Ethical Reflections on the Financial Crisis 20072008 by Wilfried Eecke

Author:Wilfried Eecke
Language: eng
Format: epub
Publisher: Springer Berlin Heidelberg, Berlin, Heidelberg

4.4 Philosophical Justifications and the Categories of Merit Goods

Pointing out that the concept of merit goods is necessary to conceptualize certain economic events is one way to justify it, but I also want to take a more ambitious tack and show the conceptual necessity of the idea of merit good. If individuals and consumers desire an end, they have to accept the means necessary to achieve it. That is, individuals have to accept the conditions whether agreeable or not, that are necessary for their wishes. This kind of reasoning rests on the insight that there are logical relations in reality, which have validity, even if consumers do not like them.16 Thus if one needs food, one needs money to buy it or one must be able to grow it oneself or one needs to be able to rely on somebody to give it.

What are the conditions for the possibility of a given good or service that individuals, as economic actors, wish? Western citizens as economic actors wish for a free market.17 In order to prevent individuals from escaping the discipline of the competitive free market, the state will have to impose measures which violate the Pareto principle. These measures are the necessary conditions—the possibility conditions– for implementing the ideal efficiency of the free competitive market. I shall call merit goods those goods that are the conditions for the possibility of the free market, especially if these merit goods or services themselves are not preferred by consumers. Paradoxically, a market left truly free (that is entirely unregulated) will not perform what are considered the beneficial functions of “free markets.” Thus, if individual consumers desire a free market they have to accept the necessary conditions to arrive at it even if they seem contrary to their short-term interests. These are what Kant would call conditions of the possibility, or those things necessary, to achieve an end. Describing merit goods this way sets a theoretical limit to the concept. The government cannot thwart the wishes of the consumer whenever it feels like it: the government needs arguments to justify overriding consumer sovereignty. It should only act when its actions will facilitate the market or its effectiveness and its actions are morally and constitutionally acceptable. If this philosophical reasoning is correct it means that economic thinking necessarily has to propose that the government should perform economic activities that interfere with the wishes of consumers. That is, one can assume that economic thinking will propose economic activities to the government, which will respect neither the Pareto principle nor the consumer sovereignty principle. This means that economists will recommend to the government some economic activities, which might cause disadvantage to some citizens, and might favor others.

Thus, the concept of merit good refers to those economic activities of the government that cannot be justified by arguing they help consumers achieve the satisfaction of their wishes. Such activities are captured by the concept of public good. Merit goods can be justified as the necessary conditions for the efficient

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