I agree but in the example cited there is no way to prove or disprove that a
given level of ticket scalping activity is or is not compatible with profit
maximization by the ticketing service firm. As you say, this kind of thing
tends to be tautological, especially if you think you can rely on only the
logic of neoclassical theory, rather than in depth empirical research of
market structure and behavior to answer the questions. I have hard time
expressing the depth of my contempt for neoclassical doctrine (especially
the Chicago school version) that presumes that knowledge based on empirical
research can be replaced with theocratic doctrine and the most cavalier
appeal to anecdote, the latter often heavily conditioned by the class
position and outlook of the economist. I was recently asked to review a
Chicago paper, by two star Chicago time economists, on the seemingly
innocuous subject of the economic returns to medical research. Knowing what
the client wanted to hear, they came to the conclusion that such returns
(even for publicly funded research) are enourmously large. But the
conclusion is, in fact, mainly spurious and is supposedly built on a model
of individual dynamic life-time utility optimization. In fact the aggregate
economic estimation excercise that comes up with the return has absolutely
no relationship to the model but, with a lot of obscurantism, it is made to
seem like there is a relationship and, in the typical mode of Chicago
economics, the policy problem and the answer to it are turned around a
vindication of the underlying eternal truthfullness of the theory. And in
the process the collateral damage of the model is that it "proves" that
people with more wealth inherently place a higher value of health.
And don't think that Chicago economics is some marginalized crack-potism.
It is the demoninant mode of economic thought in 90% of academia (pen-l
being 1% of the remaining 10%) and in the economic policy world.
-----Original Message-----
From: Jim Devine [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, March 20, 2001 2:49 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:9213] Re: Re: maximization?
At 12:45 PM 3/20/01 -0500, you wrote:
>So far my bias is that the maximization assumption seems exceedingly
>broad.
the problem with the profit maximization is that it tends to be
tautologically true, though not as much as the utility maximization theory
(in which any behavior, including self-mutilation or suicide, can be
interpreted as maximizing utility).
However, since there are forces that encourage profit maximization, such as
competition among capitalists and pressure from creditors, I'd say that
profit maximization is a useful first approximation.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
