148 SECTIONAL ADDRESSES 



economic objective was to achieve the preferred position the maxim of 

 laissez-faire was exalted and a wealth of recommendations vouchsafed. 



These may be defended at least negatively. A given interference, 

 unless specifically designed to shape the real world to a closer approxima- 

 tion to the map, is likely to distort it further from it. In this case reference 

 to the criterion makes valid condemnation possible. 



More recently there has been a proper tendency to go beyond this 

 negative attitude and to consider what interferences might be introduced 

 to make the real world more like the map. Recommendations of this sort 

 must be based on a vigilant observation of the actual working of real 

 institutions (but they do not rest on causal laws or predictory powers). 



In this connection reference may be made to the formulation by Prof. 

 Pigou, already referred to, that the marginal social net product of resources 

 in difi^erent occupations should be equal. Time forbids me to consider 

 the definitions and classifications required to support this. It is the 

 necessary but not sufficient condition for the fulfilment of the criterion 

 that individuals should get what they prefer and may be regarded as a 

 (partial) re-statement of it. 



The fact that a large part of Prof. Pigou's Economics of Welfare consists 

 in the appraisal of institutions and proposals in the light of his criterion is 

 evidence that this line of thought still has vitality. 



Recent theorems relating to Imperfect Competition, which in my own 

 mind at least have a direct intellectual connection with Prof. Pigou's 

 consideration of Increasing Returns in the light of his criterion, appear 

 to have their principal value, not in the realm of causal laws or prediction, 

 but as an endeavour to show in an orderly and systematic way how real 

 markets are distorted by comparison with those of the map. 



In spite of these interesting developments I feel that there is a danger 

 that this part of economic speculation, the field of its most signal triumphs 

 in the past, may suff^er an undeserved neglect, whether owing to the 

 economist's absorption in rival interests or to his discouragement at the 

 overthrow of free trade. A mistaken methodological ban on advice- 

 giving might also contribute something. 



The widespread growth of government interference makes this function 

 more and not less important. Officially sponsored rationalisation schemes, 

 arrangements for the semi-public operation of services, public policy with 

 regard to road and rail transport, marketing board arrangements all require 

 vigilant scrutiny in the light of the criterion, to say nothing of more full- 

 blooded socialist programmes. Even if public policy appears to violate 

 the advice which the economist would give simpliciter, this is no excuse 

 for him not to take an interest in the fulfilment of his criterion subject to 

 the overriding demands of policy. He may think that there is no case for 

 giving agriculture special protection ; in the face of the opposite policy 

 he has scope enough to criticise the arrangements introduced to give effect 

 to it. If he loses interest in this field of thought, the country is only too 

 likely to get tied up with red tape and be subject to vast avoidable wastage. 



One further topic remains for consideration in this section. 



The preference criterion which forms the basis of the kind of investiga- 

 tion here considered was stated in a form not involving the comparison 



