Here’s the quote again from StrangeLoop:
From what I can infer, Stigler is defining “efficiency” as “acheiving some value of output from a given value of inputs”. Note that all I’m really doing here is taking “maximum” out of his last sentence.
Thanks, I think. 
valuable goal = “psychic profit”
I’ve pressed StrangeLoop above about efficiency. He confirms that it has to do with maximizing “psychic profit” relative to inputs.
valuable means = inputs = What, possibly could this be, if not scarce resources? Any discussion of “efficient” human action surely requires the consideration of resource scarcity. Humans act according to their ends. Which ends? Those deemed highest priority. Why prioritize? The omnipresence of resource scarcity.
. Even though you were asking a serious question, I thought you were trying to be funny also.
Edit: Yea, I forgot about this Stigler quote. It’s the only one where he does, in fact, define what he means by “efficient”, though incompletely. StrangeLoop completes the definition, I would say, when he affirms that he considers “output” as taking the form of “psychic profit”.
Indeed. This is my view, too.
What do you think about all this “efficiency” business? Do you find my definitions suitable, per my long post above?
Sorry, I guess I should’ve been clearer in my last post. By “value” I mean “subjective value”, of course. StrangeLoop confirmed a while back that this is what he (and thus presumably Stigler) means as well.
I’m also assuming inputs = means, most of which are scarce. (Air isn’t, for example.) Obviously I agree with you that scarcity leads to prioritization. 
Oh, actually I wasn’t. But I think it was something of a reductio ad absurdum. My point was that the mugging interfered (and intentionally, at that) with the moviegoer’s efficiency maximization. It lead to the moviegoer choosing a less efficient outcome.
Yes, I’d say I find them suitable. I guess I had intuited what StrangeLoop meant, so I didn’t need to go through all that clarification. Not saying you shouldn’t have or anything.
StrangeLoop already countered your claim of fallacy-of-composition by pointing out that we can observe which products are being sold on the market and in which quantities. There’s a potential counter-claim you can make, though: the difference between many different products, all being offered in the market, vs. a single “product” that is forced on all individuals under a government. In other words, his comparison may be apples-to-oranges.
I think the more interesting challenge lies in using Stiglerian efficiency against itself. Aggression, as initiation of force, necessarily involves intentional interference with Stiglerian-efficiency-maximizing behavior. Hence it leads to less Stiglerian-efficient outcomes – for those on the receiving end of the aggression.
Yea, I think the “fallacy of composition” charge breaks down depending on one’s precise conception of “efficiency”. What is efficient for the individual, qua individual, MAY or MAY NOT be synonymous with what is efficient for the individual as group member. The two can be synonomous, but aren’t necessarily (per my long post above).
What type of aggression are you referring to here? And who is the aggressor?
I don’t think there’s more than one type of agression. What about you?
An individual. Or do I misunderstand your question?
ha ha. No. Vague question. My bad.
I thought you might be referring to aggression by an agent of the state.
It is not incorrect at all. Correctness is something that applies to descriptive theories. The legitimacy which individuals ascribe to government actions really consists of an acceptance of the idea that there ought to be two sets of rules, one for government actors and another for everyone else. In every other realm of human interaction, the Golden Rule is rigidly applied in every culture… what’s sauce for the goose is sauce for the gander. I’m not saying that’s incorrect, just that that’s how it is and that it is remarkable that in 99% of our day-to-day dealings we expect and require symmetrical ethical arrangements with those with whom we have dealings (unless they are criminals, in which case we might fall victim to them but we roundly and unambiguously morally condemn them) but government acts in a way materially indistinguishable from the actions of any other criminal, yet that element of moral condemnation on the part of society is missing. To me, that’s the central mystery to be solved.
In addition, I think we can trace a long evolutionary arc in human existence towards greater and greater ethical symmetry and away from the ethical asymmetry that characterizes alpha-male society. That’s a whole separate thread but that’s the reason for my long-term optimism regarding the eventual elimination of the State qua State. I do not believe the State can be eliminated in a manner which is inconsistent with this evolutionary arc (nor do I think it can be preserved in a manner which is inconsistent with this arc). As Henry David Thoreau said, “… I believe–‘That government is best which governs not at all’; and when men are prepared for it, that will be the kind of government which they will have.”
Yeah, I reject all propaganda/brainwashing/indoctrination hypotheses of the State.
Clayton -
Those are important qualifying phrases. It is indisputable that the outcome of a coercive encounter does not reflect the subjective preferences of the victim of coercion. That breaks a key assumption under which efficiency holds.
However, legal disputes involve a kind of exchange that isn’t quite voluntary but isn’t completely coercive, either, and I think there is a little window to shoehorn in a limited concept of efficiency but I think we have to be more careful than just simply slapping market-efficiency onto dispute-resolution.
And market efficiency certainly doesn’t apply to things like taxation. The element of coercion is simply violative of the conditions under which market efficiency is proved to obtain.
Clayton -
Clayton,
Existence (and persistence) of coercion/aggression – or any other natural or social phenomenon – doesn’t suddenly stop human actors from making cost/benefit “efficiency” calculations toward achieving their ends. The persistent existence of mugging would make it costlier to go to the theater. The persistent existence of gravity makes it costlier to fly to China but if the benefit of doing so outweighs those gravity-induced costs, I may still take the trip. Yes, gravity makes the trip less “efficient” (more costly) than the alternative of simply floating there, but the “efficiency” of (persistently existent) gravity, as a phenomenon may be reflected in the fact that without it there’d be neither China nor human actors deciding to fly there to begin with.
Establishing and measuring “correct” prices requires omniscience from a central planner. The market is the ultimate price “calculator” and the ultimate judge and executor of products/services. Establishing or measuring the “efficiency” of everything around us requires omniscience, too. The reality (of what exists and persists to do so) is the ultimate “efficiency” judge and executor.
Z.
What he said!
Okay, no problem.
No, I was referring to aggression by anyone.
I understand that. But to push aggressors out of the circle of human action into the exogenous world of “mere circumstances”, as you do below, is an obvious mistake because aggressors are themselves acting humans and the whole question of social order is what costs should we impose on aggressors and how should we go about imposing those costs*? If you treat aggressors like an exogenous variable to the social order such as wild animals, bad weather or gravity, then you are implicitly denying that aggressors act and that they calculate, based on the expected response of their victims, how to act to achieve their ends.
In the case of the mugger and mugging victim, we crucially distinguish between a mugging victim who is forced to give up the money in his wallet and a charitable man who voluntarily hands over some money to someone on the street. Both men are performing exactly the same action, from a purely materialist point of view. Both men are still acting, that is, choosing the best means to achieve their own ends given their current circumstances. But that does not make their situations indistinguishable.
What distinguishes the situations is whether the rearrangement of property boundaries is unilateral or bilateral. Market or voluntary transactions are bilateral rearrangement of property boundaries. When I place the cash in your hand as you grasp it and you place the flowers in my hand as I grasp them, we are both consenting to a rearrangement of property boundaries… something that was once mine is now yours (and I want that) and something that was once yours is now mine (and you want that).
Crimes are a very different situation. This should be obvious in the extreme case of murder. Let’s say the mugger is a three-strikes type… he has nothing to lose anyway, so rather than sticking you up, he chooses the more efficient route of just killing you outright … you never even see what hit you. Then he takes your wallet and runs. Your volition had nothing to do with the situation, you did not act because you could not have acted. What has happened is that the property boundaries have been unilaterally rearranged… your attacker assumed de facto ownership of your body (by ending your life, something that only the owner of the body has the right to do) and your wallet.
Mugging without homicide is only slightly less obvious but it still falls into the same logical category. When the mugger sticks you up, he is presenting you with one of two options… give up your wallet, on the one hand, or be killed and give up your wallet, on the other hand. Now, if you’re a Bruce Lee, you might have some chance of fighting back or something, in which case, the action analysis would become relevant. But for the ordinary person, once the mugger has gotten the drop on them, the situation is just the same as the homicide situation above but with a happy ending for the victim if he doesn’t fight back or make any noise. There is no reasonable sense in which the transfer of property under such circumstances can be called “bilateral” “voluntary” or “consensual.”
Clayton -
*As well as, how has nature attempted to solve these problems, already?
The difference between being mugged or giving up money is the difference between cost and benefit–it’s subjective valuation.
Ladies and gentlemen, this will be my last response and for the record, I believe all Stigler has actually endorsed is a game-theoretic stable equilibrium–but not necessarily an optimal one. Of course, this relies upon a notion of market failure (individual rationality not leading to group rationality, just like in the Prisoners’ Dilemma).
For those that resisted my conclusions in this debate, I think that’s fine… so long as you believe in market failure. If not, then I think you should jump on Stigler’s bandwagon.
oh, so you now you get to call failure of politics and hegemonic relationships… ‘market failure’
Just like David Friedman, I believe “market failure” is really simply strategic interaction among rational individuals that doesn’t achive an optimal result (all individuals would be happier had their moves been different).
Although, I do think Stigler is raising a great point; I think it would have served him better if supplement ed his article with a game-theoretic analysis. Social institutions do, indeed, emerge as the outcome of goal-directed rational behavior. If rational behavior leads to this, then libertarians need to explain such suboptimal results in terms of market failure.
[DELETED -William]
These social institutions that fail the community, fail precisely because they do not respect the institution of private property, which is the fundamental basis of the market.
market absence is not market failure, its market absence.