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Ethical goodness and economic welfare

The fact that a policymaker ought to promote the public good by pursuing right purposes through suitable methods raises the issue of the relation between economic welfare and ethical goodness intended as good states of mind. In Keynes's system of thought, there is no immediate and precise logical nexus between economic welfare and ethical good, because the movement from material welfare to supreme good is an art that someone may not possess. Therefore, economic welfare is only one requirement of ethical goodness; it is an intermediate good, which in turn is a means for pursuing the supreme good (Marzetti, 1999). In particular, in 'Economic Possibilities for our Grandchildren', Keynes claims

that the economic problem is not - if we look into the future - the permanent problem of the human race. ... Man will be faced with his real, his permanent problem - how to use his freedom from pressing economic care, how to occupy the leisure. . But it will be those peoples, who can keep alive, cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

(1972d [1930], pp. 326-8)

In a context where the economic agent may not attain the philosopher's summum bonum by maximizing her or his utility, because private good may compete with social good and the logical nexus between ethical good and economic welfare may not be immediate and precise, Keynes - aiming towards the maximum ethical good - focuses not on maximum economic welfare but on national income. More specifically, he considers intermediate objectives - such as a just distribution of income and wealth, full employment and monetary stability - whose achievement is seen as the solution to the main issues related to the economic organization of society. Thus, the task of ethical rationality is to establish in which way and to which degree the possibilities of economic welfare are used. Keynes (1973b [1936], p. 379) leaves to classical theory the task of describing the behaviour of single agents (see Izumi Hishiyama chapter 10, this volume), and assigns to his macroeconomic theory the task of justifying policymakers' actions. If policymakers have to guide the economic system in order to promote the social welfare, they have to know the laws that govern the behaviour of the economic system as a whole. These laws are not completely atomistic, but have an organic component. To our mind, Keynes's sacrifice of the economic welfare function is the Keynesian simplification of welfare; it is designed to avoid all the difficulties that can arise when a theory makes reference not only to the concept of utility or preference, but also to the duty of calculating exactly the consequences of a moral action (Marzetti, 2007).

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