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Contrived desires, affluence, and welfare: J.K. Galbraith's Pigovian redistribution argument reconsidered

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  • Alexander Douglas

Abstract

I argue that John Kenneth Galbraith's theory of the “dependence effect” in The Affluent Society provides a way to rescue A.C. Pigou's argument for wealth redistribution from a powerful objection. The objection is based on the unprovability of statements making interpersonal comparisons of utility. Galbraith's dependence effect theory allows him to present a version of the Pigovian argument that requires no such statements to be made. I argue that Galbraith's main piece of advocacy in The Affluent Society was for income redistribution, despite the fact that he claimed to be in favour of greater spending in the public sector rather than redistribution as such. I then show how my reading of the dependence effect theory helps to defend it against objections from Hayek and Rothbard. I end by discussing what improvements in economics a proper test of the theory would require and showing how my reading of it helps to reveal the ongoing importance of The Affluent Society to the understanding of political economy.

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  • Alexander Douglas, 2016. "Contrived desires, affluence, and welfare: J.K. Galbraith's Pigovian redistribution argument reconsidered," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 23(4), pages 611-640, August.
  • Handle: RePEc:taf:eujhet:v:23:y:2016:i:4:p:611-640
    DOI: 10.1080/09672567.2015.1018291
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    1. Becker, Gary S., 1978. "The Economic Approach to Human Behavior," University of Chicago Press Economics Books, University of Chicago Press, number 9780226041124, December.
    2. Rosenberg, Alexander, 1992. "Economics--Mathematical Politics or Science of Diminishing Returns?," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226727233, December.
    3. Roger Mason, 1998. "The Economics of Conspicuous Consumption," Books, Edward Elgar Publishing, number 1508.
    4. John Kenneth Galbraith & Murray L. Weidenbaum & Charles H. Hession & Barbara Deckard & Howard Sherman & Carey C. Thompson, 1975. "Economics and the Public Purpose," Journal of Economic Issues, Taylor & Francis Journals, vol. 9(1), pages 87-100, March.
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