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

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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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Keywords: Galbraith; Hayek; Pigou; utility; welfare

Document Type: Research Article

Publication date: July 3, 2016

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