David B. Shemano wrote:
> I agree with all of this [i.e., my rant about how the concept of "rational
> utility maximization" is well-nigh tautological and thus a red herring]. <
Jay Hanson writes:
> "Rational utility maximization" is a false description of how humans make
> decisions. In fact, present-day economics is much like Ptolemaic model of
> the solar system. It more-or-less worked but was completely wrong. But does
> it matter if economics doesn't describe the real world?<
That's just assertion -- and doesn't answer what I said. The fact is
that if a concept is tautological (as I think "rational utility
maximization" is well-nigh), then it really doesn't describe anything.
It's just a matter of definition. As far as I can tell, the main
purposes of "rational utility maximization" are (a) to allow abstract
models to have equilibria; and (b) to express most economists'
narrow-minded individualism. I guess we might add a third: to imply a
benchmark to compare the real world to.
The Ptolemaic system wasn't tautological, but was instead a poor theory.
Jay:
>What do you folks think the purpose of economics is now?<
to give something for economics professors to teach (and some of them
to teach free-market ideology), to allow some to study totally
abstract questions in Cloud-Cuckoo land and to demonstrate their
mathematical prowess, and to make economic policy advisers sound more
profound than they really are.
>What do you folks think the purpose of economics should be?<
to allow people to have a greater understanding of the empirical world
than they currently have, so that they can change it for the better.
I ranted:
>>> The problem is not with individuals not maximizing utility, but with
>>> markets, which (as well-known to those who study economics seriously)
>>> fail to serve consumer wants and are best at serving those who have
>>> lots of liquid assets (i.e., money), among other things giving them
>>> "consumer sovereignty" over those with fewer assets.
David:
> Again, no real disagreement with the statement as far as it goes. The
> disagreement is with your silent assumption that there is an alternative
> better than markets.<
I've talked about this before, so there's no point creating a long
post. I am greatly familiar with the Churchillian approach ("Markets
are the worst form of organizing economic production and distribution,
except for all those other forms that have been tried from time to
time.") I have three points:
1) it's a mistake to confuse "markets" with capitalism (the society we
live in), because the latter inherently involves class inequality
(those with a lot of liquid wealth have power over those without) and
non-market forms (bureaucratic command, as in corporations or the
coercive power of the state).
2) I think that an approach similar to that of Charlie Andrews (FROM
CAPITALISM TO EQUALITY) would be highly superior to capitalism. It's a
good place to start.
3) on a less utopian note, I already described my ideas about
parent/teacher collectives replacing the current bureaucratic system
and preventing the hostile take-over of the public school system by
the self-styled "reform" movement.
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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