Main trends of research in the social and human ... - unesdoc - Unesco

308 Economics
next five-year plan, they would prefer to see more people employed in non-pro-
ductive services (so that those services could thereby be improved), or shorter
working hours for all the employed. From the planner’s point of view, the choice
is indifferent, but it is difficult to see what ‘objective’ criterion can be employed.
Is there then any alternative to applying subjective preferences?
Welfare economics theory begs the question. The only practical approach is
to make an empirical analysis of the preferences of individuals and social groups
by sampling surveys, questionnaires, public opinion polls, and so on. This, how-
ever, will not give a clear-cut and non-controversial scale of utilities, especially
when moving from present to future choices.38 The problem becomes acute when
we go beyond market economies, i.e. either in considering a pre-market, prim-
itive economy or the theoretical model of a non-market socialist economy. In both
these cases, it is necessary to assume the existence of a scale of preferences and
also assume that optimization - the general purposein all human activities - can
be sought in the Pareto optima, i.e. by moving towards the individual goals so
long as the attainment of the other goals is not thereby prejudiced. This can
happen intuitively in the case of a very simple scale of preferences in a primitive
economy, 39 but, even with modern computer techniques, it is still difficult in an
industrial economy.
The fact that problems of measurement and aggregation remain shows clearly
the direction further studies aimed at perfecting the economist’s tool-box must
take. Progress here will largely decide how far reality can be expressed in terms
of a model and how far it will be possible to move from the model back to reality
and hence, permit the constructionof theoriesthat can provide a deeper and full-
er interpretation of reality.
B. Methods followed in diflerent provinces of economic theory
To continue the analysis, three provinces, and the methods connected with
them, must be singled out:
I. The theory of the functioning of the economy;
2. The theory of growth;4O
3. The theory of socio-economic development.
The theory of socio-economic development considers dynamic processes from
the point of view of changes in the structure of basic social relations. The theory
of functioning and the theory of growth assume that these relations are stable;4’
the first concentrates on quantitative changes and changes in the commodity
pattern of the output, the second on management mechanisms taken in the
broadest meaning.
In a sense, the theory of socio-economic development logically takes prece
dence over the theory of growth and the theory of the functioning of the econo-
my. However, socio-economic development takes place within the framework
of the economy, functioning in accordance with definite principles, and it results
from growth. The functioning of the economy obviously affects the process of
growth and vice versa. Thus, there are numerous inter-relationships between