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Kaldor-Hicks Improvement and Justice: To the Discussion on Normative Economics

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  • Lukáš Augustin Máslo

Abstract

The author's main objective is to point out the existence of the paradox of involuntary improvement and to present a solution to this paradox. The paradox of involuntary improvement appears when a subject which suffers an injustice involuntarily still gets better off by this change. The suggested solution consists in the decomposition of the total effect of the pseudo-contract into the effect of the basic contract (which is desirable for the subject) and the effect of the super-contract (which is undesirable for the subject). Such a decomposition is not arbitrary, in the author's view, but necessary because it reflects the self-contradictory nature of the pseudo-contract, such as usury and sale/purchase at an unjust price. The author argues that the contract of usury and sale/purchase at an unjust price do not represent cases of Pareto improvement but rather cases of Kaldor-Hicks improvement (Kaldor, 1939; Hicks, 1939). The author's complementary objective is to show that the positive - normative dichotomy is an artificially created distinction which is supposed to cut off economics from its mother discipline, philosophy, and which moral sceptics used to deprive moral philosophy of the status of science.

Suggested Citation

  • Lukáš Augustin Máslo, 2023. "Kaldor-Hicks Improvement and Justice: To the Discussion on Normative Economics," Politická ekonomie, Prague University of Economics and Business, vol. 2023(5), pages 518-535.
    • Handle: RePEc:prg:jnlpol:v:2023:y:2023:i:5:id:1400:p:518-535
    DOI: 10.18267/j.polek.1400
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    References listed on IDEAS

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    1. David Colander & Huei-Chun Su, 2015. "Making sense of economists' positive-normative distinction," Journal of Economic Methodology, Taylor & Francis Journals, vol. 22(2), pages 157-170, June.
    2. Mark Blaug, 2007. "The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated," History of Political Economy, Duke University Press, vol. 39(2), pages 185-207, Summer.
    3. Jan Peil & Irene van Staveren (ed.), 2009. "Handbook of Economics and Ethics," Books, Edward Elgar Publishing, number 4252.
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    More about this item

    Keywords

    Kaldor-Hicks improvement; Pareto improvement; normative economics; equality in exchange; usury; just price;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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