"At every moment, by introspection we are aware of preferences unrevealed by our behavior. Figuring out the mental states of other people is obviously more difficult, but that hardly shows that their mental states do not exist. The statist could easily reverse Rothbard's objection, and claim that since there is no "ironclad proof" that third parties do not object to other people's voluntary exchanges, it is impossible to say whether that they increase social utility. Thus, Rothbard's welfare economics terminates in agnosticism about not only the benefits of intervention but the benefits of voluntary exchange." -Byron Caplan of GMU refuting one of Rothbard's arguments on social utility as excerpted from "Why I Am Not an Austrian Economist", http://econfaculty.gmu.edu/bcaplan/whyaust.html
How can logic alone predict the social utility of market processes?
Caplan's critique looks sound to me. I know Larry White also criticized Rothbard's welfare economics, possibly on similar grounds, but I don't know where to find that.
Well, people don't like pedophiles, even if they don't do anything harmful. Its likely they would be discriminated against and potentially attacked by radicals under anarchy. There are good reasons why anarchy will probably resemble anarcho capitalism, but not to a T. If society's prejudices are alligned against a certain group, they are screwed with or without a state.
I think more generally, it is true a priori that any random set of actions might produce utility, but you would never know this if the services were provided coercively. The only way to know what sorts of things are preferred by society is to let consumer demand show itself through prices...
But you still wouldn't know what is preferred by society, exactly the point Caplan is making.
Why should exchange increase welfare of third parties? Why does austrian economics need to claim that? There is no reason ican see for it. Only the welfare of the participants involved need meet the criteria
scineram:But you still wouldn't know what is preferred by society, exactly the point Caplan is making.
As Caplan pointed out, that's false.
scineram:As Caplan pointed out, that's false.
To be agnostic, you have to believe that people can't act to satisfy their wants and needs.
The statist could easily reverse Rothbard's objection, and claim that since there is no "ironclad proof" that third parties do not object to other people's voluntary exchanges, it is impossible to say whether that they increase social utility. Thus, Rothbard's welfare economics terminates in agnosticism about not only the benefits of intervention but the benefits of voluntary exchange.
Adress this first, as the opener asked, before talking about assertions.
scineram:and claim that since there is no "ironclad proof" that third parties do not object to other people's voluntary exchanges,
The objection presupposes that we can engage in interpersonal comparisons of utility, because it relies on the idea that the happiness of one group could be offset by the happiness of the other group. Can't compare subjective utility. Fail.
For example, if a gay couple wishes to get married and there's a bunch of rednecks who don't want it to go through, they could offer to pay the couple not to marry. In this way, the interests of actors on the market are harmonized.
This looks like the Kaldor-Hicks efficiency. But still not Pareto improvement, why would the gays pay the bigots when they can ignore them?
No one compared interpersonal utility. Fail.
scineram:This looks like the Kaldor-Hicks efficiency. But still not Pareto improvement, why would the gays pay the bigots when they can ignore them?
scineram:No one compared interpersonal utility. Fail.
Because he is discussing a claim Rothbard made. Here's the relevant paragraph from Caplan:
"While Rothbard and Mises had similar objections to mainstream utility theory, Rothbard went one step further by "reconstructing" welfare economics along Austrian lines. His main conclusions are simple and austere: every market transaction benefits all participants, while every act of government intervention benefits some people at the expense of others. Rothbard goes on to make a seemingly stronger claim: "If we allow ourselves to use the term 'society' to depict the pattern of all individual exchanges, then we may say that the free market 'maximizes' social utility, since everyone gains in utility."[20] This claim might be re-phrased to say simply that each voluntary exchange benefits all participants, and the free market permits the implementation of all desired voluntary exchanges."
The idea being that the two people who exchange both gain, everyone else in the world in unaffected, therefor the "whole world" gains.
Now for Snowflake's objection, that "Holding that it is possible for one group's happiness to cause greater unhappiness in another group presupposes the ability to compare interpersonal utility."
Caplan is not saying that. He is saying that, since we indeed cannot make that comparison, then IT MIGHT BE the case that everyone else is so jealous of the two people making the exchange that MAYBE the world as a whole is worse off [=more unhappy]. That's all he's claiming. And he's saying this to refute Rothbard, who claims that when A and B exchange, everyone else is MUST BE considered neutral about it.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
The bigots pay the gays not to get married. We let the price levels determine the outcome.
This scenario does not exist. What are you talking about?
Holding that it is possible for one group's happiness to cause greater unhappiness in another group presupposes the ability to compare interpersonal utility.
I never said their unhappiness is greater. Only that it exists. This dooms Pareto improvement.
Smiling Dave:then IT MIGHT BE the case that everyone else is so jealous of the two people making the exchange that MAYBE the world as a whole is worse off
scineram:This scenario does not exist. What are you talking about?
scineram:I never said their unhappiness is greater. Only that it exists. This dooms Pareto improvement.
Are you aware that what Caplan is criticizing is Rothbard claiming that market exchanges are always Pareto improvements?
I'm saying you can't even make this judgement without presupposing that some people can be objectively happier than others. Its nonsense.
1. That may be so. However, both Rothbard and Caplan disagree with you [as shown in the Caplan article] and assume that there might be such a thing. Rothbard just says we can't know someone is truly jealous, Caplan is claiming [quite rightly, it seems to me] that of course we can.
2. So if one person permanently cripples the whole world [but himself] because he likes hearing their shrieks of despair, we cannot make a judgement that the world as a whole is a sadder place?
I can't accept a premise that concludes this.
Smiling Dave:So if one person permanently cripples the whole world [but himself] because he likes hearing their shrieks of despair, we cannot make a judgement that the world as a whole is a sadder place?
But, now most Utilitarians don't think like this, but I think they should, that since you can't ever make interpersonal comparisons of utility you *can't* evaluate the effifacy of different plans for the world. You have to let people engage in voluntary relationships because that's the only way you can for sure increase their subjective wellbeing. From this position, a Utilitarian cannot even consider harming one for the good of the many, but rather must find an equal moral worth in each human being, wishing them the greatest possible good in their each of their lives.
This idea is highly undeveloped, but i've been toying with it for a while. Hopefully something good comes out of it.
That's right. Didn't notice that.
So yeah, Rothbard missed the boat here. Absolutely.
I would have argued differently.
Every govt action makes the owner of his own property unhappy, by taking it away from him withthe threat of force.
Every exchange makes the owners happier. As for the rest of the world being jealous or whatever, that's their problem. Deal with it, rest of the woirld. Grow up, whatever. No reason for anyone to consider your emotional state when you should be minding your own business.
Snowflake:
I have no units to measure it. So what? I think every person who ever existed on the face of the Earth would agree that yes, the world is more miserable from that transaction.
Theories are meant to organize and sharpen our understanding of the real world. If a theory says "Nope, no way of knowing, ridiculous to even ask, if the world is unhappier from that," I see it as a flaw in the theory.
I see a flaw also in your rebuttal of Utilitarianism. Because if we can't really tell what's best, why not do whatever we please? All plans are equally good.. Why not just go wherever cunning and force leads us? Maybe the world as it is right now is perfect, because Obama is happy. Why expend energy fighting it?
My thoughts on Utilitarianism. Say the world contracts a rare disease and everyone will die, except one person. That fellow has something in his blood that makes him immune. Now for some odd reason, it turns out that if he was to be crucified, his blood bleeding on the cross would save the world. He doesn't like the idea at all.
I think that indeed the sum total of human happiness would be greater if he was killed. But I think that he has the right to say "I don't care about the sum total of human happiness. I care about me more than the whole world put together, and that's my privilege. It's my body and my blood, and I will do with it as I please."
He is reserved the choice. What we cannot see is this man's potential guilt, should he not sacrifice himself. Perhaps there is an optimality in GHP comparing the potential loss of life and one man's guilt?
Smiling Dave:I have no units to measure it. So what? I think every person who ever existed on the face of the Earth would agree that yes, the world is more miserable from that transaction.
Smiling Dave:"Nope, no way of knowing, ridiculous to even ask, if the world is unhappier from that," I see it as a flaw in the theory.
Smiling Dave:All plans are equally good..
Thus my Utilitarianism abandons trying to maximize 'overall good' or whatever. The only good that can be advanced is subjective and individual. You cannot make interpersonal comparisons of this property. The only way to promote this kind of good is to preserve people's freedom to pursue their goals. This approach frustrates any attempt to sacrifice one for the many, because it must rely on some conception of aggregate good, which is meaningless.
Snowflake: This approach frustrates any attempt to sacrifice one for the many, because it must rely on some conception of aggregate good, which is meaningless.