Re: Fundamental Flaw of National Accounting

[Harry Veeder <aa361@xxxxxxxxxxxxxxx>]

On Mon, 15 Sep 1997, Per Gunnar Berglund wrote:

> Per:
>     Since you keep coming back to this basically philosophical question of
> commensurability of aggregates, I will try to state how I perceive your
> view: You say that the aggregates are incommensurate if they don't consist
> of a (virtually) unchanged "internal structure", meaning that they are
> equally composed over time. I say that they are commensurate even if they
> have changed in composition. Let me give three examples:
>     First, by your view, a 20th century house should not be comparable to a
> 19th century house, since the former consists of concrete and steel and the
> latter of bricks and mortar. By my view, there is a "houseness" to be
> assessed and compared, regardless of the building materials used.

One needs a physical basis or "internal structure" for making any objective
comparisions between the "houseness" of houses. It is *possible* to compare
house plans and materiality over time because space can be measured and
materials can be analysed chemically and physically.

>     Secondly, by your view, 20th century labour cannot reasonably be
> compared to 19th century labour, because working people have different tasks
> now than they had then. By my view, there is a "labourness" which can be
> usefully compared over prolonged time periods.

What is the physical basis or "internal structure" for making comparisons
between the "labourness" of labour? (see below)

<snip>
>
> Bruce:
> Interpersonal comparisons of well-being are meaningless under
> an individual utility maximising framework.
>
> Per:
>     This statement is certainly not true. The mere axiom or assumption that
> people act to maximise their utility does not rule out the possibility of
> interpersonal comparison of well-being. What I have been trying to say, is
> that any utilitarian weighted summation of personal utilities should not be
> applied in the national accounting procedures, since they would involve some
> distributive non-neutrality. The fact that volume index summation is built
> on distributive neutrality does of course mean that a volume index in _not_
> a measurement of "social utility".


But Bruce is saying (i think) because you don't provide any physical
measures of your volume index it can only be realistically interpreted as
a measure of "social utility". Personally I feel there is nothing wrong
with your volume index but it needs to have a physical basis to avoid
the social utility interpretation. I'm not sure what constitutes the
physical basis although I think it might have something to do with the
physical/biological basis for storing and sharing and applying knowledge.

Harry Veeder