There is an excellent article here titled the 'Poverty of Social Choice theory' by Pedro Schwartz
Before commenting on it, I should explain that it was always obvious that Societies should choose to imitate more successful Societies with similar endowments or, at the very least, should choose not to do the sort of stupid shite that had caused other Societies to fail.
One way to identify the mimetic target is to look at entry and exit. Are people flocking to it or running away? This is where 'marginal analysis'- i.e. looking at what happens at borders- comes into its own.
People do 'interpersonal comparisons of utility- i.e. compare themselves to people who seem happier or who appear more driven to get happier- and move to where they think they too will do better. Alternatively, they try to copy the more 'advanced'. This is called Tardean mimetics.
A separate question is who should do the choosing in a Society. Should it be Kings? No. Kings tend to have shit for brains. What about the Aristocracy or Clergy? Fuck that. They too have shit for brains.
What about guys who have made money? Why not let them tax themselves and use Government revenue to do things which boost their own income and wealth? The problem here is that the rich have shit for brains. So do the workers. As for economists or engineers or accountants- they all have shit for brains. The only smart thing we can do is limit the impact of any Social Choice while telling the guys that talk about it that they smell bad because of all the shit in their brains.
On the other hand, in the world of Quantum Computers and Big Data and DeepMind, maybe some coalition of Tech Companies will take over our lives and 'nudge' us to do whatever they think is socially optimal. The trouble is that that the program could be hacked or gamed. Also, kicking in the heads of nerds could prove a popular past time.
Pedro Schwartz comes from Italy- where Enrico Barone had introduced the notion of a mathematical plan for Society back in 1908. One could say that the notion of 'shadow prices' is already present in Barone's work.
The First World War turned this into a reality. But technocrats make mistakes. The German 'Schweinemord'- the slaughter of the pigs on the grounds that they were co-eaters- was an example of central planning precipitating a famine. The eggheads had forgotten that pigs produce manure.
Still, thanks to Stalin's propaganda machine, many believed that workers in the Soviet Union were thriving under the 5 year plans. This is what gave mathematical economics a certain cachet in the Fifties and even into the Sixties.
Schwartz, an erudite upper-class Spaniard, did his PhD in Econ at the LSE in the Sixties. He writes
I well remember a lecture by Oskar Lange at the Old Theatre of London School of Economics a few months before his death in 1965. Lionel Robbins was in the chair. Lange explained how computers would make the calculations of market socialism workable. Robbins, who sat above Lange, could barely contain his laughter. The collapse of ‘real socialism’ in 1989 confirmed the accuracy of the critics’ judgement.
It is said, not quite fairly, that a mathematical economist, Aganbegyan, contributed to the fall of Gorby's regime. India, however, had already turned its back on mathsy 'development econ' because its promoters, quite obviously, were as stupid as shit.
It is with trepidation that I enter the field of collective choice with critical intent, a field bristling with Nobel Prize winners
Samuelson, Arrow and Sen. But the first two were pioneers in other fields whereas their contribution to Welfare Econ was shitty.
and knowledgeable experts in mathematical logic.
Sadly, they understood shit about mathematical logic. Assuming any set, of interest to Social Choice is well defined, is foolish because of 'the masked man fallacy'. Essentially, an 'intensional object' has no stable 'extension'. It changes all the time as our knowledge changes. It does not obey Leibniz's law. This is an inescapable feature of human life. We don't know what the possible states of the world are. This is 'Knightian Uncertainty'- which is the only reason co-evolved phenomena, like Societies and Choice Menus exist in the first place.
As a former pupil of Amartya Sen, I aver that I have found few teachers as inspiring as he was. He kept the class spell-bound for two hours at a stretch while covering the blackboard with deductions and proofs of mathematical logic.
Mathematical logic can only prove that it has no application to Social Choice because no Society could exist if its choice set were well defined or even partially ordered. This is because it would fall victim to predators or parasites or both. Our voyage is either unanimous and into the unknown or there is no voyage. Everybody is their own improvised Dunkirk evacuation.
He was courteous to a fault and sworn to reason and compassion. Whatever I say here about his welfare theory should not be understood as derogation of the respect I feel for him as an economic philosopher.
Because Sen and his pals didn't try to fuck up the Spanish economy. Indians must be less charitable.
Finding Barone and Lange in a cul de sac,
though, if there is an existential threat- e.g. total War- then the Government really does run almost everything.
the defenders of collective choice felt the need for a method to formulate and evaluate public policies from the standpoint of methodological individualism and not as the dictates of an outsider planner.
This is easily done. Are people running away from or towards the thing? That's all that matters.
This new path was opened by Abram Bergson (1938) and Paul Samuelson (1947) who defined the general structure of ways to organise society rationally by means of methodologically acceptable transformations of individual preferences into social preferences. The transformations are usually known as social welfare functions (SWFs). The transition from individual to social should fulfil two conditions:
both impossible
(a) that the SWF be strictly related to the welfare of individuals,
which is impossible to know. I thought smoking was good for me. It wasn't. Also, though certain types of pleasure may be strictly related to individuals- e.g wanking or shitting- welfare NEVER is.
so that, when the situation of individuals is bettered, the SWF also shows an improvement;
Though the thing would be impossible to compute though, it is true, anybody cold just make that shite up.
(b) that any of these SWFs arrange all resulting social states in an order going from worse to better unequivocally.
but there is no unique pre-order. The thing is not a function.
Within these wide limits philosophers would able to adjudicate among proposed SWFs as to which would best aggregate the ethical demands of individuals, and thus judge the justice or fairness of a market economy.
But such philosophers were judged and found to be useless.
The welfarist party then received a cruel blow from Kenneth Arrow (1952), one of its foremost champions:
Arrow and Samuelson were related through their wives, who were sisters. Thus, they hated each other. Arrow was scoring off his more patrician schwager.
the “Arrow impossibility theorem”. This theorem proved that no SWF could exist that fulfilled four very mild conditions: that it be applicable to all conceivable choices; that it be unanimous; that it be chosen on its own merits; and not be imposed by any one person on the rest.
Nobody would agree to having a voting role over whether or not they got to scratch their own arse. Arrow's theorem was nonsnesne.
The conclusion was devastating: Arrow had proved that it was impossible for a society to agree on a welfare arrangement, even if the individuals of that society unanimously preferred it.
Only if there was no delegation, no 'transferable utility'- i.e. bribes- no use of language or exercise of any type of Social behavior.
As Andreu Mas-Collell put it (1974): a social group that may try to apply a SWF will inevitably find that “it cannot decide rationally, that is to say, as if it were an individual person”.
unless it can. Anyway, it is perfectly rational to act arbitrarily if there is no obvious reason not to do so.
It is instructive to follow the twists and turns of the whole collective choice school to try and salvage some part of ‘rational’ welfare economics, broadly understood to include public economics, planning theory, the theory of the state and the theory of social justice.
This is easily done. Embrace subsidiarity and promote Tiebout sorting. Having lots of different fiscal mixes in different localities allows people to vote with their feet. It permits faster 'discovery' and allows better choice of mimetic targets for communities.
To this purpose, the school showed that the rules to be applied could work reasonably well if preferences are restricted.
Social processes restrict our preference to fill our hands with our own feces and fling it about while laughing maniacally.
The fact is the Econ of Barone and Slutsky didn't get that price signals have much more content than just an income and substitution effect. There are speculative and signaling and psychological effects.
Also, the limitations of Pareto unanimities as regard the distribution of income and wealth could be partially overcome if levels of interpersonal comparisons were in some way allowed.
i.e. arbitrarily.
And the non-dictatorship condition
which said that a wise and prudent adviser is actually a Dictator.
could be suspended for decisions affecting essential liberties, when an individual had the right to veto some social injunction.
These are 'Hohfeldian immunities'. But rights collapse if there is no incentive compatible remedy. Exit and entry to competing Tiebout models is democratic Social Choice. You get to choose which Society to be a member of.
In the end and after much logical demonstration, Sen himself admitted (1970) that there can be no single golden rule to organise society along welfarist lines.
No. There can be a golden rule- viz. ignore stupid shitheads.
His book, said Sen,
… has been concerned with impurities of one kind or another, e.g., partial interpersonal comparability […], partial cardinality […], restricted domains […], intransitive social indifference […], incomplete social preferences […], and so on.
Ritualists are often concerned with 'impurities'. But ritualism is a waste of time- more especially if God exists.
With a humorous turn typical of his seductive personality, he ends by saying that,
… while purity is an uncomplicated virtue for olive oil, sea air, and heroines of folk tales, it is not so for systems of collective choice.
They should be prostitutes. Sen's pal, Sukhamoy Chakroborty joined the Planning Commission so as to preside over Sanju's criminality and corruption. Mathsy Econ, in India, was about sucking off the Dynasty. Around this time, Sen and his best pal were more or less admitting that the 'Project Evaluation' their students would do represented nothing but telling stupid lies so as to justify a fraud upon the exchequer. Then Sen ran away with the best friend's wife.
Robbins Again
In the Preface of his 1970 book, Sen perhaps unwittingly makes what I think is a crucial separation between questions of the theory of decision procedures and questions of political philosophy.
The Dynasty would decide the political philosophy. Mathematical economists would prostitute themselves as directed.
For me, the main contribution of social choice is the discovery and attempted solutions for the conundrums and contradictions of decisions taken by bodies of people; and the main danger of social choice is the attempt to define a just society and impose it on people.
This is foolish. Society has changed greatly because we have chosen to imitate cultures less fucking horrible than our own. If we don't, smart peeps emigrate and our lives turn to shit. Social Choice is about Social processes not some pseudo-mathsy masturbation.
Of course, we do have to take communal decisions.
Or we could just move to where those decisions are better made.
Their structures and results are not evident. Their logical mechanisms have to be explored, as when we analyse the paradoxes of voting
Anglo-American 'first past the post' elections are stable enough. Still there is always the question of how far 'subsidiarity' should go. Spain has this problem in acute form- i.e. Catalan separatism.
or the pervasive free-riding that besets public goods.
Non-convexities we will always have with us. But, it turns out, volatility is a good thing.
But these factual studies must not be confused with the ethics of collective decisions.
because the latter is totes bogus.
Sen ingeniously
disingenuously
rebuts Robbins’s interdictum of interpersonal comparisons of utility
made at a time when Muslims were demanding more votes than Hindus so they could ethnically cleanse Sen's people.
by noting that the prohibition against comparing preferences interpersonally may be lifted if those involved are ready to take the consequences of their choices into consideration when debating whether to hold onto their preferences.
JN Mandal, a Dalit leader, chose to support the Muslim League. Then he and his people had to flee Pakistan. Nobody knows 'the consequences of their choices' but, equally, nobody sensible fails to take them into consideration when choosing.
They are implicitly taking those values and preferences as “non-basic”, that is to say, ready to temper them or to give them up in the name of justice.
Meaningless shite. Valuing living rather than dying horribly is pretty fucking 'basic'. Nobody gives them up in the name of justice- though I often ask people to kill themselves because they are prettier than me and that's totes unfair- but end up doing stupid shit and dying horribly as a result.
“It should be fairly obvious”, he says, “that nothing much of interest can be said on justice without bringing in some interpersonal comparability”. (1970, page 150).
Nonsense! Lots of interesting things can be said about how to make the Justice system fairer and more efficient and easier to access and so forth.
This is not the definition of justice according to Hume, as we shall see.
It was and is perfectly obvious that Justice is a service industry. Utility is the sole desiderata.
“Citizens make social choices, but there cannot be a ‘Social Choice’.”
By outlawing inter-personal comparisons in welfare economics, Robbins precisely wanted to defend an Austrian view of justice in society.
Jews have lots of money- right? But they don't really enjoy wealth. They'd be happier building Pyramids for Pharaoh under the lash the way Ra intended.
In an individualistic market system one cannot say that society is just or unjust, nor that rewards are undeserved or the distribution of property unfair.
Sure one can. The question is how much one will get paid for saying what people want to hear.
It is people who are just, not systems.
Judicial systems may be unjust just as pedagogic systems may inculcate stupidity and ignorance.
Of course in democracies we make social choices, according to the interests and the moral judgment of the different individuals concerned.
No. A Democracy, like Ukraine, makes choices because other Societies make choices which affect them. But there are also 'games against nature'. Individuals can migrate. Societies must either change or die.
These judgments can be evaluated or criticized by pointing to their effects, self-contradictory or positive.
But who will pay for such evaluations?
This is very different from trying to formulate and apply a social welfare function, however modified to avoid ‘Arrow contradictions’. Citizens make social choices, but there cannot be a ‘Social Choice’.
Yet, Societies exist as do Enterprises and Institutions. If they make bad choices they may disappear. However Schwartz is right about shitheads doing 'evaluation'. Nobody gives a shit if some bunch of academics decide that Afghanistan has more Press Freedom than India or that North Korea is very Heaven.
This refusal to make collective social judgments is clearly in the tradition of David Hume, who in (1752) defined two moral duties that men and women perform entirely from a sense of obligation, only in consideration of “the necessities of human society, and the impossibility of supporting it, if these duties were neglected.”
This is foolish. Hume, like Smith- but from a more upper class perspective- understood that Scotland had to change. It had to be more like England and Holland. There must be no more Jacobin uprisings or protracted theological quarrels. Hume- as a Tory gentleman- might hate this outcome but the alternative was to sink as Ireland was sinking.
It is thus [that] justice or a regard to the property of others, [and] fidelity or the observance of promises, become obligatory, and acquire an authority over mankind. (Hume, Essays Moral, Political, and Literary, page 48016)
So, Scotland had to stick with the Acts of Union
If we stand by Hume, the whole endeavour of collective choice belongs to a world of collective dreams that can easily turn into nightmares.
Hume made money by writing books. Academics can do the same by inventing useless subjects in which shitheads can gain credentials.
Collective choice moves in a world without institutions, without competition, without history; a rational world of decisions based on perfect knowledge of individual preferences.
This is also true of mathematical econ- which is almost wholly useless when it isn't actively mischievous.
The danger is that some arbiter may start acting on the basis that he knows what is best for others.
There are plenty of such people. We pay them to help us reduce weight or gain confidence in talking to the opposite sex or to achieve Nirvana or enable us to kill our enemies without going to jail.
Sen defined individual liberty as
everything it wasn't.
including the enjoyment of what he called “functionings”—
which cows and cats and pigeons have
enough food, good health, a long life, opportunities for happiness, respect for one’s dignity, participation in the life of the community.
That's a description of my neighbor's cat. It isn't a description of the liberty of the individual which involves the exercise of political and juristic rights.
There is a telling passage in which he laments the situation of downtrodden people in an unfair society,
Maneka Gandhi, similarly, laments the situation of under-fed stray dogs in a society which is so deeply unfair that her sister-in-law gets to run the Congress party while she and her son have to slum it in the BJP
who may go hungry, die young, lose most of their children, lack education,
the neighbor's cat hasn't been to medical school which is why it can charge for CAT scans.
suffer discrimination, and not even know that they are in want of the minimum capacities to function. They neither control their lives nor have a capacity for personal-choice, he says. So he defends the
… social-choice characterisation of liberty [which] compares what [in fact] emerges with what the person would have chosen, whether or not he actually does the choosing,
If Maneka had chosen to poison her sister-in-law's lasagna the Social Choice characterization of liberty
Can Social Choice theory enable scientists to always chose the right theory or equation or whatever, we'd have cold fusion and warp drive space ships by now. Sen is pretending the subject he teaches has magical properties.
I understand this as meaning that we can impose liberty on people who are too poor or too ignorant to make the choices we think are right for them.
India could have got universal suffrage in 1931. Muslims objected because Hindus were in the majority. But this meant partition was inevitable because Muslims object to Kaffirs continuing to occupy valuable real estate. Thus Sen's people had to run away to Hindu majority India.
These fateful words conjure the shadows of Indira Ghandi’s forced sterilisation or the ‘one child policy’ of Communist China.
That was only possible because she suspended liberties. Fuck does Pedro think happened? Indira cunningly got the UP Bhaiyya to vote for having their goolies interfered with?
One of the objects of Sen’s Collective Choice and Social Welfare (1970) is to show that it is impossible to be a classical liberal and present the free market as one of the few social arrangements where unanimity rules.
This is nonsense. Free markets permit exit. Unanimity does not exist when people vote with their feet. Socialist regimes may forbid exit but it may occur all the same. On the other hand, they may be very good at ensuring that the Supreme Leader is re-elected unanimously.
His “Impossibility of a Paretian Liberal19”
is nonsense because it forgets that 'transferable utility' is a thing. There is a Coasian solution. Prude and Lewd can strike a deal.
encapsulates in one expression this alleged paradox. An emergent solution to this paradox and many others in social choice is an institution evolved in our societies since Roman times, namely, private property.
In rem rights don't give rise to in personam liberties. Rebel or be judged as guilty of impiety could lead to death or exile for the person while property might be escheated if this were not possible. Alternatively, both occurred. The American Revolution gave short shrift to the property and persons of Loyalists.
This institution partitions the domain of Paretian rules so that for the things she owns she can exercise a veto against the decision of the rest of society, which is the essence of human liberties (or ‘human rights’ as they are usually called).
Schwartz does not know about Hohfeldian incidents. The LSE got mathsy and turned to shit. In Coase's time, it offered Commerce as a Degree subject. Coase was planning to become a Solicitor.
The preservation of private property in Western societies is not only helped by its positive effects on productivity, as in the end, through purchase or rent resources will fall into the hands of the most efficient user. Property rights also help protect individual liberties.
Nope. When Pedro was at the LSE homosexuals had no fucking liberty to bump uglies. Singapore ranks high in property rights. But individual liberty is greater in India where there is no fundamental right to property.
Market Defects Corrected by Emerging Institutions
The eternal argument of interventionists and regulators against a free economy is the existence of market defects.
Which were always already justiciable in one way or another. No doubt, legislative codification can help. As for 'distributional issues'- law makers ave always had some power to deal witht them.
They seem not to have read Ronald Coase or to have been taught his (1960) theorem in its static formulation. Coase in his later years moved away from the interpretation of his theorem as showing that alleged market defects dissolved on condition that property rights were clearly defined and the economy was perfectly competitive.
This is unnecessary. Just letting peeps do deals is good enough. Anyway, now everybody gets that rights regimes arise out of incomplete contracts- i.e. they have some 'give' and are renegotiated on the fly.
Welfare improving trades created property rights
No. Uncorrelated asymmetries create property rights among birds and animals.
and functioned under imperfect competition—a shining example being the growth of capitalism in contemporary China. On this point I need not repeat myself, since I argued it at length in a Letter from Europe published at the Library of Economics and Liberty in October last year, under the title “Ronald Coase, the Unexpected Economist”. So I can refer my readers to that unconventional piece of mine.
You need to understand Scottish history to understand Hume and Smith. You need to understand Tort law to understand Coase. You don't need to know math to understandy why mathematical econ is shite. The mistake is always of an obvious sort- e.g. begging the question by assuming there is a unique pre-order and then piling a Pelion of nonsense on an Ossa of shite. Still, Sen made some money- much less than the Maharishi, who taught Yogic levitation- but at least it got him away from Muslim neighborhoods which took a dim view of kaffirs.
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