Discussion of Arrow’s Paper

Professor Arrow began his celebrated monograph ‘Social Choice and Individual Values’ (1951) with the following words: ‘In a capitalist democracy there are essentially two methods by which social choice can be made: voting, typically used to make “political” decisions, and the market mechanism, typically used to make “economic” decisions’ (p. 1). Roughly twenty years later, in his Nobel prize lecture, Kenneth Arrow (1974) argued: ‘If we want to rely on the virtues of the market but also to achieve a more just distribution, the theory suggests the strategy of changing the initial distribution rather than interfering with the allocation process at some later stage. Thus … there is an irreducible need for a social or collective choice on distribution.’