Julio wrote:>... the notion of "failure" of a given social structure or institution must presuppose that such structure or institution is in place or, at least, possible. If markets (private ownership rights) are impossible, if they can't exist, then they can't fail.<
As usual, it depends on one's definition of "failure." If one sees "market failure" as the failure of the real world to live up to standards of the Walrasian general equilibrium system, then any missing markets represent failures of the market system. On the other hand, if one sees "market failure" as the failure of the those parts of empirical reality that are organized by market institutions to live up to Walrasian standards, then missing markets are _not_ market failures. (However, doesn't the theory of the second best say that if there are missing markets, it messes up all of the market system, so that an effort to solve "market failure" can actually encourage more waste?) Of course, those two definitions define market failure with reference to an ideal that is totally unknowable in practice (the Walrasian system). An alternative definition of market failure would be the failure of the market system to fulfill human needs while sustaining the natural environment.
The idea of failure of a social structure or institution is that,
under some conditions, social inefficiency (waste -- ultimate waste of human life) flows as a necessary consequence of such structure or institution.< is it a "market failure" if normal market operations kill people but the market value of human life is zero? if the price is zero, throwing it away is not really waste (at least not by market standards). If the price is low (but not zero), then by market standards it would not be "waste" to throw it away if the net benefits of doing so are positive. (Interestingly, the proof they gave us of the existence of equilibrium in the Walrasian system assumed "free disposal": if there's a glut of unemployed workers, for example, you can throw them away. Or is this a misinterpretation?) Julio:>And we cannot say that just because a perfectly healthy human being is an abstraction, the medical concept of illness is nonsensical or useless or arbitrary...< I don't think that the medical concept of illness centers on the notion of a perfectly healthy human being. I'm not a medical expert, but as I understand it, medical thinking instead centers on the notion of a person who successfully _functions_ as well as the "normal" human being over time and dies as long as practically possible after what would be indicated by average life-expectancy data. They might compare someone's health to the health in some other country during some other time, but as far as I know, doctors don't compare that health to an ideal. The MedlinePlus on-line medical dictionary defines "health" as: "the condition of an organism or one of its parts in which it performs its vital functions normally or properly : the state of being sound in body or mind ...; especially: freedom from physical disease and pain ..." Also, a "clean bill of health" is defined as the "absence of infectious disease" (see http://www.nlm.nih.gov/medlineplus/mplusdictionary.html.) Dictionaries only report on conventions, but these definitions are suggestive: it suggests that instead of defining health as attaining an ideal, it's the absence of pain and the like, which fits with defining it in terms of one's ability to function in a normal life. There's a philosophical contrast: whereas neoclassical economic theory is philosophically idealist, i.e., using the Walrasian system and its so-called "fundamental theorems of welfare economics" as the measure of success, the medical profession seems much more materialist, instead using actual data as the standard. More specifically, doctors define a "normal" temperature as an empirical average (98.6 degrees F) and see an unhealthy temperature as one that's significantly above or below that. (I'm sure they do account for individual differences, such as the woman in "Body Heat" -- Kathleen Turner (gasp!) -- who always has an above-"normal" temp.) On the other hand, the dominant ideology among economists seem to define "normal" as a totally-marketized society and unhealth as either situations where markets can't be instituted or where they are instituted but don't do a very good job (compared to the ideal). me:>>this is merely a matter of definition of the term "market failure." Definitions are, by their very nature, conventional.<< Julio:>Conventional doesn't mean arbitrary. There are degrees of social objectivity.< _of course_ conventions aren't arbitrary. But different paradigms (research programs) might have different conventions, i.e., those that are consistent with their core conceptions and ideological presuppositions. what, BTW, do you mean by "social objectivity"? Julio:>You didn't say you were proposing a better (personal) definition of market failure.< I don't have a "better" definition (which is why I often say that it is a waste of time to argue about what the "true" definition of anything is). I have never had a "better" definition of anything, except within the context of a larger theoretical framework and the specific questions being addressed. Instead of focusing on definitions, the key issue is to avoid a partial or one-sided understanding of (our perceptions of) empirical reality. Instead of using words in a way that simply assumes that everyone agrees on the definitions, I try to define words as I use them, in the contexts that I use them. After all, the meaning of words varies with context. (Unfortunately, it takes time and effort to always define terms. But it's a good idea.)
You said that the tragedy of the commons was a well-known market
failure among "neoclassicals," that they should respond to it, that it was in their official list, etc.< well that stuff about the "official list" was facetious (though something like an official can be seen in introductory and intermediate textbooks). If you want to stick with the definition that _you_ see as "official" (generally accepted by the neoclassical school), that's fine. Then I should have said that the tragedy of the commons is a well-known _tragedy_ among neoclassicals _even if_ they don't attach the "market failure" tag to it. Because it's a tragedy that concerns economic issues (which they're supposed to be concerned with), they should respond to it.
All I'm saying is that you have it wrong. For the economists, the
tragedy of the commons is not a market failure.< Right, as they define the term "market failure." And you mean _neoclassical_ economists here, right, since there is more than one paradigm? more than one way of figuring out how the world works? not all economists are neoclassicals, right? some are (say) Marxist, right? it's not like there's some totalitarian neoclassical mafia that defines all non-neoclassicals as non-economists, right? FWIW, I see neoclassical economics as that flavor of economics which focuses on voluntary exchange between individuals and perfect market equilibria as the essence of economic life. (Thanks to Peter Dorman for this suggestion.) This means, for example, that not all game theory is neoclassical. Julio:>So [if we follow the "official" definition that Julio says they use] they don't see the need to respond to it. Social conventions (definitions, concepts, etc.) have some semantic plasticity, but I just can't see how you can turn the tragedy of the commons into a "neoclassical" market failure.< there's no need for economists to respond to an economic tragedy, such as overfishing? should we allow mere definitions to determine whether we respond to something or not? (Maybe it matters to the State Department whether some event is dubbed "genocide" or not, but should social scientists and activists care that much about words?)
The other remarks I made weren't meant as imputations. I was just
trying to clarify things.< I wasn't taking anything personally. Normally, I have a very hard time taking _anything_ personally. (I do get peeved by a lack of communication...) -- Jim Devine / "The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side." -- James Baldwin
