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We seem to be pretty close, J. Barkely, but at the same time quite a
distance apart. In discussing Samuelson's contribution, you say that
"there are in fact very few such pure collective consumption goods."
I would argue that there are _no_ pure collective consumption goods.
The question raised by Samuelson's analysis is whether it is practically
useful (relevant) to divide goods into classes based on whether they are
purely private, purely public, impurely private, and impurely public, as
he defines these mathematically. Unless one also addresses the issue of
ownership (or, more generally, legal rights to control actions) and the
institutions, dispositions, and incentives associated with it, I do not
believe it is. Or perhaps in a more conciliatory tone, nothing you have
said persuades me that this division is relevant to policy, which I take
to be the ultimate goal of introducing the concept of a public good.
Samuelson himself makes a claim that is similar to the one that you appear
to
make, in his 1954 paper about polar cases: "[T]o say that a thing is not
located at the South Pole does not logically place it at the North
Pole."(356)
It is interesting to note, however, that although he gives the appearance
of
writing about the private-collective goods dichotomy, he is in fact
referring
to what he calls "public functions." He is concerned about whether
"education,
the courts, public defense, highway programs, police and fire protection"
fit
into his private-collective goods scheme.
To me, he gets confused by his own scheme. A good is certainly not a public
function and to assume that it is or to describe it as such puts the cart
before the horse. The important question is whether the classification
scheme
he proposes helps us decide whether indeed the government (and which
government) has a function in a particular respect. In this respect to call
courts, public defense, and police protection public goods, pure or impure,
is
to confuse the provision of the conditions necessary for a market system
with
the provision of supplementary services.
Samuelson writes more about the "intermediate cases" in his1958 paper. In
this
paper, he avoids the confusion caused by the term "public functions,"
focusing
on the goods that exhibit characteristics of jointness and non-exclusion.
He
even recognizes the exclusion problem in his discussion of descramblers for
TV
signals.
His argument starts with the idea of the achievement of the social optimum
(335). Aside from the fact that he approaches the subject from the
perspective
of the theoretical welfare economist, the interesting thing about this
paper,
from the standpoint of my argument, is the absence of any acknowledgment
of "the obstacles individuals face in reaching the optimal solution through
exchanging rights to control actions."(my last post) Samuelson's discussion
is
about whether market prices will be optimal, as if the question with which
he
is concerned is theoretical and not practical. Yet he appears to want to
say
something practical. He appears to be associating every case of
nonoptimality
with some function for government or supplementary service. But to do this,
one
must assume that market pricing is optimal for so-called pure private
goods.
This assumption is unrealistic also, since it implicitly assumes a strictly
enforced and costless property system and the absence of costs of making
exchanges. The ultimate question here concerns the relevance of the pure
private-pure public good dichotomy for evaluating government policies. This
is
where Samuelson comes up short.
It is precisely in this respect that the characteristics of jointness and
non-exclusion, when properly understood from the property rights
perspective,
show their relevance. And it is precisely for this reason that I regard
Samuelson's exercises as part of the dark ages. At best, it seems to me, he
can
be credited with stimulating deeper thought on the matter, an exercise that
seems to have begun with Head's work. This makes him analogous to Marx, who
stimulated economists like Clark and Bohm Bawerk to produce the marginal
productivity theory of distribution. By showing in extremes how a
theoretical
system (in Marx's case, classical economics) is not especially relevant to
the
conditions that one aims to describe or the problem that one aims to solve,
a
writer can often stimulate otherwise complacent minds to cause intellectual
revolutions.
Let me return to the question of whether Samuelson's public goods papers
made
an important modern contribution. I think that they did, but it was not to
the
theory of public goods. It was to theoretical welfare economics. So I will
grant that his work is part of the history of that field. But I don't think
that theoretical welfare economics is relevant to the concerns of students
of
public goods and market failure, as defined in the modern sense.
Samuelson is a brilliant man and it is possible that if he had turned his
attention to the problems that concerned Coase and the property rights
theorists, he would have contributed to the further development of this
subject. But I don't see how mathematical models of goods that do not
exist,
based on the assumption of fully enforced property rights and zero
transactions
costs, can be of much help in dealing with the practical problems of public
policy toward legal rights in economic interaction and toward freedom of
enterprise.
Samuelson, Paul A. (1955). "Diagrammatic Exposition of a Theory of Public
Expenditure." Review of Economics and Statistics. 37: 350-6.
Samuelson, Paul A., "Aspects of Public Expenditure Theories," Review of
Economics and Statistics, November, 1958.
Pat Gunning
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