[PEN-L:8704] RE: RE: Thomas Friedman an economist?

["Max B. Sawicky" <sawicky@xxxxxxxxxxxxxxxx>]

>>
Max Sawicky wrote,

>Not to get you too worked up about all this, but suppose
>leisure is admitted as an argument into utility functions,
>and/or the social welfare function uses a Rawlsian weighting
>of individual utilities?  Or how about a SWF variable like
>'walkerz' representing social harmony?

That's a big question, Max. Here's how Barone incorporated leisure in his
welfare calculus:

"It is convenient to suppose -- it is a simple book-keeping artifice, so to
speak -- that each individual sells the services of all his capital and
re-purchases afterwards the part he consumes directly. For example, A, for
eight hours of work of a particular kind which he supplies, receives a
certain remuneration at an hourly rate. It is a matter of indifference
whether we enter A's receipts as the proceeds of eight hours' labour, or as
the proceeds of twenty-four hours' labour less expenditure of sixteen hours
consumed by leisure."
>>

Sure but in any textbook you can find U(c,l), where c is consumption
of purchased goods and l is leisure.

The fact that an algebraic translation to a SWF has not been found
speaks to the possibility that a SWF can't be implemented empirically,
not to ANY lack of use to SWF's per se.  Also to the lack of attention
to the problem, partly for political reasons.

>>
That convenient supposition, combined with an equally blyth assumption that
the "technical coefficients of production . . . are determined by the
condition of minimum cost of production" adds up to the proposition that the
worker prefers precisely as much leisure as there is time left over at the
end of an optimally productive day. Convenient indeed!
>>

I'd say that is not a reignant assumption in NC econ, as per previous
comment.

I've read the Chapman piece, not to say understood it at the most
profound level, and it goes to behavior, not to whether such behavior
can be modeled in utility or SWF's.

In light of the sociology of the econ profession, not especially its
professed theory, I'd agree that SWF's are mostly a placeholder to
signal  recognition that welfare is more than individual consumption
and official GDP figures.

One departure from this is what theory might be contrasted with
NC in this vein.  There is no marxian counterpart to NC welfare
theory, beyond some profound generalities and some bromides, as
to the allocatiion problem.  For instance, in the latter vein I
had a long argument w/Devine as to whether democratic control
of planning (sic) had any intrinsically defensible economic
advantages, though it does have some democratic ones.  There's
more juice in market socialism, as far as this question goes.

Any rational central planning process would have to come back
to something like utility and SWF.  An appreciation of the
magnitude of this problem points up the pathetic state of
current computing power, in contrast, alongside the under-
developed state of economic theory of all types.

Lange's praise of Hayek has been misstated here.  The point of
his exercise is not simulate a "free market," but a market where
all 'externalities' are correctly priced, and where the distribution
of income is "fair."  This is hard to do.

mbs