జర్నల్ ఆఫ్ సోషల్‌మిక్స్

నైరూప్య

An Abridged Welfare-State Minded Introduction to the Art of Microeconomics

Gerasimos T Soldatos

This is an abridged set of notes on an introductory course in microeconomics designed to show how the welfare state is the only way to reconcile the central conclusion of this discipline, namely the harmony of consumer sovereignty, with the disharmony of capitalism especially when the need for merit goods is acknowledged. The first part of the paper presents the basic ingredients needed to have consumer sovereignty when only private goods are considered, and then characterizes consumer sovereignty in the presence of market failures and public goods, too. The second part introduces into the discussion merit goods preparing the ground for the conclusion that only the welfare state can alleviate the antithetic trends of capitalism and foster consumer sovereignty as a second-best approach to the system even when merit goods are present. It does so by noting that either the unfettered capitalism of globalization or the interventionist socialist market can be exploited politically and upset the system. The embedded liberalism of welfare state as the only successful means of “managed disharmony” is then concluded in the last section of these notes.