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It depends how you define "socially optimal". A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of the

It depends how you define "socially optimal". A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. A market can consist solely of such interaction. A democracy on the other hand involves people via votes controlling what other people can and can't do (in a market context, reducing their control over what, how and to whom they can exchange their labour and products thereof), which necessarily entails some kind of loss (in terms of otherwise-realised unrealised preference) from the people who are not able to do what they'd be doing absent coercion by the democracy's enforcers. Pure free-market economics adopts the epistemological stance that utility (the economic proxy for value, based roughly on the notion of value being defined as the sum of people's realised preferences) isn't quantifiable, so no potential utility gained from the results of the democratic thwarting of some people's preferences can outweigh the definite loss from those people not realising their preferences. Other schools of economics do view utility as quantifiable, so it's possible to say that there can be a net benefit from interfering with someone's preferences based on the result of democratic process. They disagree however in how utility is best quantified. Schools of thought external to economics often have measures of value that differ substantially from the economic notion of utility. In particular, any scheme that assumes the existence of moral absolutes is fundamentally incompatible with the notion of utility. It's hence important to consider that any economics that makes recommendations (that isn't just econometrics/prediction) is necessarily based on some particular philosophical propositions regarding what's valuable. Without this, economic discussion tends to degrade to people talking past each other because they have fundamentally different theories of value, fundamentally different metrics for the "optimal" in social optimality. To put it another way, whether or not there is an optimal solution depends on how optimality is defined, so discussing solutions without defining optimality is pointless.

eli_gottlieb 11y ago
>A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. This is, of course, completely unrealistic, but in some contexts it happens to help the modeling involved in academic economics.
lern_too_spel 11y ago
That "key notion" ignores market failures like externalities, in which everybody could make trades that help themselves, but everybody ends up worse off. In fact, this whole article makes a ridiculous mistake. Nobody is arguing for a command economy. Democratic socialists just want regulations that fix market failures.
asgard1024 11y ago
> A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. A market can consist solely of such interaction. The problem is that interactions of two other people can also impose cost on me. Then if this is worse than some opportunity lost is not clear cut. > Pure free-market economics adopts the epistemological stance that utility isn't quantifiable I know, but it's an absurd stance, isn't it? It let's you do things like seeing a person that has a heart attack and thinking "I see you have a heart attack, but why should I help you, maybe it's your preference!" I think any actor has to assume certain, at least very fuzzy, preferences of other actors to be able to operate in the world. I suspect there are actual rational reasons why people don't want to have their preferences revealed, and this economic school of thought's usage of the "non-quantifiable argument" is just a one of the possible rationalizations. > so discussing solutions without defining optimality is pointless I actually feel the same way reading the article.
- logicchains 11y ago
  >The problem is that interactions of two other people can also impose cost on me. Then if this is worse than some opportunity lost is not clear cut. The economic answer would be that the possible costs it could impose on you can be expressed as violations of your property rights, and if they wished to do this then they'd need to compensate you, or else you could sue them for redress. >I know, but it's an absurd stance, isn't it? It let's you do things like seeing a person that has a heart attack and thinking "I see you have a heart attack, but why should I help you, maybe it's your preference!" Being absurd doesn't necessarily make it less philosophically valid. In one sense the whole concept of morality is absurd, via https://en.wikipedia.org/wiki/Regress_argument https://en.wikipedia.org/wiki/Regress_argument. There's even a school of philosophy called Absurdism that based around recognition of the absurdity of seeking absolute values that inherently cannot be found: https://en.wikipedia.org/wiki/Absurdism https://en.wikipedia.org/wiki/Absurdism. On a more concrete level, the rejection of quantifiable utility is based on rejection of the extra assumptions it requires. Two in particular: firstly, it assumes some kind of simple relationship, so that if person X buys 10 apples for $100, then they valued each apple at $10 (linear), or maybe the first at $50, the second at 25$, etc. (polynomial). There is however no irrefutable logical justification for the assumption, e.g. perhaps they valued the first at $30, the second at $1, the third at $4, the fourth at $5. Secondly, it assumes that a person's preferences at time t have any relation to their preferences at time t+1.

eli_gottlieb 11y ago

lern_too_spel 11y ago

That "key notion" ignores market failures like externalities, in which everybody could make trades that help themselves, but everybody ends up worse off. In fact, this whole article makes a ridiculous mistake. Nobody is arguing for a command economy. Democratic socialists just want regulations that fix market failures.

asgard1024 11y ago

> A key notion of economics is that if two people voluntarily agree to something, it must be of some benefit of them at that moment compared to alternatives else they wouldn't have agreed. A market can consist solely of such interaction. The problem is that interactions of two other people can also impose cost on me. Then if this is worse than some opportunity lost is not clear cut. > Pure free-market economics adopts the epistemological stance that utility isn't quantifiable I know, but it's an absurd stance, isn't it? It let's you do things like seeing a person that has a heart attack and thinking "I see you have a heart attack, but why should I help you, maybe it's your preference!" I think any actor has to assume certain, at least very fuzzy, preferences of other actors to be able to operate in the world. I suspect there are actual rational reasons why people don't want to have their preferences revealed, and this economic school of thought's usage of the "non-quantifiable argument" is just a one of the possible rationalizations. > so discussing solutions without defining optimality is pointless I actually feel the same way reading the article.

logicchains 11y ago
>The problem is that interactions of two other people can also impose cost on me. Then if this is worse than some opportunity lost is not clear cut. The economic answer would be that the possible costs it could impose on you can be expressed as violations of your property rights, and if they wished to do this then they'd need to compensate you, or else you could sue them for redress. >I know, but it's an absurd stance, isn't it? It let's you do things like seeing a person that has a heart attack and thinking "I see you have a heart attack, but why should I help you, maybe it's your preference!" Being absurd doesn't necessarily make it less philosophically valid. In one sense the whole concept of morality is absurd, via https://en.wikipedia.org/wiki/Regress_argument https://en.wikipedia.org/wiki/Regress_argument. There's even a school of philosophy called Absurdism that based around recognition of the absurdity of seeking absolute values that inherently cannot be found: https://en.wikipedia.org/wiki/Absurdism https://en.wikipedia.org/wiki/Absurdism. On a more concrete level, the rejection of quantifiable utility is based on rejection of the extra assumptions it requires. Two in particular: firstly, it assumes some kind of simple relationship, so that if person X buys 10 apples for $100, then they valued each apple at $10 (linear), or maybe the first at $50, the second at 25$, etc. (polynomial). There is however no irrefutable logical justification for the assumption, e.g. perhaps they valued the first at $30, the second at $1, the third at $4, the fourth at $5. Secondly, it assumes that a person's preferences at time t have any relation to their preferences at time t+1.