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Copyright Information AT THE SHRINE OF OUR LADY OF FATIMA or
WHY POLITICAL QUESTIONS ARE NOT ALL
ECONOMIC
Mark Sagoff*
Lewiston, New York, a well-to-do community near Buffalo, is the
site of the Lake Ontario Ordinance Works, where years ago the federal
government disposed of the residues of the Manhattan Project. These
radioactive wastes are buried but are not forgotten by the residents who
say that when the wind is southerly, radon gas blows through the town.
Several parents at a recent Lewiston conference I attended described
their terror on learning that cases of leukemia had been found among
area children. They feared for their own lives as well. On the other
side of the table, officials from New York State and from local corpora-
tions replied that these fears were ungrounded. People who smoke,
they said, take greater risks than people who live close to waste disposal
sites. One speaker talked in terms of "rational methodologies of deci-
sionmaking." This aggravated the parents' rage and frustration.
The speaker suggested that the townspeople, were they to make
their decision in a free market and if they knew the scientific facts,
would choose to live near the hazardous waste facility. He told me
later they were irrational---"neurotic"-because they refused to recog-
nize or to act upon their own interests. The residents of Lewiston were
unimpressed with his analysis of their "willingness to pay" to avoid this
risk or that. They did not see what risk-benefit analysis had to do with
the issues they raised.
If you take the Military Highway (as I did) from Buffalo to Lewis-
* Research Associate, Center for Philosophy and Public Policy and Center for Environ-
mental and Estuarine Studies (Horn Point Laboratories), University of Maryland. A.B. 1963, Harvard College; Ph.D. 1970, University of Rochester. Work on this Article was supported by the National Science Foundation and National Endowment for the Humanities, Grant No. OSS 8018096. Views expressed are the author's, not necessarily those of the NSF or NEH. The author is grateful for criticism received from colleagues, especially David Luban. ARIZONA LAW REVIEW
ton, you will pass through a formidable wasteland. Landfills stretch in
all directions and enormous trucks-tiny in that landscape-inces-
santly deposit sludge which great bulldozers then push into the ground.
These machines are the only signs of life, for in the miasma that hangs
in the air, no birds, not even scavengers, are seen. Along colossal
power lines which criss-cross this dismal land, the dynamos at Niagra
send electric power south, where factories have fled, leaving their re-
mains to decay. To drive along this road is to feel, oddly, the mystery
and awe one experiences in the presence of so much power and
decadence.
Henry Adams had a similar response to the dynamos on display at
the Paris Exposition of 1900. To him, "the dynamo became a symbol
of infinity." ' To Adams, the dynamo functioned as the modem
equivalent of the Virgin, that is, the center and focus of power. "Before
the end, one began to pray to it; inherited instinct taught the natural
expression of men before silent and infinite force." ' Adams asks in his
essay "The Dynamo and the Virgin" how the products of modern in-
dustrial civilization will compare with those of the religious culture of
the Middle Ages. If he could see the landfills and hazardous waste
facilities bordering the power stations and honeymoon hotels of Niagra
Falls he would know the answer. He would understand what happens
when efficiency replaces infinity as the central conception of value.
The dynamos at Niagra will not produce another Mont-Saint-Michel.
"All the steam in the world," Adams wrote, "could not, like the Virgin,
build Chartres." 3
At the Shrine of Our Lady of Fatima, on a plateau north of the
Military Highway, a larger than life sculpture of Mary looks into the
chemical air. The original of this shrine stands in central Portugal
where in May, 1917, three children said they saw a Lady, brighter than
the sun, raised on a cloud in an evergreen tree. 4 Five months later, on a
wet and chilly October day, the Lady again appeared, this time before a
large crowd. Some who were skeptical did not see the miracle. Others
in the crowd reported, however, that "the sun appeared and seemed to
tremble, rotate violently and fall, dancing over the heads of the
throng...."'
The Shrine was empty when I visited it. The cult of Our Lady of
Fatima, I imagine, has only a few devotees. The cult of Pareto Op-
timality, however, has many. Where some people see only environ-
1. H. ADAMS, THE EDUCATION OF HENRY ADAMS 380 (2d ed. 1970). 2. Id 3. Id at 388. 4. For an account, see generally J. PELLETIER, THE SUN DANCED AT FATIMA (1951). 5. 5 NEW CATHOLIC ENCYCLOPEDIA 856 (1967).
[Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
mental devastation, its devotees perceive efficiency, utility, and the
maximization of wealth. They see the satisfaction of wants. They envi-
sion the good life. As I looked over the smudged and ruined terrain I
tried to share that vision. I hoped that Our Lady of Fatima, worker of
miracles, might serve, at least for the moment, as the Patroness of cost-
benefit analysis. I thought of all the wants and needs that are satisfied
in a landscape of honeymoon cottages, commercial strips, and dumps
for hazardous waste. I saw the miracle of efficiency. The prospect,
however, looked only darker in that light.
Political and Economic Decisionmaking
This essay concerns the economic decisions we make about the
environment. It also concerns our political decisions about the envi-
ronment. Some people have suggested that ideally these should be the
same, that all environmental problems are problems in distribution.
According to this view, there is an environmental problem only when
some resource is not allocated in equitable and efficient ways. 6
This approach to environmental policy is pitched entirely at the
level of the consumer. It is his or her values that count, and the meas-
ure of these values is the individual's willingness to pay. The problem
of justice or fairness in society becomes, then, the problem of distribut-
ing goods and services so that more people get more of what they want
to buy: a condo on the beach, a snowmobile for the mountains, a tank
full of gas, a day of labor. The only values we have, according to this
view, are those that a market can price. 7
How much do you value open space, a stand of trees, an "un-
spoiled" landscape? Fifty dollars? A hundred? A thousand? This is
one way to measure value. You could compare the amount consumers
would pay for a townhouse or coal or a landfill to the amount they
would pay to preserve an area in its "natural" state. If users would pay
more for the land with the house, the coal mine, or the landfill, then
without-less construction and other costs of development-than the
efficient thing to do is to improve the land and thus increase its value.
That is why we have so many tract developments, pizza stands, and gas
stations. How much did you spend last year to preserve open space?
How much for pizza and gas? "In principle, the ultimate measure of
6. See, e.g., W. BAXTER, PEOPLE OR PENGUINS: THE CASE FOR OPTIMAL POLLUTION ch. 1 (1974). Seegenerall, A. FREEMAN, R. HAVEMAN, A. KNEESE, THE ECONOMICS OF ENVIRONMEN- TAL POLICY (1973) [hereinafter A. FREEMAN]. 7. Posner makes this point well in discussing wealth maximization as an ethical concept. "The only kind of preference that counts in a system of wealth-maximization," he writes, "is... one that is backed up by money-in other words, that is registered in a market." Posner, Utilitari- anism, Economics, and Legal Theory, 8 J. LEGAL STUD. 103, 119 (1979).
1981] A.RIZONA LAW REVIEW
environmental quality," as one basic text assures us, "is the value peo-
ple place on these. ..services or their willingness to pay." s
Willingness to pay: what is wrong with that? The rub is this: not
all of us think of ourselves simply as consumers. Many of us regard
ourselves as citizens as well. We act as consumers to get what we want
for ourselves. We act as citizens to achieve what we think is right or
best for the community. The question arises, then, whether what we
want for ourselves individually as consumers is consistent with the
goals we would set for ourselves collectively as citizens. Would I vote
for the sort of things I shop for? Are my preferences as a consumer
consistent with my judgments as a citizen?
They are not. I am schizophrenic. Last year, I fixed a couple of
tickets and was happy to do so since I saved fifty dollars. Yet, at elec-
tion time, I helped to vote the corrupt judge out of office. I speed on
the highway; yet I want the police to enforce laws against speeding. I
used to buy mixers in returnable bottles-but who can bother to return
them? I buy only disposables now, but to soothe my conscience, I urge
my state senator to outlaw one-way containers. I love my car; I hate
the bus. Yet I vote for candidates who promise to tax gasoline to pay
for public transportation. And of course I applaud the Endangered
Species Act, although I have no earthly use for the Colorado squawfish
or the Indiana bat. I support almost any political cause that I think will
defeat my consumer interests. This is because I have contempt for-
although I act upon-those interests. I have an "Ecology Now" sticker
on a car that leaks oil everywhere it's parked.
The distinction between consumer and citizen preferences has long
vexed the theory of public finance. Should the public economy serve
the same goals as the household economy? May it serve, instead, goals
emerging from our association as citizens? The question asks if we may
collectively strive for and achieve only those items we individually
compete for and consume. Should we aspire, instead, to public goals
we may legislate as a nation?
The problem, insofar as it concerns public finance, is stated as fol-
lows by R.A. Musgrave, who reports a conversation he had with Ger-
hard Colin:
He [Colin] holds that the individual voter dealing with political is-
sues has a frame of reference quite distinct from that which underlies
his allocation of income as a consumer. In the latter situation the
voter acts as a private individual determined by self-interest and
deals with his personal wants; in the former, he acts as a political
being guided by his image of a good society. The two, Com holds,
8. A. FREEMAN, supra note 6, at 23.
(Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
are different things. 9
Are these two different things? Stephen Marglin suggests that they
are. He writes:
the preferences that govern one's unilateral market actions no longer
govern his actions when the form of reference is shifted from the
market to the political arena. The Economic Man and the Citizen
are for all intents and purposes two different individuals. It is not a
question, therefore, of rejecting individual. ..preference maps; it is,
rather, that market and political preference maps are inconsistent. 0
Marglin observes that if this were true, social choices optimal
under one set of preferences would not be optimal under another.
What, then, is the meaning of "optimality?" He notices that if we take
a person's true preferences to be those expressed in the market, we may
neglect or reject the preferences that person reveals in advocating a
political cause or position. "One might argue on welfare grounds,"
Marglin speculates, "for authoritarian rejection of individuals' politi-
cally revealed preferences in favor of their market revealed
preferences!" "
Cost-Benft Analysis vs. Regulation
On February 19, 1981, President Reagan published Executive Or-
der 12,29112 requiring all administrative agencies and departments to
support every new major regulation with a cost-benefit analysis estab-
lishing that the benefits of the regulation to society outweigh its costs.
The order directs the Office of Management and Budget (OMB) to re-
view every such regulation on the basis of the adequacy of the cost-
benefit analysis supporting it. This is a departure from tradition. His-
torically, regulations have been reviewed not by OMB but by the courts
on the basis of the relation of the regulation to authorizing legislation,
not to cost-benefit analysis.
A month earlier, in January, 1981, the Supreme Court heard law-
yers for the American Textile Manufacturers Institute argue against a
proposed Occupational Safety and Health Administration (OSHA) reg-
ulation which would have severely restricted the acceptable levels of
cotton dust in textile plants.1 3 The lawyers for industry argued that the
9. R. MusGRAVE, THE THEORY OF PUBLIC FINANCE 87-88 (1959). 10. Marglin, The Social Rate of Discount and the Optimal Rate ofInvestment, 77 Q.J. ECON. 95, 98 (1963).11. Id 12. 46 Fed. Reg. 13,193 (1981). The order specifies that the cost-benefit requirement shall apply "to the extent permitted by law." 13. American Fed'n of Labor, etc. v. Marshall, 617 F.2d 636 (D.C. Cir. 1979), cert. granted sub nom. American Textile Mfrs. Inst., Inc. v. Marshall, 49 U.S.L.W. 3208 (1981). ARIZONA LAW REVIEW
benefits of the regulation would not equal the costs.' 4 The lawyers for
the government contended that the law required the tough standard., 5
OSHA, acting consistently with Executive Order 12,291, asked the
Court not to decide the cotton dust case in order to give the agency
time to complete the cost-benefit analysis required by the textile indus-
try. 6 The Court declined to accept OSHA's request and handed down
its opinion in American Textile Manufacturers v. Donovan on June 17,
1981.17
The Supreme Court, in a 5-3 decision, found that the actions of
regulatory agencies which conform to the OSHA law need not be sup-
ported by cost-benefit analysis.' In addition, the Court asserted that
Congress, in writing a statute, rather than the agencies in applying it,
has the primary responsibility for balancing benefits and costs.' 9 The
Court said:
When Congress passed the Occupational Health and Safety Act
in 1970, it chose to place pre-eminent value on assuring employees a
safe and healthful working environment, limited only by the feasibil-
ity of achieving such an environment. We must measure the validity
of the Secretary's actions against the requirements of that Act. 20
The opinion upheld the finding of the District of Columbia Court of
Appeals that "Congress itself struck the balance between costs and ben-
efits in the mandate to the agency." 21
The Appeals Court opinion in American Textile Manufacturers v.
Donovan supports the principle that legislatures are not necessarily
bound to a particular conception of regulatory policy. Agencies that
apply the law therefore may not need to justify on cost-benefit grounds
the standards they set. These standards may conflict with the goal of
efficiency and still express our political will as a nation. That is, they
may reflect not the personal choices of self-interested individuals, but
the collective judgments we make on historical, cultural, aesthetic,
moral, and ideological grounds. 22
14. 49 U.S.L.W. 3523-24. 15. Id 16. Id 17. American Textile Mfrs. Inst., Inc. v. Donovan, 49 U.S.L.W. 4720 (1981). 18. Id at 4724-29. 19. Id at 4726-29. 20. Id at 4733-34. 21. Id at 4726-29. 22. To reject cost-benefit analysis as a basis for policymaking is not necessarily to reject cost- effectiveness analysis which is an altogether different thing. For this difference, see Baram, Cost- Benoft Analysis: An Inadequate Basisfor Health, Safety, and Environmental Regulatory Decision- making, 8 ECOLOGY L. Q. 473 (1980). "Cost-beneft analysis. ..is used by the decisionmaker to establish societal goals as well as the means for achieving these goals, whereas cost-effecdieness analysis only compares alternative means for achieving 'given' goals." Id at 478 (footnote omit- ted). In practice, regulatory uses of cost-benefit analysis stifle and obstruct the achievement of legislated health, safety, and environmental goals. Id at 473. Further, to the extent that economic
[Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
The appeal of the Reagan Administration to cost-benefit analysis,
however, may arise more from political than economic considerations.
The intention, seen in the most favorable light, may not be to replace
political or ideological goals with economic ones, but to make eco-
nomic goals more apparent in regulation. This is not to say that Con-
gress should function to reveal a collective willingness-to-pay just as
markets reveal an individual willingness-to-pay. It is to suggest that
Congress should do more to balance economic with ideological, aes-
thetic, and moral goals. To think that environmental or worker safety
policy can be based exclusively on aspiration for a "natural" and "safe"
world is as foolish as to hold that environmental law can be reduced to
cost-benefit accounting. The more we move to one extreme, as I found
in Lewiston, the more likely we are to hear from the other.
Substituting Efficiency for Safety
The labor unions won an important political victory when Con-
gress passed the Occupational Safety and Health Act of 1970.23 That
Act, among other things, severely restricts worker exposure to toxic
substances. It instructs the Secretary of Labor to set "the standard
which most adequately assures, to the extent feasible. ..that no em-
ployee will suffer material impairment of health or functional capacity
even if such employee has regular exposure to the hazard. ..for the
period of his working life." 4
Pursuant to this law, the Secretary of Labor in 1977 reduced from
ten to one part per million (ppm) the permissable ambient exposure
level for benzene, a carcinongen for which no safe threshold is known.
The American Petroleum Institute thereupon challenged the new stan-
dard in court. 25 It argued, with much evidence in its favor, that the
benefits (to workers) of the one ppm standard did not equal the costs
(to industry). 26 The standard therefore did not appear to be a rational
response to a market failure in that it did not strike an efficient balance
between the interests of workers in safety and the interests of industry
and consumers in keeping prices down.
The Secretary of Labor defended the tough safety standard on the
factors are permissible considerations under enabling statutes, agencies should engage in cost- effectiveness analysis, which aids in determining the least costly means to designated goals, rather than cost-benefit analysis, which improperly determines regulatory ends as well as means. Id at 474. 23. Pub. L. No. 91-596, 84 Stat. 1596 (1970) (codified at 29 U.S.C. §§ 651-678 (1970)).
24. 29 U.S.C. § 655(b)(5) (1970). 25. American Petroleum Inst. v. Marshall, 581 F.2d 493 (5th Cir. 1978), at'd, 448 U.S. 607 (1980). 26. 581 F.2d at 501-05.
1981] ARIZONA LAW REVIEW
ground that the law demanded it.27 An efficient standard might have
required safety until it cost industry more to prevent a risk than it cost
workers to accept it. Had Congress adopted this vision of public pol-
icy-one which can be found in many economics texts 28-it would
have treated workers not as ends-in-themselves but as means for the
production of overall utility. This, as the Secretary saw it, was what
Congress refused to do. 29
The United States Court of Appeals for the Fifth Circuit agreed
with the American Petroleum Institute and invalidated the one ppm
benzene standard. 30 On July 2, 1980, the Supreme Court affirmed the
decision in American Petroleum Institute v. Marshall 3' and remanded
the benzene standard back to OSHA for revision. The narrowly based
Supreme Court decision was divided over the role economic considera-
tions should play in judicial review. Justice Marshall, joined in dissent
by three other justices, argued that the Court had undone on the basis
of its own theory of regulatory policy an act of Congress inconsistent
with that theory. 32 He concluded that the plurality decision of the
Court "requires the American worker to return to the political arena to
win a victory that he won before in 1970." 33
The decision of the Supreme Court is important not because of its
consequences, which are likely to be minimal, but because of the fasci-
nating questions it raises. Shall the courts uphold only those political
decisions that can be defended on economic grounds? Shall we allow
democracy only to the extent that it can be construed'either as a ra-
tional response to a market failure or as an attempt to redistribute
wealth? Should the courts say that a regulation is not "feasible" or "reasonable"-terms that occur in the OSHA law 34--unless it is sup-
ported by a cost-benefit analysis?
The problem is this: An efficiency criterion, as it is used to evalu-
ate public policy, assumes that the goals of our society are contained in
the preferences individuals reveal or would reveal in markets. Such an
approach may appear attractive, even just, because it treats everyone as
equal, at least theoretically, by according to each person's preferences
the same respect and concern. To treat a person with respect, however,
is also to listen and to respond intelligently to his or her views and
27. Id at 501. 28. See, e.g., R. POSNER, ECONOMic ANALYSIS OF LAW I & 11 (1973). In G. CALABRESI, THE COSTS OF AccIDENTSfassim (1970), the author argues that accident law balances two goals, "effi- ciency" and "equality' or "justice." 29. American Petroleum Inst. v. Marshall, 581 F.2d 493, 503-05 (5th Cir. 1978). 30. Id at 505. 31. 448 U.S. 607 (1980). 32. Id at 719. 33. Id 34. 29 U.S.C. §§ 655(b)(5) & 652(8) (1975).
[Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
opinions. This is not the same thing as to ask how much he or she is
willing to pay for them. The cost-benefit analyst does not ask econo-
mists how much they are willing to pay for what they believe, that is,
that the workplace and the environment should be made efficient.
Why, then, does the analyst ask workers, environmentalists, and others
how much they are willing to pay for what they believe is right? Are
economists the only ones who can back their ideas with reasons while
the rest of us can only pay a price? The cost-benefit approach treats
people as of equal worth because it treats them as of no worth, but only
as places or channels at which willingness to pay is found. 5
Liberty. Ancient and Modern
When efficiency is the criterion of public safety and health, one
tends to conceive of social relations on the model of a market, ignoring
competing visions of what we as a society should be like. Yet it is obvi-
ous that there are competing conceptions of what we should be as a
society. There are some who believe on principle that worker safety
and environmental quality ought to be protected only insofar as the
benefits of protection balance the costs. On the other hand, people ar-
gue-also on principle-that neither worker safety nor environmental
quality should be treated merely as a commodity to be traded at the
margin for other commodities, but rather each should be valued for its
own sake. The conflict between these two principles is logical or moral,
to be resolved by argument or debate. The question whether cost-bene-
fit analysis should play a decisive role in policy-making is not to be
decided by cost-benefit analysis. A contradiction between principles-
between contending visions of the good society-cannot be settled by
asking how much partisans are willing to pay for their beliefs.
The role of the legislator, the political role, may be more important
to the individual than the role of consumer. The person, in other
words, is not to be treated merely as a bundle of preferences to be jug-
gled in cost-benefit analyses. The individual is to be respected as an
advocate of ideas which are to be judged according to the reasons for
them. If health and environmental statutes reflect a vision of society as
something other than a market by requiring protections beyond what
are efficient, then this may express not legislative ineptitude but legisla-
tive responsiveness to public values. To deny this vision because it is
economically inefficient is simply to replace it with another vision. It is
to insist that the ideas of the citizen be sacrificed to the psychology of
the consumer.
35. For a similar argument against utilitarianism, see Hart, Between Utility and Rights,. 79 COLUM. L. REv. 828, 829-31 (1979). ARIZONA LAW REVIEW
We hear on all sides that government is routinized, mechanical,
entranched, and bureaucratized; the jargon alone is enough to dissuade
the most mettlesome meddler. Who can make a difference? It is plain
that for many of us the idea of a national political community has an
abstract and suppositious quality. We have only our private concep-
tions of the good, if no way exists to arrive at a public one. This is only
to note the continuation, in our time, of the trend Benjamin Constant
described in the essay De La Liberte des Anciens Comparee a Celle des
Modernes. 36 Constant observes that the modem world, as opposed to
the ancient, emphasizes civil over political liberties, the rights of pri-
vacy and property over those of community and participation. "Lost in
the multitude," Constant writes, "the individual rarely perceives the
influence that he exercises," and, therefore, must be content with "the
peaceful enjoyment of private independence. '37 The individual asks
only to be protected by laws common to all in his pursuit of his own
self-interest. The citizen has been replaced by the consumer; the tradi-
tion of Rousseau has been supplanted by that of Locke and Mill.
Nowhere are the rights of the modems, particularly the rights of
privacy and property, less helpful than in the area of the natural envi-
ronment. Here the values we wish to protect-cultural, historical, aes-
thetic, and moral-are public values. They depend not so much upon
what each person wants individually as upon what he or she thinks is
right for the community. We refuse to regard worker health and safety
as commodities; we regulate hazards as a matter of right. Likewise, we
refuse to treat environmental resources simply as public goods in the
economist's sense. Instead, we prevent significant deterioration of air
quality not only as a matter of individual self-interest but also as a
matter of collective self-respect. How shall we balance efficiency
against moral, cultural, and aesthetic values in policy for the workplace
and the environment? No better way has been devised to do this than
by legislative debate ending in a vote. This is very different from a
cost-benefit analysis terminating in a bottom line.
Values are Not Subjective
It is the characteristic of cost-benefit analysis that it treats all value
judgments other than those made on its behalf as nothing but state-
ments of preference, attitude, or emotion, insofar as they are value
judgments. The cost-benefit analyst regards as true the judgment that
we should maximize efficiency or wealth. The analyst believes that this
36. B. CONSTANT, DE LA LIBERTE DES ANCIENS COMPAREE A CELLE DES MODERNES (1819). 37. Oeuvres Politiques de Benjamin Constant, 269 (C. Louandre, ed. 1874), quoted in S. Wo- LIN, POLITICS AND VISION 281 (1960).
[Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
view can be backed by reasons, 38 but does not regard it as a preference
or want for which he or she must be willing to pay. The cost-benefit
analyst tends to treat all other normative views and recommendations
as if they were nothing but subjective reports of mental states. The
analyst supposes in all such cases that "this is right" and "this is what
we ought to do" are equivalent to "I want this" and "this is what I
prefer." Value judgments are beyond criticism if, indeed, they are
nothing but expressions of personal preference; they are incorrigible
since every person is in the best position to know what he or she wants.
All valuation, according to this approach, happens inforo interno; de-
bate inforopublico has no point. With this approach, the reasons that
people give for their views do not count; what does count is how much
they are willing to pay to satisfy their wants. Those who are willing to
pay the most, for all intents and purposes, have the right view; theirs is
the more informed opinion, the better aesthetic judgment, and the
deeper moral insight.
The assumption that valuation is subjective, that judgments of
good and evil are nothing but expressions of desire and aversion, is not
unique to economic theory. 39 There are psychotherapists--Carl Rogers
is an example-who likewise deny the objectivity or cognitivity of valu-
ation. 4" For Rogers, there is only one criterion of worth: it lies in "the
subjective world of the individual. Only he knows it fully." 41 The
therapist shows his or her client that a "value system is not necessarily
something imposed from without, but is something experienced. 42
Therapy succeeds when the client "perceives himself in such a way that
no self-experience can be discriminated as more or less worthy of posi-
tive self-regard than any other. ..."4 The client then "tends to place
the basis of standards within himself, recognizing that the 'goodness' or
38. There are arguments that whatever reasons may be given are not good. See generally Dworkin, Why Efficiency? 8 HOFSTRA L. REV. 563 (1980); Dworkin, Is Wealth a Value? 9 J. LE- GAL STUD. 191 (1980); Kennedy, Cost-Benfit Analysis of Entitlement Problems: A Critique, 33 STAN. L. REv. 387 (1980); Rizzo, The Mirage ofEfficiency, 8 HOFSTRA L. REV. 641 (1980); Sagoff, Economic Theory and Environmental Law, 79 MICH. L. REV. 1393 (1981). 39. This is the emotive theory of value. For the classic statement, see C. STEVENSON, ETHICS AND LANGUAGE chs. I & 2 (144). For criticism, see Blanshard, The New Subjectivism in Ethics, 9 PHILOSOPHY & PHENOMENOLOGICAL RESEARCH 504 (1949). For a statement of the related inter- est theory of value, see generally R. PERRY, GENERAL THEORY OF VALUE (1926); E. WEs- TERMARCK, ETHICAL RELATIVITY chs. 3-5 (1932). For criticisms of subjectivism in ethics and a case for the objective theory presupposed here, see generally P. EDWARDS, THE LOGIC OF MORAL DISCOURSE (1955) and W. Ross, THE RIGHT AND THE GOOD (1930). 40. My account is based on C. ROGERS, ON BECOMING A PERSON (1961); C. ROGERS, CLI- ENT CENTERED THERAPY (1965); and Rogers, A Theory of Therapy, Personality, and Interpersonal Relationships, as Developed in the Client Centered Framework, 3 PSYCHOLOGY: A STUDY OF A SCIENCE 184 (1959). For a similar account used as a critique of the lawyer-client relation, see Simon, Homo Psychologicus: Notes on a New Legal Formalism, 32 STAN. L. REV. 487 (1980). 41. Rogers, supra note 40, at 210. 42. C. ROGERS, CLIENT CENTERED THERAPY 150 (1965). 43. Rogers, supra note 40, at 208. ARIZONA LAW REVIEW
'badness' of any experience or perceptual object is not something inher-
ent in that object, but is a value placed in it by himself.""
Rogers points out that "some clients make strenuous efforts to
have the therapist exercise the valuing function, so as to provide them
with guides for action." 45 The therapist, however, "consistently keeps
the locus of evaluation with the client." '46 As long as the therapist re-
fuses to "exercise the valuing function" and as long as he or she prac-
tices an "unconditional positive regard" 47 for all the affective states of
the client, then the therapist remains neutral among the client's values
or "sensory and visceral experiences." 48 The role of the therapist is
legitimate, Rogers suggests, because of this value neutrality. The thera-
pist accepts all felt preferences as valid and imposes none on the client.
Economists likewise argue that their role as policy-makers is legiti-
mate because they are neutral among competing values in the client
society. The political economist, according to James Buchanan, "is or
should be ethically neutral: the indicated results are influenced by his
own value scale only insofar as this reflects his membership in a larger
group. '49 The economist might be most confident of the impartiality of
his or her policy recommendations if he or she could derive them for-
mally or mathematically from individual preferences. If theoretical
difficulties make such a social welfare function impossible, 50 however,
the next best thing, to preserve neutrality, is to let markets function to
transform individual preference orderings into a collective ordering of
social states. The analyst is able then to base policy on preferences that
exist in society and are not necessarily his own.
Economists have used this impartial approach to offer solutions to
many significant social problems, for example, the controversy over
abortion. An economist argues that "there is an optimal number of
abortions, just as there is an optimal level of pollution, or purity ....
Those who oppose abortion could eliminate it entirely, if their intensity
of feeling were so strong as to lead to payments that were greater at the
margin than the price anyone would pay to have an abortion." '51 Like-
wise, economists, in order to determine whether the war in Vietnam
was justified, have estimated the willingness to pay of those who
demonstrated against it.52 Following the same line of reasoning, it
44. C. ROGERS, supra note 42, at 139. 45. Id at 150. 46. Id 47. Rogers, supra note 40, at 208. 48. Id at 523-24. 49. Buchanan, Posiive Economics, Wepfare Economics, andPoltical Economy 2 J.L. & EcoN, 124, 127 (1959). 50. K. ARROW, SOCIAL CHOICE AND INDIVIDUAL VALUES I-V (2d ed. 1963). 51. H. MACAULAY & B. YANDLE, ENVIRONMENTAL USE AND THE MARKET 120-21 (1978). 52. See generally Cicchetti, Freeman, Haveman, & Knetsch, On the Economics ofMass Dem-
[Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
should be possible to decide whether Creationism should be taught in
the public schools, whether black and white people should be segre-
gated, whether the death penalty should be enforced, and whether the
square root of six is three. All of these questions arguably depend upon
how much people are willing to pay for their subjective preferences or
wants. This is the beauty of cost-benefit analysis: no matter how rele-
vant or irrelevant, wise or stupid, informed or uninformed, responsible
or silly, defensible or indefensible wants may be, the analyst is able to
derive a policy from them-a policy which is legitimate because, in
theory, it treats all of these preferences as equally valid and good.
Preference or Principle?
In contrast, consider a Kantian conception of value. 53 The indi-
vidual, for Kant, is a judge of values, not a mere haver of wants, and
the individual judges not for himself or herself merely, but as a mem-
ber of a relevant community or group. The central idea in a Kantian
approach to ethics is that some values are more reasonable than others
and therefore have a better claim upon the assent of members of the
community as such. 4 The world of obligation, like the world of math-
ematics or the world of empirical fact, is public not private, and objec-
tive standards of argument and criticism apply. Kant recognized that
values, like beliefs, are subjective states of mind which have an objec-
tive content as well. Therefore, both values and beliefs are either cor-
rect or mistaken. A value judgment is like an empirical or theoretical
judgment in that it claims to be true not merely to be felt.
We have, then, two approaches to public policy before us. The
first, the approach associated with normative versions of welfare eco-
nomics, asserts that the only policy recommendation that can or need
be defended on objective grounds is efficiency or wealth-maximization.
The Kantian approach, on the other hand, assumes that many policy
recommendations may be justified or refuted on objective grounds. It
would concede that the approach of welfare economics applies ade-
quately to some questions, for example, those which ordinary consumer
markets typically settle. How many yo-yos should be produced as
compared to how may frisbees? Shall pens have black ink or blue?
Matters such as these are so trivial it is plain that markets should han-
onstrations: A Case Study of the November 1969 March on Washington, 61 AM. ECON. REv. 719 (1971). 53. I. KANT, FOUNDATIONS OF THE METAPHYSICS OF MORALS (1969). I follow the interpre- tation of Kantian ethics of W SELLARS, SCIENCE AND METAPHYSICS ch. vii (1968) and Sellars, On Reasoning About Values, 17 AM. PHIL. Q. 81 (1980).
54. See A. MACINTYRE, AFTER VIRTUE 22 (1981). ARIZONA LAW REVIEW
die them. It does not follow, however, that we should adopt a market
or quasi-market approach to every public question.
A market or quasi-market approach to arithmetic, for example, is
plainly inadequate. No matter how much people are willing to pay,
three will never be the square root of six. Similarly, segregation is a
national curse and the fact that we are willing to pay for it does not
make it better, but only us worse. The case for abortion must stand on
the merits; it cannot be priced at the margin. Our failures to make the
right decisions in these matters are failures in arithmetic, failures in
wisdom, failures in taste, failures in morality-but not market failures.
There are no relevant markets which have failed.
What separates these questions from those for which markets are
appropriate is that they involve matters of knowledge, wisdom, moral-
ity, and taste that admit of better or worse, right or wrong, true or false,
and not mere economic optimality. Surely environmental questions-
the protection of wilderness, habitats, water, land, and air as well as
policy toward environmental safety and health-involve moral and
aesthetic principles and not just economic ones. This is consistent, of
course, with cost-effectiveness and with a sensible recognition of eco-
nomic constraints.
The neutrality of the economist is legitimate if private preferences
or subjective wants are the only values in question. A person should be
left free to choose the color of his or her necktie or necklace, but we
cannot justify a theory of public policy or private therapy on that basis.
If the patient seeks moral advice or tries to find reasons to justify a
choice, the therapist, according to Rogers' model, would remind him or
her to trust his visceral and sensory experiences. The result of this is to
deny the individual status as a cognitive being capable of responding
intelligently to reasons; it reduces him or her to a bundle of affective
states. What Rogers' therapist does to the patient the cost-benefit ana-
lyst does to society as a whole. The analyst is neutral among our "val-
ues'-having first imposed a theory of what value is. This is a theory
that is impartial among values and for that reason fails to treat the
persons who have them with respect or concern. It does not treat them
even as persons but only as locations at which wants may be found.
The neutrality of economics is not a basis for its legitimacy. We recog-
nize it as an indifference toward value-an indifference so deep, so
studied, and so assured that at first one hesitates to call it by its right
name.
The Citizen as Joseph K.
The residents of Lewiston at the conference I attended demanded
(Vol. 23 POLITICAL QUESTIONS AND ECONOMICS
to know the truth about the dangers that confronted them and the rea-
sons for those dangers. They wanted to be convinced that the sacrifice
asked of them was legitimate even if it served interests other than their
own. One official from a large chemical company dumping wastes in
the area told them in reply that corporations were people and that peo-
ple could talk to people about their feelings, interests, and needs. This
sent a shiver through the audience. Like Joseph K. in The Trial, 55 the
residents of Lewiston asked for an explanation, justice, and truth, and
they were told that their wants would be taken care of. They de-
manded to know the reasons for what was continually happening to
them. They were given a personalized response instead.
This response, that corporations are "just people serving people,"
is consistent with a particular view of power. This is the view that
identifies power with the ability to get what one wants as an individual,
that is, to satisfy one's personal preferences. When people in official
positions in corporations or in the government put aside their personal
interests, it would follow that they put aside their power as well. Their
neutrality then justifies them in directing the resources of society in
ways they determine to be best. This managerial role serves not their
own interests but those of their clients. Cost-benefit analysis may be
seen as a pervasive form of this paternalism. Behind this paternalism,
as William Simon observes of the lawyer-client relationship, lies a the-
ory of value that tends to personalize power. "It resists understanding
power as a product of class, property, or institutions and collapses
power into the personal needs and dispositions of the individuals who
command and obey." 56 Once the economist, the therapist, the lawyer,
or the manager abjures his own interests and acts wholly on behalf of
client individuals, he appears to have no power of his own and thus
justifiably manipulates and controls everything. "From this perspec-
tive it becomes difficult to distinguish the powerful from the powerless.
In every case, both the exercise of power and submission to it are por-
trayed as a matter of personal accommodation and adjustment." 57
The key to the personal interest or emotive theory of value, as one
commentator has rightly said, "is the fact that emotivism entails the
obliteration of any genuine distinction between manipulative and non-
manipulative social relations." 58 The reason is that once the affective
self is made the source of all value, the public self cannot participate in
the exercise of power. As Philip Reiff remarks, "the public world is
55. F. KAFKA, THE TRIAL (rev. ed. trans. 1957). Simon applies this anology to the lawyer- client relationship. Simon, supra note 40, at 524. 56. Simon, supra note 40, at 495. 57. Id 58. A. MACINTYRE, supra note 54, at 22. ARIZONA LAW REVIEW2
constituted as one vast stranger who appears at inconvenient times and
makes demands viewed as purely external and therefore with no power
to elicit a moral response." 59 There is no way to distinguish the legiti-
mate authority that public values and public law create from tyranny. 60
"At the rate of progress since 1900," Henry Adams speculates in
his Education, "every American who lived into the year 2000 would
know how to control unlimited power. "61 Adams thought that the
Dynamo would organize and release as much energy as the Virgin. Yet
in the 1980s, the citizens of Lewiston, surrounded by dynamos, high
tension lines, and nuclear wastes, are powerless. They do not know
how to criticize power, resist power, or justify power-for to do so de-
pends on making distinctions between good and evil, right and wrong,
innocence and guilt, justice and injustice, truth and lies. These distinc-
tions cannot be made out and have no significance within an emotive
or psychological theory of value. To adopt this theory is to imagine
society as a market in which individuals trade voluntarily and without
coercion. No individual, no belief, no faith has authority over them.
To have power to act as a nation we must be able to act, at least at
times, on a public philosophy, conviction, or faith. We cannot abandon
the moral function of public law. The antinomianism of cost-benefit
analysis is not enough.
59. P. REIFF, THE TRIUMPH OF THE THERAPEUTIC: USES OF FAITH AFTER FREUD 52 (1966). 60. That public law regimes inevitably lead to tyranny seems to be the conclusion of H. ARENDT, THE HUMAN CONDITION (1958); K. POPPER, THE OPEN SOCIETY AND ITS ENEMIES (1966); L. STRAUSS, NATURAL RIGHT AND HISTORY (1953). For an important criticism of this conclusion in these authors, see generally Holmes, Arisippus In and Out of Athens, 73 AM. POL. Sci. REV. 113 (1979). 61. H. ADAMS, supra note I, at 476.
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