regain the high moral ground that economists seemed to have had taken from them. With true Victorian earnestness he set some lofty public goals for himself and fellow students of the science. As he said: ‘... the spirit of the age induces a closer attention to the question whether our increasing wealth may not be made to go further than it does in promoting the general wellbeing; and this again compels us to examine how far the exchange of any element of wealth, whether in collective or individual use, represents accurately the addition which it makes to happiness and wellbeing.’ The device by which he hoped to achieve this was his concept of consumers’ rent or consumers’ surplus, a concept derived from the law of diminishing marginal that suggested we settle our most basic needs first and obtain more satisfaction from the earliest units of any good we acquire than later ones. The we pay for any good or in

5 the measures the satisfaction we anticipate from the last or marginal unit we can just be induced to purchase. But it does not tell us what satisfaction we derive from the intra- marginal units we consume. We need some measure of total utility before we can arrive at an estimate of the wellbeing we derive from living in a world in which many of the things we buy are offered at lower than those we would be prepared to pay rather than go without them. In an older pre-utility-theory language, consumers’ surplus is a measure of the difference between exchange value (the market prices on which calculations of national income and wealth are based) and value in use (on which calculations of economic wellbeing could be based if only we could find a satisfactory measuring device). Marshall’s problem, then, becomes one of detecting those economic circumstances in which wealth in individual or collective use adds less to human wellbeing than it might under altered circumstances. Those like me who taught the blackboard economics of the 1950s, 60s and 70s will recall the triangles that were formed beneath the demand curves used to show the effect on consumers’ surplus of differing price elasticities of demand and shifts in the supply curve through or subsidies. In the book I print Marshall’s original diagram and equations for this exercise, but have no intention of returning to them now. What matters is the seriousness of Marshall’s purpose in sticking, as he said, with ‘diagrams that will appeal to the eye’ to show ‘the quantities of consumers’ surplus that will result from different courses of public and private action’. He was well aware of the restrictive nature of the assumptions needed to sustain conclusions about wellbeing on this basis (chiefly that the of money remained more or less constant before and after any policy intervention), but his faith in the possibilities for making use of statistical demand curves for the purpose in hand was remarkable. You can see this in the following passage that shows how he swept away possible objections, including those based on the perennial difficulties of all interpersonal comparisons of wellbeing. Marshall made the plea of incommensurability from more squeamish commentators sound like moral evasion: it was the duty of economists to grapple with the heterogeneity of evidence needed to assess the relative weights attached to physical, mental, and moral wellbeing. Making interpersonal comparisons was not so much

6 a delicate philosophical problem as a practical one involving the interpretation of statistical aggregates of more or less roughness. As I’ll show in a moment, Marshall was less of a convinced Benthamite than other contemporary economists, notably Jevons and Edgeworth, but he appreciated Bentham’s stress on measurement as the means by which the science of economics could advance from its qualitative stage to a quantitative one. Marshall genuinely believed that in the concept of consumers’ surplus he had forged a tool that would enable economists to advise civil servants and legislators how to achieve collective goals; how to administer taxes and subsidies and the pricing policies of public with a confidence equivalent to that felt by private entrepreneurs when making and pricing decisions based on ordinary market information. Hard though this may be to credit, the diagrams that appealed to the eye were not mere blackboard exercises: they were endowed with potential operational significance by their ability to depict relative magnitudes. After all, some triangles are larger than others. Although Marshall attached many caveats to the use of consumers’ surplus as a guide to policy action, it was only quite late in life that he came to the conclusion that the concept ‘was devoid of important practical application because it was not capable of being quantified in a meaningful way’. Marshall’s disappointment must have been acute, which may explain why this admission of failure was made in private to his nephew rather than to the world at large. What remained after this confession was a theoretical tool that served a negative purpose in refuting what Marshall referred to as the ‘maximum satisfaction’ school of thought, those who maintained that competitive markets delivered a solution that satisfied the conditions for economic efficiency and equity. The surplus analysis could at least show that market prices fixed in competitive markets were not necessarily optimal; that there were conditions, chiefly those in which were produced under increasing or decreasing return conditions, in which a higher level of economic wellbeing could be achieved via a system of taxes and subsidies. Marshall was also not content with Pareto optimality: equity and questions involving the distribution of income could not be hived off for separate consideration, the

7 solution that commended itself to those who championed the new ordinalist-style of the 1930s and beyond.

IV

The full story of Marshall’s enthusiasm and subsequent disappointment requires one to understand the larger culture-and-society debate with which I began. He was anxious to defend the English tradition of value theorising from misuse and criticism. Criticism of political economy from Carlyle and Ruskin had centred on its materialism, lack of appreciation for organic wholes, and preference for individualistic or laissez-faire solutions to social problems. Marshall admitted the justice of some of these criticisms, but distinguished between popularisations of the science and its genuine exponents. Like two of these before him, Mill and , Marshall was aware that there was no general presumption of harmony between individual action through markets and . This was especially true of the exceptions to the general rule of laissez faire recognised in Book V of Mill’s

Principles, on the basis of which Sidgwick had constructed a taxonomy of cases where, as a result of what were later called and indivisibilities, the presumption was that state intervention might be called for to compensate the errors or inadequacies of market criteria. Many of these cases dealt with what were later called pure public goods and others remain the subject matter of today. One could treat all this as variations on English, pragmatic, and empirical utilitarian themes, but some aspects of it were peculiar to Marshall, who was keen to create some linguistic space between his version of economics and the ‘hedonics’ he attributed to more thorough-going utilitarian approaches. In Marshall’s vocabulary, ‘satisfaction’ replaced ‘pleasure’, and ‘wellbeing’ increasingly became his alternative to ‘happiness’, possibly to combat any frivolous Epicurean connotations. Along the way he also abandoned Mill’s ‘economic man’ assumptions in favour of a more inclusive idea: for if economics was concerned, as Marshall claimed, with ‘man in the ordinary business of life’ his behaviour could range from narrow self-concern at one end of the ethical spectrum to altruism and

8 public duty at the other – the high moral ground that had been appropriated too easily by the romantic critics. Marshall was not above practising a little linguistic larceny of his own when he appropriated some of the ‘feudal’ connotations that lay behind the romantic dismissal of the ‘cash nexus’. He countered by speaking of ‘the social possibilities of economic chivalry’, and espousing the idea of encouraging businessmen ‘to take a delight in doing noble and difficult things because they are noble and difficult’. Chivalric deeds tended to be conflated with charitable ones that met collective needs, as in the case of an art collection bequeathed to the town by one of its prosperous sons. We are back in the realm of public goods possessing ‘durable magnificence’. One of Marshall’s late Victorian enthusiasms was what we would call an environmental one. On health and civic amenity grounds he was an advocate of public parks and the preservation of urban spaces; he was also a supporter of garden city suburbs as a solution to problems of urban renewal. So much so indeed that he once let it be known that he thought the provision of public parks was more important than old age pensions, an example of his confidence in being able to rank disparate sources of wellbeing. Marshall’s reservations about ‘hedonics’ are clearly expressed in comments he made on

Edgeworth’s New and Old Methods of Ethics: ‘As to the interpretation of the [utilitarian] dogma, I think you have made a great advance: but I have still a hankering after a mode of exposition in which the dynamical character of the problem is made more obvious, which may in fact represent the central notion of happiness as a process rather than a statical condition’. This reflects Marshall’s interest in a number of evolutionary themes in late nineteenth-century thinking that derived eclectically from Darwin, Henry Maine, Herbert Spencer, Auguste Comte, Marx, and Hegel. In a follow-up letter to Edgeworth Marshall added an alarmingly subversive and quasi-Hegelian consideration: ‘I think there is room for question whether the utilitarians are right in assuming that the end of action is the sum of the happiness of individuals rather than the vigorous life of the whole.’ Reverting once more to the communal benefits of ‘durable magnificence’, here one could say that Marshall was reaching out for the

9 kinds of conclusion that Adam Smith and possibly Hegel had reached via their familiarity with classical republican notions of the public good. When Marshall’s confidence in consumers’ surplus was at its height, he abandoned the kinds of self-denying ordinance that earlier economists had used. Walter Bagehot, a UCL product and the best nineteenth-century example of the as businessman and journalist, had been intentionally provocative in boasting about the philistinism of the economists’ position. He emphasized the moral indifference of the economist by saying that: ‘He regards a pot of beer and a picture, a book of religion and a pack of cards, as equally ‘Wealth’, and therefore for his purpose, equally worthy of regard’. Bagehot also thought that economists ‘dealt not with man, the moral being, but with man, the money-making animal’, a position that would have made the more earnest-minded Marshall wince. When Ruskin’s

Unto this Last was published Bagehot greeted it with a review in The Economist magazine headlined ‘Aesthetic Twaddle versus Economic Science’. You will be able to gauge the content from the first sentence which read: ‘In the faculty of writing nonsense, stupidity is no match for genius.’ Jevons, like Bagehot, another UCL-bred economist, made more apologetic noises on the same subject by saying that economics only dealt with the lower scale of wants; and that it had nothing to say about the ethics of where these should be sacrificed for higher ends. Marshall would have agreed with this. Indeed, one of his motives for damping down the initial enthusiasm Jevons had expressed in the new importance utility theory gave to consumer wants and demand was his belief that wants only ruled life among the lower animals and in the early stages of human existence; that it was ‘efforts and activities’, those relations into which people enter in the course of their working or productive lives that mattered most. Wants were the dependent variable in the socio-economic equation: more important was the formation of character which took place in the workplace rather than in the market for final goods. Character could be formed by the earning of incomes, but might be lost in the business of spending them, especially if took the form of display rather than ‘solid, unostentatious pleasure of a wholesome kind’.

10 As judgements like this make plain, Marshall was not content with wanting to make economics immune from the kinds of criticism that Carlyle and Ruskin had ranged against it. Marshall was more polite than Bagehot when dealing with William Morris and Ruskin, but equally dismissive. Morris’s News from Nowhere was ‘delightful’ because it was plainly soft utopian poetry rather than the hard scientific material quarried by economists: delightful because there was no risk of anyone taking it seriously. Marshall’s ambition was far greater than that of Bagehot: he wanted to take over Ruskin’s role as arbiter of public taste and cultural commentator on the potential for advancing wellbeing under the British form of capitalism and the moral leadership of the best examples of the economics profession.

V

What are we to make of this whole episode, of Marshall’s original aims and ambition, as well as his late confession of partial failure? As in all such questions the answer depends on who ‘we’ are or what persona we choose to adopt when asking the question. Two of Marshall’s pupils, Pigou and Keynes, took positions at odds with one another. Pigou in his Economics of Welfare was fully in harmony with the aims of Marshall’s original enterprise, with all its high Victorian seriousness concerning the contribution academic economists could make to human betterment.4 Keynes, on the other hand, only six years younger, leaned towards what might be described as the Bloomsbury or Lytton Strachey-type view by criticising Marshall for sacrificing science in favour of preaching, accusing him of being ‘too anxious to do good’. But Keynes was too much of a patrician elitist in cultural and intellectual matters to revert to the neutral stance more characteristic of the economist as we now see him: an earnest yet modest professional, typically a respectable member of the petit bourgeoisie in a way that Keynes was not. He had no difficulty in pronouncing on how much he welcomed the foreseeable end to the basic economic problem of being able to satisfy absolute needs. He predicted that technology would allow this to happen in the century beginning in 1930, the

4 ‘The complicated analyses which economists endeavour to carry through are no mere gymnastic. They are instruments for the bettering of human life. The misery and squalor that surround us, the injurious luxury of some wealthy families, the terrible uncertainty overshadowing many families of the poor – these are evils too plain to be ignored. By the knowledge that our science seeks it is possible that they may be restrained.’ vii

11 period when he hoped that economists would become ‘humble, competent people, on a level with dentists’; and when avarice and usury would once more become vices and ‘we shall once more value ends above means and prefer the good to the useful’. Although Keynes had high hopes that more resources would be devoted to the arts, that a new age of durable and less durable forms of public magnificence would be inaugurated, he had little to say about the discontent associated with the irresistible rise of relative needs that can only be met by positional goods, the kind of thing that has been used to explain the dissatisfaction associated with rising incomes and wealth. Moreover, Keynes’s assumption concerning the rising preference for leisure over work that would come with increased incomes has not been met in the Anglo-American world -- a world that ought to be only two decades away from fulfilling his prophecy (it can’t rank as a prediction). As so often happens, when these arguments became the centre-piece of Fred Hirsch’s excellent book on the Social

Limits to Growth in 1976 it became possible to recognise just how prescient Adam Smith had been on the delusive qualities of economic ambition in his Theory of Moral Sentiments published in 1759.

VI

Keynes died in 1946, and while the supply of fully- or half-paid-up Keynesians has increased dramatically in the past couple of years, one has to look elsewhere for signs of what has happened to Marshall’s original hopes for the measurement of wellbeing. From one point of view, at least, it would seem that he was far too pessimistic. That has certainly not been the conclusion of two or three generations of late twentieth- and early twenty-first century cost- benefit analysts, whose activities crucially depend on the assumption that gains and losses can be quantified by means of shadow prices that reflect the social costs and benefits of public projects. To obtain these estimates we supplement statistical demand and supply curves with a wide variety of other types of evidence that Marshall might or might not have regarded as possible or legitimate. Insurance statistics on the value of lives saved or lost might have been acceptable, but not, I suspect, data derived from surveys that equate happiness with reported states of subjective wellbeing.

12 This kind of counter-factual speculation is inconclusive, possibly meaningless. Marshall’s confidence in prescribing for human wellbeing partly derived from living in a stable class society with stable inter-class values. This allowed the middle classes to pronounce on what was best for the working classes (notably temperance in the use of alcohol), while the working classes could either touch their forelocks or do what Orwell said they did when listening to patronising speeches: greet them with a silent chorus of raspberries. Marshall’s confidence in passing judgement extended to the ‘western world’; and he was followed by Pigou when he claimed that the conclusions of his work on economic welfare were likely to be true ‘among nations with a stable general culture, like those inhabiting Western Europe’ (21). I’m intrigued by the fact -- if it is one -- that recent behavioural studies may have restored some of this confidence in the cultural stability and cross-cultural comparability of survey evidence. It is the kind of confidence that enables some economists to hope they can join the behavioural psychologists in becoming doctors of human wellbeing.

VII

And yet there are clear signs that doubts persist. A happiness technocracy that can be achieved via the dispensation of therapy and drugs comes too close to Huxley’s Brave New World for comfort. In attempting to annex the study of wellbeing to economics Marshall thought he was showing how a new breed of ethically-minded economic scientists could regain moral territory that had wrongly been taken over by the self-appointed and often sentimental spokesmen for human beings. But looked at from another point of view -- let us tendentiously call it that of the human beings -- Marshall could be made to resemble the Cecil Rhodes of economic imperialism, keen to extend the grasp of economics over territories that should be protected from the inherent individualism of the market perspective. What he regarded as a move from economics to ethics could be interpreted as an alarming movement in the opposite direction. Signs of resistance have been shown in the first field to which cost-benefit studies were applied standardly, water resource projects, now part of the larger field of environmental economics. Some environmentalists regard ‘willingness to pay’ or willingness to receive

13 compensation for environmental damage as antagonistic to their more thorough-going eco- centric view of things. The substitution of a measure of ‘use value’ for ‘exchange value’ cannot be an adequate response to someone who regards some forms of damage to the eco- sphere as involving matters of intrinsic worth. Whether or not a species becomes extinct in a certain part of the world concerns an ‘existence value’ that cannot be placed in the balance beside more mundane costs and benefits that can be reduced to money estimates. There are other well-known examples of misgiving. Congestion charges that reduce the unhappiness of time spent on commuting are perhaps only controversial now for NIMBYish political reasons. But the same does not apply to creating a global market for carbon trading. For some, that appears to be as unwholesome as renting wombs or paying for blood, kidneys, and sex. Richard Titmuss put forward some fairly compelling evidence to show that material rewards could destroy moral incentives to donate blood voluntarily; and communitarian political theorists such as Michael Sandel or Tony Judt build on such evidence to show that mere market liberals have an impoverished notion of common good. I have used up the time at my disposal. If I could command the resources of the happiness social survey it would be interesting to learn how this audience divides itself among the three following alternatives. First, are you happy to hear that some economists now feel able to greatly extend their command over the wellbeing territory that surrounds wealth- generating pursuits? Or, second, do you share the fundamentalist objections to this extension of economics that were voiced originally by the romantic poets and now by eco-centric environmentalists? Or, third, would you feel more comfortable if economists returned to the modesty expressed by Pigou when confining his attention to economic welfare and making only tentative claims to be advancing total welfare? If we now know more than Marshall did, what does it tell us to do?

[N. B. From here on there are merely notes towards more positive conclusions rather than conclusions themselves.] Adam Smith wisely noted that prudent self-interested behaviour, ‘that principle in the mind which prompts to truck, barter, and exchange, tho’ it is the great foundation of arts,

14 commerce, and the division of labour, yet it is not marked with any thing amiable. To perform any thing, or to give any thing, without a reward is always generous and noble, but to barter one thing for another is mean. The plain reason for this is that these principles are so strongly implanted by nature that they have no occasion for that additional force which the weaker principles need.’ We have a kind of stand-off at the political level. The well-being doctors proclaim the democratic credentials of their craft: since they begin from the people’s own evaluations of their lives, its satisfactions and dissatisfactions, they cannot be accused of paternalism or expertism. But is a democratic practice based on simulating markets capable of meeting broader social needs, the needs met by social capital, trust, and a different kind of democracy? Would it be like plebiscitary democracy? Why should the humble contentment of those inured to suffering have a low value placed upon it? Nanny state: is diddums feeling content? Is it a case of ‘trying to be happier being as futile as trying to be taller’. Let me confess to a prejudice. Reading some of the literature on happiness, much of it generated in the States, I have the impression that I’m eavesdropping on the agonized proceedings of Americans concerned about the quality of their public life, the absence of or the difficulty of defending what is standard practice in the social democracies of Europe, especially Northern Europe. The dilemmas of early applied social science during the interwar period. The agonizing of Hobson, the confident prescriptions of Keynes. We hanker, as some late Victorians did, for a more dynamic, a more evolutionary perspective that will enable us to go beyond the wants of our present nature. The paternalism of seeking for signs of our better, more educated selves. What about the new psychologies of happiness, what we learn from neuroscience, philosophy, and social survey. Can reported studies of dissatisfaction be manipulated by special ? Are people capable of balancing short-term sensations against more reflective notions of their life’s satisfactions? Let’s look at what actually makes us happy. Is it our actual selves (the democratic claim) or our best selves want (the patrician or elitist

15 claim), the selves that are not unduly influenced by advertising and the competitive concern with positional goods. We want security, we want to trust our neighbours. New scope for social engineering on a grand scale. We do not speak about ‘character’ but Marshall was right in giving priority to work, or lack of it, to how work shapes wants, shapes the capacity to acquire happiness. Subjective Wellbeing is a field in its own right, and it has been described as ‘a democratic approach to quality of life in that it grants recognition to people’s own evaluations of their lives’. 16451 But will it be given to the demos by kindly experts acting on the basis of surveys or even from referenda in the Swiss manner? When happiness is actively pursued for its own sake, it often leads to disappointment. Happiness should be a byproduct. The power of positive thinking. Instead of saying ‘Shit’ you say ‘Shit happens’. Help others: do good to them. Be sociable. Cultivate gratitude. Engage in purposeful activity, preferably on others’ behalf, and realise the wisdom JSM discovered from his depression. Ed Diener started it all in 1981. By 1995 we had Diener, Diener and Diener. As a young man Marshall was attracted to psychology; and there is an intriguing long essay he wrote on the brain, from an artificial intelligence perspective, that carries the peculiar title, ‘Ye Machine’. Perhaps that means he would have been open to the findings of neuro- science, to the investigation of the left pre-frontal cortex as the seat of pleasurable sensations. Pain killers might have been acceptable, but he would definitely have frowned upon drug- induced happiness. He knew nothing about the insidious wonders of Prozac or psychotherapy. There are better grounds for thinking that Marshall would have been more heartened by these attempts at measurement than he would have been by the prolonged period of professional agnosticism that prevented economists from interesting themselves in cardinal approaches to utility. He would not have sympathised with the belief that ordinalism made cardinalism unnecessary; and the adherence to Occam’s Razor that led economists to prefer revealed preference to any other kind of representation of demand. Those brought up in the Victorian and Edwardian world were less inhibited about condemning the rich who were

16 ruining themselves and setting a bad example to inferiors through luxury expenditure. There was no end to the advice offered to the English working classes, especially on alcohol. Jevons condemned their drink-sodden enjoyments and wanted to substitute for them more genteel municipal musical events on the Scandinavian or Hallé orchestra pattern. He paid lip service to the idea that for professional reasons economists had to respect consumer sovereignty, but he noted cases where a slight change of wants could result in increased welfare. For example, he considered the British prejudice against non-wheaten bread to be damaging to working- class health as well as budgets.

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