On Tue, 9 Jul 1996 [EMAIL PROTECTED] wrote: > To Tavis B. > Of course if preferences are well ordered and convex and > technology and resources are suitably well behaved an Arrow- > Debreu equilibrium exists. But so what? The criticism is indeed > on the lines of the autonomy of preferences. They are socially > determined, they are bought, etc. Also, there is strong evidence > that they are not "well ordered" in the Arrow-Debreu sense, and > for some people some of the time they are not convex, which was > the starting point of this thread, if I remember correctly. Fair enough. The original thread was on the consistency of utility theory. Some suggested that the theory fell apart if preferences were socially determined. My point was that the result of market prices somehow being "optimal" fell apart, but that the theory was still usable. You seemed to be defending (though I'm not sure since it was by way of example rather than statement) a previous post (I can't remember whose) that suggested that commodities did not provide pleasure, except inasmuch as they provide people with the ability to continue habitual behavior. This would, indeed, be deadly for utility theory, since it provides no basis to evaluate hypothetical consumption bundles, and also because it might imply that people with different levels of consumption would be just as happy with their respective consumption bundles provided that those bundles are habitual. I disagree (I went into more detail in my response to Terry) since I think that enjoyment of commodities is developed by an interaction of social acceptance and physical stimulation and not (usually) by either one alone. I grant that equilibria won't exist if preferences aren't convex, however this strikes me as a somewhat arbitrary critique for radicals to make, i.e., there are no real politics of non-convex preferences. I'm less concerned about the production sets since I think the NC theory of the firm is so bad as to be pretty much useless. My question was more along the lines of, if we don't like utility theory, what would be a better approach? > I do not have an answer to how to measure "efficiency" outside > of the NC or some related framework such as dynamic programming > (central planner plugs in objective function). Does it matter? > Perhaps other goals such as sustainability and equality matter more. I don't defend any NC notions of efficiency and I agree with your point. I was referring to the word in a slightly different sense: When labor values determine prices, one of the assumptions is that labor is efficiently exploited, i.e., firms that make useless goods go out of business quickly. This essentially assumes a theory of demand without ever spelling it out. Perhaps this is a time for a Marxologist like Jim to tell me I'nm wrong, but my sense and my recollection from reading Capital is that Marx never worked out what determined why people bought some commodities and not others. NC utility theory does, and this gives it some original value. Cheers, Tavis
