Jay Hanson wrote: > ... If one removes equilibrium and Pareto where is the normative claim for > market outcomes? In other words, assuming they did a fairly good job of it, > why not have government simply give people basic biological needs (food, > water, shelter, healthcare, etc.)?<
I don't know that equilibrium is that central to normative claims for the market. Pareto optimality also seems a poor basis for normative claims, since it gives a small minority (of one) the veto power over any changes. In any event, most economists use Pareto only to define (static) "efficiency," which is only one metric for making normative claims. Chicago schoolers claim that efficiency is their only normative criterion, while others say that "equity" is important, too, and can overrule efficiency. There are of course other normative criteria available. A dynamic-disequilibrium approach of the sort I use says that Pareto is irrelevant, even if equilibrium does play a role (as a benchmark and/or center of gravity). Market changes regularly mean that some people are made worse off at the same time others are made better off. But return to the 50,000 euro question: what normative justifications are there for the market? First, free-market economists deny the possibility that the government could do "a fairly good job." James Buchanan and the Virginia "public choice" school argue that democracy is inherently inefficient and that the government represents a "special interest." Thus, government is a tool of last resort (i.e., for national defense, defending private property rights, enforcing contracts, etc.) Second, the so-called Austrian school doesn't care about Pareto and equilibrium either. They see the market as providing (negative) freedom and that's enough for them. By the way, mainstream economists do not have a concept of needs. (For them, "needs" are simply intense subjective wants.) I have a paper in the works that defines that concept: basic needs are costs of human living, while if these costs are not paid, human health declines (on the physical, mental, and/or social dimensions). -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
