From Amoral High Theory to Immoral Applied Theory


Surprisingly, given the substantial resources in time and energy that mainstream economics departments have historically required grad students to devote to general theorems of welfare economics (GTWE) high theory scholastics the vast majority of economists—basically all those who do not explicitly work on General Equilibrium Welfare Theory, pretty much ignore the theory discussed in Chap. 9 as window dressing. The main purpose of the GTWE appears to be to make mainstream economics look more like a natural science and serve as a useful gate keeper to select students who, after spending considerable time and energy plowing through the advanced mathematics necessary to derive these theorems, are more likely to become attached to their underlying ideological message.1 Why else would one be required to spend so much time and effort on this?

The neoplatonic ideological message being implicitly conveyed is that, as these theorems are derived from dazzlingly fancy (for most economics...


Marginal Cost Producer Surplus Consumer Surplus Price Discrimination Consumer Welfare 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Atknson, A. B., & Stiglitz, J. (1980). Lectures on public economics. New York: McGraw Hill.Google Scholar
  2. Baiman, R. (2000). Why the emperor has no clothes: The neoclassical case for price regulation. In B. Baiman, & D. Saunders (Eds.), Political economy and contemporary capitalism: Radical perspectives on economic theory and policy. New York: M. E. Sharpe.Google Scholar
  3. Baiman, R. (2001). Why equity cannot be separated from efficiency: The welfare economics of progressive social pricing. Review of Radical Political Economics, 33, 203–221.CrossRefGoogle Scholar
  4. Baiman, R. (2002). Why equity cannot be separated from efficiency II: When should social pricing be progressive. Review of Radical Political Economics, 34, 311–317.CrossRefGoogle Scholar
  5. Baumol, William J. 1977. Economic Theory and Operations Analysis. Upper Saddle River, NJ: Prentice Hall.Google Scholar
  6. Baumol, W. J., & Bradford, D. (1970, June). Optimal departures from marginal cost pricing. American Economic Review, 60(3), 265–283.Google Scholar
  7. Baumol, William J., Joskow, Paul L., and Alfred E. Kahn. 1994. The Challenge for Federal and State Regulators: Transition from Regulation to Efficient Competition in Electric Power. December 4. Federal Energy Regulatory Commission (FERC) Docket no. RM 95-8-000.Google Scholar
  8. Chiang, A. C. (1984). Fundamental methods of mathematical economics (3rd ed.,). New York: McGraw Hill.Google Scholar
  9. Crotty, J. (2011, March). The realism of assumptions does matter: Why Keynes-Minsky theory must replace efficient market theory as the guide to financial regulation policy. Political Economy Research Institute (PERI), Working Paper 255.Google Scholar
  10. Feldstein, M. (1972). Distributional equity and the optimal structure of public prices. American Economic Review, 62, 32–36.Google Scholar
  11. Horwitz, Robert Britt. 1989.The Irony of Regulatory Reform: The Deregulation of American Telecommunications. Oxford University Press.Google Scholar
  12. Kahn, A. E. (1993). The economics of regulation. Cambridge, MA: MIT Press.Google Scholar
  13. Krugman, P. (2014, June 22). The big green test. The New York Times.Google Scholar
  14. Kuttner, Robert. 1984. The Economic Illusion: False Choices Between Prosperity and Social Justice. Boston, MA: Houghton Mifflin.Google Scholar
  15. Kuttner, R. (1996). Everything for sale. New York: Alfred A. Knopf.Google Scholar
  16. Lusvardi, W. (2011). Bryson’s troubled part in the California electric crisis. California Watchdog. Retrieved August 5, from
  17. Mankiw, N. G. (2008). Principles of microeconomics (5th ed.,). New York: Worth Publishers.Google Scholar
  18. Ramsey, F. (1927). A contribution to the theory of taxation. Economic Journal, 37, 47–61.CrossRefGoogle Scholar
  19. Steinberg, I. S. (1993). Economics: Value theory in the spirit of Bentham. In B. Parekh (Ed.), Jeremy Bentham: Critical assessments. New York: Routledge.Google Scholar
  20. Thoenig, J.-C., & Paradeise, C. (2014). Organizational governance and the production of academic quality: Lessons from two top U.S. research universities. Minerva, 52(4), 381–417.CrossRefGoogle Scholar
  21. Varian, H. R. (1992). Microeconomic analysis (3rd ed.,). New York: W. W. Norton.Google Scholar
  22. Vietor, Richard H.K. 1994. Contrived Competition: Regulation and Deregulation in America. Harvard University Press.Google Scholar
  23. Vogel, N. (2000, December 9). How California’s consumers lost with electricityderegulation. Los Angeles Times.Google Scholar

Copyright information

© The Author(s) 2016

Authors and Affiliations

  1. 1.Benedictine UniversityIllinoisUSA

Personalised recommendations