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A critique of Pieter Hennipman's comment that Paretian welfare economics is not a part of normative economics is presented. Hennipman argues that the assumptions of Paretian welfare economics were not based on value judgements. However, an analysis of consumer behavior and individualism reveals that consumer actions are based on accepted norms borne out of value judgements. Since the assumptions of Paretianwelfare economics are based on norms, it can be concluded that it is a part of normative economics.

Something happened to economics in the decade of the 1950s that is little appreciated by most economists and even by professional historians of economic thought. The subject went through an intellectual revolution as profound in its impact as the so-called Keynesian Revolution of pre-war years. I call it the Formalist Revolution after Ward (1972, pp. 40?41), who was the first to recognize the profound intellectual transformation of economics in the years after World War II.

THE RHETORIC OF ECONOMICS by Donald N. McCloskey Madison, Wis.: University of Wisconsin Press, 1985; 229 pp., $21.50

Conclusions: The Royal Opera House could resort less and less to guest artists of intermational standing; it could lean more heavily than it already does on old favourites; it could skimp on new productions; and it could increase the number of ballet performances at the expense of opera. All these measures would tend to hold down seat prices. But without a substantial increase in its Arts Council grant, the Royal Opera House could not significantly cut seat prices unless it drastically changed its basic artistic policy. It is not my purpose to advocate. The choice is yours. Indeed, the choice is everyone's, including people who never go to ballet or opera, because everyone is paying for ballet and opera seats.

Health economics took off in 1970 or thereabouts, just after the take‐off date for the economics of education. Although early health economics made use of human capital theory as did the economics of education, it soon took a different route inspired by Arrow's work on medical insurance. The economics of education failed to live up to its promising start in the 1960s and gradually ran out of steam. The economics of health, however, has made steady theoretical and empirical progress since 1970, principally in coming to grips with the implications of supplier‐induced demand and the difficulties of evaluating health care outcomes. Some of the best work on British health economics has been in the area of normative welfare economics, defining more precisely what is meant by equity in the delivery of health care and measuring the degree of success in achieving equity. Recent efforts to reform the NHS by the introduction of ‘quasimarkets’ have improved the quantity and quality of health care in Britain. In short, British health economics has been characterised by the use of Pigovian piecemeal rather than Paretian global welfare economics, retaining a distinctive style that sets it apart from American health economics.

F. A. Hayek's contributions to a variety of disciplines were decisively influenced by his career as an economist, running from early work in capital theory and business cycles to the economics of socialism and neo-Austrian theories of competition. After reviewing his battle with Keynesian economics, this essay examines the socialist calculation debate, which altered Hayek's views of the central task of economics and led to a definite but disguised break with the views of Ludwig von Mises; and discusses the issue of what, if anything, economics can predict, an area Hayek never thoroughly explored. An air of uncertainty therefore continues to hang over many of his fundamental ideas.

The patterns of government subsidies to higher education in France, Germany, Netherlands, Sweden, and the United Kingdom (UK) are compared and contrasted. The subsidies are subsequently evaluated in the light of stated policy objectives, with particular attention to the objectives of efficiency and equity. Two extreme models of financing are considered; one in which public subsidy covers 100 per cent of the private costs of higher education, including income forgone by students, the other in which public subsidy to students is kept at a minimum. The study concludes that the ideal package from the standpoint of efficiency and equity is (1) a grants system in the last few years of secondary education; (2) a system of fees equal to about 30–50 per cent of institutional incomes and (3) an income contingent loan scheme (or graduate tax) for both undergraduate and postgraduate students.

The origins of the concept of recurrent education and the claims presently made for it are analyzed. The recurrent education policies presently pursued in six OECD countries are described. The theory of recurrent education and relevant empirical data are reviewed. The authors conclude that the concept of recurrent education requires clarification and that the costing of proposals for recurrent education should be undertaken.

This paper examines three alternative explanation of the basic finding that amounts of education and personal earnings are positively correlated in some 30 countries studied. Arbitrarily labelled (1) the “economic”, (2) the “sociological” and (3) the “psychological” explanation, (1) argues that better-educated people earn more because education imparts vocationally useful skills that are in scarce supply; (2) propounds that they do so either because length of schooling is itself correlated with social class origins or because education disseminates definite social values which are prized by the ruling elite of a society; (3) contends that education merely selects people in accordance with their native abilities and, obviously, abler people earn more than less able ones.