ETHICS, SOCIAL CHOICE THEORY AND THE THEORY OF ECONOMIC POLICY.

This essay is intended as an expository paper on how the seemingly abstract social choice models are related to the practical problems of formulating models of economic policy. The flexibility of the social choice models in dealing with the problem of relating ethical propositions to propositions concerning social actions is not widely understood. The paper is divided into five sections. In the first section, it is argued that an economic policy should be viewed as a decision process rather than a decision and that the social choice models are a natural framework for the representations of the concept of a decision process. In addition, it is argued that Arrow's controversial 'Independence of Irrelevant Alternatives' axiom is actually a defining property of a political-economic process. Problems of 'policy formulation' are viewed, then, as problems of 'systems design' with the axiom being used as the defining characteristic of a 'system.' The second section contains a discussion of the concept of an 'ethic' as related to political economic processes.