Plug and Play: The "New" Welfare Economics

Lionel Robbins (1929) "The economic effects of variations of hours of labour":

"The days are gone when it was necessary to combat the naïve assumption that the connection between hours and output is one of direct variation, that it is necessarily true that a lengthening of the working day increases output and a curtailment diminishes it."

Enrico Barone (1908)"The ministry of production in the collectivist state":

"It is convenient to suppose – it is a simple book-keeping artifice, so to speak – that each individual sells the services of all his capital and re-purchases afterwards the part he consumes directly. For example, A, for eight hours of work of a particular kind which he supplies, receives a certain remuneration at an hourly rate. It is a matter of indifference whether we enter A's receipts as the proceeds of eight hours' labour, or as the proceeds of twenty-four hours' labour less expenditure of sixteen hours consumed by leisure."

So much for combating naïve assumptions. Apparently all one had to do back in 1938 to avoid combat was "suppose" conveniently what in days gone by had been assumed naïvely and that was enough to ground the "New" Welfare Economics in mathematical tractability. None of which would have worked if the connection between hours and output was not one of direct variation. A simple book-keeping artifice, indeed!

Did it matter whether or not the theoretical ball bearings upon which Budget Circular A-47 rolled were round? Of course not. No one ever read Barone. They just plugged his handy-dandy formula into theirs. But, hey, no interpersonal comparisons of utility were made. Sometimes you have to take a big leap of faith for Science.