“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…
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
Who’s you? The central planner? The armchair designer? You don’t have to know the specifics. So long as people express their preferences in voluntary ways, they are playing a positive sum game.
This information would be transmitted on the market in the form of prices. 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.
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.
You’re confused. The bigots pay the gays not to get married. We let the price levels determine the outcome.
Holding that it is possible for one group’s happiness to cause greater unhappiness in another group presupposes the ability to compare interpersonal utility.
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.
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.
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?
And what units would you measure it in? Sadmeters? Its reprehensible for a ton of different reasons. Libertarian, obviously…
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.