----------------- HES POSTING ----------------- 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 ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]