Economists, it seems, have difficulty offering a plausible definition of rationality, or even wimp out. Gary over over at public opinion has suggested that market rationality is one of the maximisation of self-interest and implied that this has little connection to creating a better society.
Public opinion is a bit swift in this judgement. Neo-classical economics does have a criteria that links rationality to a better kind of society. It is based on Pareto optimality, in which optimality means that everyone's utility goes up (what politicians call win-win) or some-one's utility goes up and no-one's utility goes down (there are winners but no losers). This implies that efficiency in the allocation of scarce resouces is the critieria that links self-interested rationality to making society better. And economists imply that efficiency is an adequate condition for a good society-- a gurantee add the politicians.
Many pro-market politicians follow the experts welding efficiency like a sledgehammer. Competitive market mechanisms, they say, achieves efficiency. Hence, they argue, we should create a market for water in the Murray-Darling Basin with property rights for water and allow competitive pressures to shift water from low value to high value users.
In doing so the politicians overlook the distribution of utilities (and happiness and suffering) and they ignore, or are blind to other values besides utility-eg., freedom, rights, sustainability or a flourishing life. Pareto optimality is indifferent to sustainability even though it is sometimes claimed that efficiency will give rise to sustainability.
The Clare Valley viticulturalists are high value uses. They build pipelines to take the extra water through the market (hypothetically of course). But this increased efficiency in the use of water is not sustainable. Extra vineyards are planted; salty water is poured into valley where once it was dryland viticulture; there increased salt load in the valley; the grapes become more salty; many of the smaller growers end up losing their property. Using the competitive market mechanism does not get you sustainability or distributional equity.
Claims are made about the former today but not the latter.
to be continued.
Posted by Gary Sauer-Thompson at June 14, 2003 07:40 PM | TrackBack"Gary over at Public Opinion"
Is this some sort of subtle philosopher's distinction in which "Gary over at Public Opinion" is being distinguished from "the same Gary here at philosophy.com", or are there really two different Garys ?
Sorry to be slow on the uptake, but I'm only an economist :-).
Posted by: John Quiggin on June 14, 2003 07:57 PMDifferent masks are being worn.
It is done all the time eg. the economist
John Quiggin as weblogger is different from John Quiggin research fellow who is different from John Quiggin commentator in Australian Financial Review.
Different texts, different audiences, different perspectives.
Posted by: Gary Sauer-Thompson on June 15, 2003 12:54 AMi contain the multitudes,
i encompass paradox,
and give lie to my voice
when we commit to me.