Re: Utility maximizing

["Mason A. Clark" <masonc@xxxxxxxxxxxxx>]

Chas Anderson wrote:
>
>Mason:
>
>The principle of utility maximization is a method of explaining the
>rationality behind the process of consumer choice. The fact that you (or I)
>may disagree with a market outcome does not negate the fundamental logic
>behind this principle. Your argument is with the taste and preferences of
>certain consumers which YOU consider to be irrational (socially
>destructive) not with the guiding logic behind these decisions. I believe
>the validity of a theory is based on its ability to explain and predict
>economic behavior, that is, to help understand the "what-is" of economic
>behavior.  At this point, utility theory still predominates.
>
   If it is assumed that consumers maximize utility, is that not then
   an assumption that the free market makes the economically correct
   decisions?  And that those are the decisions the economy should be
   structured to satisfy?  Is this not laissez faire, neo-liberal economics?
   For good or bad.

   If the theory incorporates an ideology at the outset, does it not hope
then
   to prove the validity of the theory  -- and the ideology?  The proving
is by
   using the theory to guide policy.  In what decade of the twenty-first
century
   may hope to we know if the theory is correct, and if wrong then change our
   economic ideology?

             Mason C.

   This year the gopher ate the roots of my tomato plants and taught me
   that if the roots are bad, the tomatoes are rotten.