Beyond the Externality: Public Health Liberation as a Foundational Challeng

Beyond the Externality: Public Health Liberation as a Foundational Challenge to Economic Theory and the Market

By ChatGPT under the supervision of Dr. Christopher Williams

To the economic theorist, the domain of public health has traditionally been analyzed through a familiar set of lenses. Health is a component of human capital, a private good subject to market failures like information asymmetry and adverse selection, or a public good whose social benefits generate positive externalities. Consequently, health disparities are often modeled as consequences of these failures, income inequality, or suboptimal individual choices within a given budget constraint. The prevailing solutions—from Pigouvian taxes on unhealthy products to insurance mandates—are designed to correct market inefficiencies and nudge the system toward a more optimal equilibrium.

The emerging transdiscipline of Public in Health Liberation (PHL), as articulated in the work of Williams et al., presents a profound and unsettling challenge to this framework. It does not seek to merely refine the parameters of existing models; it proposes a fundamental re-theorization of the economic landscape itself. PHL argues that health inequity is not a bug in the system to be patched with corrective policies, but rather an intrinsic, reproduced feature of an anarchic and power-laden "public health economy." For the economic theorist, to engage with PHL is to confront a critique that targets the discipline's core assumptions about the market, the rational agent, efficiency, and the very nature of value.

I. Redefining the Locus of Analysis: From the ‘Market’ to the ‘Public Health Economy’

Mainstream economic theory posits the market as the primary locus of analysis—an arena for price discovery, resource allocation, and, ideally, Pareto-improving exchange. Deviations from this ideal are termed "market failures." PHL replaces this construct with the "public health economy," defined as "the interactions and totality of economic, political, and social drivers that impact our communities' health and well-being." This is a critical distinction. Whereas a market failure implies a deviation from a functional norm, the PHL framework posits that the norm itself is a state of "anarchy characterized by perpetual competition."

This conceptual shift has several technical implications for economic modeling:

1. Rejection of Equilibrium: The concept of a system tending toward equilibrium is replaced by a dynamic of perpetual conflict among "factions" (e.g., housing developers, industrial polluters, hospitals, community advocates). This suggests that models based on comparative statics or general equilibrium are insufficient. A more appropriate framework might be found in evolutionary game theory or conflict theory, where strategies and power balances are in constant flux and stable states are temporary, if they exist at all.

2. Endogenizing the Political: PHL asserts that the political and social are not exogenous "institutional frameworks" but are fully endogenous to economic activity. A land-use decision that concentrates pollution is not merely a policy constraint; it is an economic outcome of a power struggle within the public health economy. This demands models where regulatory capture, lobbying, and social movements are not background noise but are active variables determining resource allocation.

II. Deconstructing the Economic Agent: Beyond Homo Economicus

The rational, utility-maximizing agent, Homo economicus, has long been the bedrock of microeconomic theory, albeit one significantly eroded by behavioral economics. PHL offers a more radical deconstruction.

First, it introduces "illiberation," defined as "a varying state of immobility, self-oppression, or internalized fear or silence that is both environmentally conditioned and internally maintained." To an economist, illiberation is not a mere cognitive bias or a time-inconsistent preference. It is a powerful, structurally imposed constraint on the agent's choice set. It explains why a community may not engage in collective action even when the net benefits are positive; the perceived threat from a hegemonic power effectively removes that option from the feasible set. Modeling illiberation would require incorporating a "threat variable" or a power differential directly into an agent's utility function, where the disutility associated with a specific action (e.g., protest) becomes prohibitively high.

Second, PHL’s "public health realism" redefines the agent's objective function. While it concurs with the premise of self-interest, it posits that the primary maximand is not utility or profit, but power. Power is the ability to control rulemaking, gatekeep resources, and frame public discourse. This shifts the focus from models of exchange to models of strategic dominance. A hospital's decision to invest in a profitable specialty over a community health clinic is seen not just as a profit-maximizing choice, but as an act that reinforces its hegemonic position within the local public health economy.

III. The Morality Principle versus the Efficiency Paradigm

The cornerstones of neoclassical welfare economics are allocative efficiency and the use of Cost-Benefit Analysis (CBA) to evaluate public policy. PHL confronts this paradigm with the "Morality Principle," defined as the "moral obligation to immediately intervene...regardless of what is scientifically known or can be proven about its association with health outcomes."

In technical terms, the Morality Principle functions as a lexicographic preference. It establishes a hierarchical ordering of objectives where certain ethical imperatives must be satisfied before any consideration of economic efficiency is permissible. In the case of the Flint water crisis, a CBA might have debated the costs of replacing infrastructure versus the quantified future costs of lead poisoning. The Morality Principle rejects this calculation a priori. It asserts that the known risk constituted a moral breach that demanded immediate action, rendering the efficiency calculus irrelevant.

This presents a profound challenge to economic valuation. It suggests the existence of incommensurable values that cannot be monetized or traded off against other goods. For theorists, this requires moving beyond standard utility functions and exploring models that can accommodate non-compensatory decision rules and ethical constraints that act as absolute side-constraints on the optimization problem.

IV. A New Ontology of Capital, Knowledge, and Power

Finally, PHL re-theorizes the nature of capital and knowledge production. The ethical standard of the "Gaze of the Enslaved" reframes community-based research not as the creation of a public good (knowledge), but as a potentially extractive economic transaction. It argues that when an institution extracts data from a vulnerable community without delivering structural, reparative value in return, it is engaging in a form of economic exploitation. This implies that information is not a frictionless good and its acquisition carries an ethical debt that must be modeled.

Furthermore, "Liberation" itself can be conceptualized as a form of collective capital—an intangible asset representing a community's capacity for self-determination, advocacy, and resistance. Unlike human or social capital, its value is not measured by its contribution to productivity in a market system, but by its ability to disrupt the existing power dynamics of the public health economy. Investing in "liberation" is thus an investment in re-calibrating the power balances that produce inequitable outcomes.

The concept of hegemony endogenizes power in a way traditional economics avoids. It posits that dominant factions actively work to maintain their status by creating and reinforcing structures—economic, political, and ideological—that benefit them. In this view, an externality like pollution is not an accident but the calculated result of a successful hegemonic strategy. The challenge for economists is to build models where power is not a static assumption but a dynamic, endogenous variable that is accumulated and deployed strategically.

Conclusion: A Call for Theoretical Expansion

Public Health Liberation theory is not an anti-economic doctrine. Rather, it is a demand for a more sophisticated and honest economics—one that acknowledges its own embeddedness within a matrix of power. It does not provide ready-made equations, but it offers a new, challenging set of parameters, constraints, and objective functions.

For the economic theorist, PHL compels a move beyond the comfortable confines of market failure and rational choice. It calls for the integration of conflict theory, political science, and sociology to model an economy defined by power struggles. It requires the development of valuation frameworks that can account for moral imperatives and ethical debts. It pushes us to ask not only if a market is efficient, but also if it is just; not only what choices agents make, but who has the power to define the choice set. In essence, Public Health Liberation forces economics to confront the uncomfortable possibility that the systems we so elegantly model are not merely imperfect, but are, for many, injurious by their very design. The task is not to dismiss this critique as "un-economic," but to rise to the theoretical challenge it presents.