Yves here. This essay achieves the difficult task of working through some of the implications of Arrow’s impossibility theorem, which might alternatively be called “the inescapability of politics theorem” in an accessible manner. In fact, one of the conclusions that the author Raphaële Chappe focuses on is that how well a society “does politics” matters, that the structure and health of institutions matter. Thus it’s perverse that economics, which readers of this blog understand full well is really political economy, has virtually no interest in questions of governance (the closest it comes is in principal/agent and game theory and information asymmetry).
By Raphaële Chappe, a Ph.D. Student at The New School For Social Research. Originally published at the Institute of New Economic Thinking website
Given the choice, would you accept to live in a society where happiness and prosperity is guaranteed for all on the condition that one single person be kept permanently unhappy? Is the well-being of thousands of people “worth” the sacrifice and suffering of a single innocent child? Such is the dilemma to which the inhabitants of the utopian city of Omelas are confronted in Ursula Le Guin’s philosophical short-story “The Ones Who Walk Away from Omelas”. In her parable, most people are ultimately able to come to terms with the atrocity. The few citizens who cannot end up walking away from the city — nobody knows where they go and they are never heard from again.
Consider another parable, the biblical story of the Judgment of Solomon. King Solomon must rule between two women claiming to be the mother of a child. Though the initial verdict is that the boy be split in two, each woman receiving half of a dead child, the final judgment is to reward the woman who gave up her claim to the child upon hearing of this initial verdict. Only a true (good) mother would want to save the child’s life at all costs, even if it meant that another woman would get to raise him. A bad mother, on the other hand, would let her feelings of jealousy prevail over the well being of the child.
Welfare economics evaluates the desirability of different social states resulting from different allocations of resources amongst different members of society. Do the stories of Omelas or Solomon’s judgment depict a socially desirable outcome? The now traditional approach in the economics literature, exemplified by Arrow’s impossibility theorem (Arrow, 1950), is framed in terms of the determination of the appropriate aggregation mechanism to produce a social choice on the basis of individual rankings (preferences) over the shared alternatives. This conceptual framework, as outlined in MWG (Chapter 21), first defines as a formal matter the kind of rule that assigns a social preference to possible profiles of individual preferences (technically a social welfare functional[3] or social welfare aggregator [Def. 21.B.1]), and the kinds of restrictions to be placed on such a choice function.
The concept of a welfare function to be defined over social states of affair is rather abstract. Should social welfare be characterized in terms of a ranking of social states of affairs (e.g. a set of alternative complete descriptions)?[4] Does it make sense to postulate an objective welfare function or functional which society ought to maximize? What is this “society” that we speak of? We may ask, as George Orwell does in his essay, “The Lion and the Unicorn”, whether there are really such things as nations. “Are we not forty-six million individuals, all different? And the diversity of it, the chaos!” If societies are not separate organic entities making decisions (see for example Buchanan and Tullock 1962), in what sense is an objective welfare function being “pursued”? To quote Amartya Sen from the opening line to Collective Choice and Social Welfare (Sen 1970a):
“There is something in common between singing romantic songs about an abstract motherland and doing optimization exercises with an arbitrary objective function for a society.”
That said, we must accept the inevitability of social choice and collective action. Social choices (i.e. actions on the part of societal institutions which have implications for all) are being made de facto as a matter of practical necessity, even if as a consequence of disorganized processes rather than coherent and deliberative ones (let alone due to the existence of ‘organic’ or group minds[5]).
Arrow’s impossibility theorem holds that if the number of alternatives being considered is three or greater, a social welfare functional cannot exist which simultaneously satisfies a number of reasonable properties, namely: universal domain[6], Paretian property[7], non-dictatorship[8], independence of irrelevant alternatives[9] (also known as the pairwise independence condition), and collective rationality.[10] This result is not intuitive, and could not really have been anticipated without Arrow’s axiomatic formalization of the problem of social choice (it might therefore be thought of as an example of a proposition that is both true and non-trivial[11]). It is a puzzling, troubling result that shows the incoherence or undesirability of many practical preference aggregation mechanisms, including majority voting — indeed, it expands Condorcet’s Paradox to a much wider range of types of preference aggregation mechanisms.[12]
But is this deep trouble? While Arrow’s theorem shows the impossibility of aggregating preferences without violating seemingly mild axioms of reasonableness, does it establish that reasonable social choice is altogether impossible?
Ways Out?
MWG draw our attention to procedural concerns, as the order in which pairwise decision rules such as majority voting are applied will be relevant to the final social aggregation outcome: “What Arrow’s theorem does tell us, in essence, is that the institutional detail and procedures of the political process cannot be neglected.” (MWG, p799). This is hardly a resolution to Arrow’s impossibility but rather suggests a method of coping: preferring the outcomes generated by specific procedures seemingly overcomes indeterminacy in a specific situation without addressing the fundamental unsatisfactoriness of the choice procedure. More fundamentally, MWG raise the possibility that the impasse of Arrovian social choice may be addressed by loosening some of the imposed axioms. MWG suggest two such ‘possibility results’ in Section 21.D. The first involves the potential relaxation of the strong version of the transitivity requirement imposed on social preferences, acknowledging that social aggregation rules can lead to potential intransitivity.[13] The second involves dropping the universality condition to focus on specific types of individual preferences. The best-known result along this line assumes “single peaked” preferences.[14]
Why stop at social rationality and universal domain? We may wish to consider the desirability of other axioms in Arrow’s framework. For instance, the independence of irrelevant alternatives is not uncontroversial.[15] The Borda count, whereby the rank of an alternative depends on the rank of every other alternative, is an example of a sensible ranking procedure that violates pairwise independence. Though the method can be criticized on the basis, for instance, that it may result in choosing alternatives that have broad mild support rather than those strongly preferred by the majority, it is not evidently unsound.
One final possibility is to drop the Pareto criterion. At first glance it seems like an innocuous assumption, as it is difficult to imagine how it would not be a desirable property of a social decision making procedure. That said, Sen (1970b) provides a somewhat provocative take on the Pareto criterion, showing that it is inconsistent with some degree of minimal liberalism. This result (the ‘impossibility of a Paretian liberal’) establishes that it is not possible to apply the Pareto criterion while allowing individuals to be decisive with respect to at least one pair of personal alternatives (more on this below).
These so-called ‘possibility results’ retain the Arrovian framework, which refuses to make explicit value judgments regarding interpersonal utility comparisons (or indeed interpersonal comparisons of involving non-utility information). Recognizing this points to another interpretation of Arrow’s impossibility theorem, which is that it may instead highlight a fundamental difficulty in making aggregate social welfare judgments solely on the basis of individual subjective preference orderings – a crucial point, unaddressed by MWG, to which we shall return below.
Judgment Contra Aggregation
Is it justified to conceive of social choice as being formed solely on the basis of the aggregation of individual preferences?[16] This limited informational landscape excludes taking into account utility levels and gains associated with social states, thereby precluding interpersonal utility comparisons, as well as any other type of information that is not reflected in utility being drawn upon when arriving at social choices. It confines social choice procedures to, broadly speaking, voting processes.
One example from Sen (1995) illustrates the limitation of the Arrovian approach in this respect. We are to split a cake between two people A and B, with three potential cake allocations: [99,1] (where A receives 99%), [50,50] (equal division), and [1,99] (where B receives 99%). The parties’ preference rankings, assuming that each person prefers to receive as much of the cake as possible, are as follows (where > indicates preference):
A: [99,1] > [50,50] > [1,99]
B: [1,99] > [50,50] > [99,1]
Although it is not obvious, the Arrovian framework only allows us to consider either [1,99] or [99,1] as the most socially desirable outcomes. This result is derived from the “Field-Expansion Lemma”, outlined in Sen (1995) as part of a strategy of proof for Arrow’s impossibility theorem, which provides that if a person is decisive over a particular pair (in the sense that his preference over an alternative prevails regardless of other persons’ preferences over the same alternative), that person will be decisive over other pairs as well, and in effect become a dictator.[17] It follows that the only social outcomes to be considered ultimately are the outcomes preferred by either party, precluding some “middle-ground” solution where neither party gets what they originally wanted but some sort of a compromise is reached. This is not to say that [50,50] is the best social outcome, but rather that it is unclear why it is altogether excluded from consideration, given its evident merits.
Another question is whether it is always desirable to reflect individual preferences (or utilities) in arriving at social judgments. If individual preferences are relevant, are they uncategorically and exclusively so? What if all the citizens of Omelas had been comfortable with the idea of living a good life at the cost of the torture of one single person. Would the overwhelming support make it a socially desirable outcome? We can imagine real life scenarios raising similar issues. Consider for example the will of a deceased father who wishes to leave all family wealth to his only son. The other children, all daughters, wish to respect the father’s decision. All parties at hand are in agreement that the son should inherit everything. Yet it could be argued that a thoughtful social evaluator[18] might favor other allocations whereby all children receive something, in spite of the fact that this goes against the will of the family (indeed, in many jurisdictions disinheriting a child is altogether illegal).
Let us begin to explore some of these issues by considering the story of Solomon’s judgment, which involves the following social outcomes:
- A: Real mother gets custody
- B: “Bad” mother gets custody
- C: The child is split in half (and therefore killed)
The parties’ preference rankings are:
- Real mother’s preference: A > B > C
- Bad mother’s preference: B > C > A
Both parties agree that B is preferred to C, so the Pareto criterion requires that the social preference reflect this as well. However, considering only pairwise comparisons (as required by the independence of irrelevant alternatives), what should be the social preference between A and B, and between A and C? The preferences of the real mother and bad mother are in conflict in relation to both of these pairs. If the social preference reflects the real mother’s preference in either case, then she is dictatorial (by the application of the field expansion lemma, as earlier). The same point can be made if the social preference reflects the bad mother’s preference in either case (similar arguments can be made under different configurations of preferences, highlighting the fundamental nature of the difficulty). This difficulty cannot necessarily be avoided by allowing for the possibility of indifference. Social indifference is hardly a helpful concept here, since Solomon’s task as a judge is to choose, and to do so for good reasons if they are available. Should Solomon really choose by tossing a coin? There is a further and more devastating objection to this approach within the social choice framework, however. The social preference must reflect indifference between (A,C) and (A,B) if neither woman is to be decisive with respect to either pair. However, in that case by transitivity the social preference relation must also register indifference between B and C, which conflicts with the Pareto criterion.
A reasonable basis for social choices does exist here (as reflected in Solomon’s judgment) but it is ruled out by the Arrovian framework! By choosing A, Solomon acts as if he were choosing in accordance with a ranking of social states that violates some Arrovian axioms: the social preference is either dictatorial (social preference relation A > B > C), or does not respect the Pareto criterion (A > C > B). Yet would anybody disagree with the view that Solomon’s judgment is for the best? As such, the set of supposedly desirable properties identified in the Arrovian framework offer no guidance at all in understanding the merits of Solomon’s decision:
- The existence of a real mother “dictator” is less harmful or objectionable than we might have suspected a priori (for the very good reason that good sense in general, and justice in particular, does not always involve ‘splitting the difference’).
- The Pareto criterion plays little role in the decision, as it merely establishes that a bad mother is universally concurred to be preferable to a dead child (B > C), but it does not help identify the best mother.
- Solomon’s judgment relies on the fact that the bad mother would rather see the child dead than raised by the other woman and as such violates the independence of irrelevant alternatives (individuals’ preferences between B and C play a role in determining the social preference between A and B, by revealing something about the nature of the person who holds the preferences in question). This is an entirely appropriate violation of the axiom, but the Arrovian framework wholly forbids such violations.
The deeper issue here is that the problem of social choice cannot be reduced to one of mere computation given a profile of individual preferences and a set of desirable axioms. In order to reach a wise decision the judge has to engage in an assessment of what is right to do which draws on the information provided by individual preferences (the bad mother’s preference of C over A is not only horrifying but also most relevant to the determination of what to do) and goes beyond applying any mere mechanism of aggregation, because it depends on the substantive meaning of these preferences. We could conceive of situations involving a similar pattern of preferences (A > B > C and B > C > A), but where A, B and C stand for different social outcomes, in which Solomon would (and should) rule differently. (Consider for instance a dispute between a nature lover and a sports enthusiast about whether or not to leave a nearby nature reserve alone (A), to build a swimming pool in it (B) or to build a tennis court in it (C). In this case, Solomon’s judgment might very reasonably go in either direction, and depend on other relevant considerations such as whether the nature reserve is the last such plot of land or one of very many, on whether there are other sports facilities already in place, or perhaps on whether there are species which would go extinct if it is developed). Solomon interprets the preference rankings in light of his view of what constitutes a good mother and what the rankings tell us in that regard. As this example illustrates, there is a stark difference between adopting a computational approach to social decision-making, and applying considered judgment. Can an approach of the former kind ever adequately encompass the demands of the latter? This is not a question even asked by MWG.
How should we understand what Solomon is doing? It might be thought that in the case of Solomon’s judgment the pair (A,B) should be decided upon by the real mother (assuming we know who she is), and that her views should prevail when the well-being of her child is at stake. Solomon might be asserted in this respect simply to be implementing an approach which recognizes a sphere of rights. However, we can conceive of a situation in which the biological mother is the “bad mother” (the parties’ preferences are switched), so that the judge should rule in favor of the non-biological mother. It seems that inescapably, Solomon must be viewed as engaged in an exercise of judgment, and not as mechanically implementing any set of rules. Solomon in part faces an epistemic problem (who is the real mother?) which he can only resolve through a contextually informed assessment, in this case concerning the actual content of the social states under consideration (e.g. alternative C standing for the child being killed, as opposed to for example, the child being raised by a third person) and what preferences tell us about those who hold them.
Solomon’s judgment illustrates a difficulty in social choice which, though very different in terms of the substantive issues at stake, is related to what Sen (1970b) refers to as the ‘impossibility of a Paretian liberal’, namely that it may not be possible simultaneously to respect the Pareto criterion, consider preferences over a universal domain, and allow individuals to be decisive with respect to at least one pair of ‘social’ alternatives. Sen focused on situations in which, as a guarantee for individual liberty individuals ought to exercise complete discretion regarding certain social outcomes that might be viewed as best relegated to a sphere of purely personal decision-making (e.g. whether to paint one’s walls pink rather than white, or whether to sleep on one’s stomach or not). The difficulty can arise in such situations because of the ‘interfering preferences’ of others over outcomes within this private sphere. In Sen’s example, which concerns who will read Lady Chatterley’s Lover, the two members of society (named “Lewd” and “Prude”) display interfering preferences in that they each have a view regarding whether the other person should read the book, which moreover conflicts with the other person’s preference.[19] A commitment to individual liberty would require that each person be permitted to decide for themself whether to read the book or not, but this will conflict with the Pareto criterion (precisely due to the existence of interfering preferences).[20]
The normative rationale for such interfering preference to be discounted has to do with the case for a sphere of personal liberty, in light of which such preferences must be seen as ‘inappropriately nosy’ or at any rate inappropriate to take into account in social choice. However, there is no way of recognizing this quality without additional information beyond individual preference orderings (Blau 1975) and the appropriate application of relevant evaluative criteria. (In Solomon’s judgment, thepreferences of the bad mother must also be discounted, albeit for different reasons having less to do with ‘nosiness’ than with the best interest of the child). For such preferences to be discounted in social decision making would require a consideration of their substantive character and contextual meaning and not merely their ordinal content, thus involving a departure from the Arrovian framework. Specifically, in the case of the Paretian liberal we must be satisfied that the criteria relevant to determining that a sphere of rights is appropriate to define are satisfied, for instance that there are no externalities of a kind which would place an appropriate limit on a person’s actions. Determining whether preferences are to be regarded as unduly meddlesome or otherwise inappropriate to defer to when determining social outcomes cannot be determined in the absence of information regarding the specifics involved as well as the application of sound judgment. Should it be within a protected sphere of rights to purchase a painting and then decide to destroy it?[21] Is the potential sense of loss experienced by art lovers an externality deemed relevant or irrelevant to the definition of the sphere of rights? In either case, how does this differ from Prude being upset and offended by Lewd’s private reading of Lady Chatterley’s Lover? Does it matter if the painting is a recognized masterpiece as opposed to an ordinary work? Similar issues arise in a very wide range of contexts.
In the case of the Paretian liberal, as in the case of Solomon’s judgment, it is necessary to depart from the Arrovian framework, by taking note of the substantive descriptions of the alternatives being ranked in order to make sense of the situation and determine how best to proceed. The ordinal Arrovian framework requires that we ‘see no evil’ and ‘hear no evil’ but alas this does not imply that we speak no evil nor that we do no evil. Examples of this kind merely illustrate the larger point that whatever the specific evaluative issues involved, judgment is inescapable and rules of aggregation are no substitute for it. This is, alas, our human predicament.
Untying Our Hands
How can the informational framework of social choice theory be broadened? What information should be considered relevant to formulating claims about society as a whole? One possibility is to take cardinal aspects of individual utility (capturing for instance the strength of preference) into account. For this, we may conceptually turn to the concept of a Bergson-Samuelson social welfare function (described in Chapter 22), which aggregates individual utilities experienced in each social situation. This raises the issue of how to engage in meaningful comparisons of utility amongst members of society, and in particular whether the utility of different persons can be expressed in a common metric. The scientific legitimacy of such an endeavor has of course been criticized on the basis that utility is highly psychological and subjective, and thus in essence unverifiable. This critique was highlighted in the 1930s by Lionel Robbins (Robbins 1935), operating within the general frame of logical positivism and its insistence that the sole stuff of science consists in empirically verifiable propositions (interpersonal utility comparisons being, as he famously remarked, a case of “thy blood or mine”[22]). This highly influential critique led to the attempts to construct a welfare economics that takes preference rankings as the sole relevant information, relying on the use of the Pareto criterion instead of utility summation (now deemed meaningless). The influence of the Robbins critique can be seen in Arrow’s approach to social choice which asks, in effect, can we still form social welfare judgments with one arm tied behind the back?
There are practical difficulties associated with establishing a common denominator of states of mind, of course, but this does not mean that it is an impossible task, or that it is always unwarranted to make the attempt. Peter Singer, for example, approaching ethical dilemmas from a utilitarian perspective, has suggested that one has the moral duty to accept small sacrifices (e.g. donate to humanitarian relief causes) in order to reduce suffering experienced by deprived starving individuals (Singer 1972). This does suggest that it is meaningful to compare, to some extent, levels of well-being across persons (wealthy and poor), and accept some tradeoff, rather than dismiss the exercise entirely on grounds that utility is completely subjective. Is comparison of such a kind utterly ‘meaningless’ regardless of how rich the rich person and how severely deprived the deprived person in the comparison? If it is not, then what are the guideposts for determining what comparisons are meaningful as guides to judgment and decision?
Another possibility is to look beyond the utility framework. It might be possible to compare social states in terms of some other criteria for evaluating them, including for instance non-utility information about the quality of human experience. A person’s use of a particular resource, or his or her expressed level of contentment, may not always be an adequate measurement of the person’s well being. For instance in situations of ‘adaptive preference’, a person may identify herself as possessing a higher level of well-being than warranted given her economic or social deprivation as recognized from a more ‘objective’ standpoint. More generally, errors in judgment, for instance concerning what conduces to well-being as the individual herself might judge from a more distanced standpoint, may call for the use of other information. In such situations, looking at what conduces to people’s actual well-being and not simply their subjective preference-based orderings over individual and social states of affairs, may be a more fruitful basis for public policy making. This requires a framework for thinking about well-being as potentially distinct from a person’s ability to derive satisfaction from a particular good, and also raises fundamental questions concerning how to define and assess quality of life, to address which both philosophical reasoning and social scientific information of diverse kinds are needed.
One approach, as in Rawls’ theory of justice as fairness, is to focus on the ownership of basic goods that most people would consider to be essential to their well-being, with ‘primary goods’ defined as things which a rational person wants whatever else he wants (Rawls, 1971: 92). The external assessment regarding welfare here involves a reference to the requirements of a rational individual, whatever the goals pursued. Amartya Sen’s “freedom-based” capability approach takes the analysis a bit further by focusing on a person’s capability to convert particular resources into achievements, and not just on the ownership or control of said resources (see for instance Sen 1979, 1992). Sen’s work on poverty and deprivations suggests that it is possible (and indeed necessary) to look beyond income levels, or indeed any materially defined poverty line, and understand poverty as capability deprivation. More generally, the conceptualization of well-being requires an adequate account of human flourishing, in which freedoms to achieve diverse functionings define a person’s capabilities. The approach has been highly influential in development policy, contributing to the creation of the Human Development concept and more recently in guiding economic and social policy assessment generally. For example, the Commission on the Measurement of Economic Performance and Social Progress (the Stiglitz-Sen-Fitoussi Commission) put forward the idea of a ‘dashboard’ consisting of a variety of indicators to evaluate social welfare and sustainability, as opposed to a single measure of well-being (Stiglitz, Sen and Fitoussi 2009). These practical efforts have emphasized the narrowness of an income-based approach to well-being evaluation as opposed to the conceptual deficiencies of utility-based evaluation. However, a capability-based approach to social assessment seems to provide a more natural foundation for capturing concerns for diverse freedoms to achieve.
This informational basis for assessments of social choice and welfare – focusing on the kinds of effective freedoms (encompassing positive and negative liberties) needed for people to achieve a fruitful life is very different from that adopted by the Arrovian framework, where such effective freedoms can only be accounted for to the extent individuals view them as relevant, forming preferences accordingly. Even if utility is given a cardinal meaning, rights and capabilities can only be taken into account on the basis of the utility generated rather than their own intrinsic merits. Still more significantly, as we discuss next, broadening the informational basis of well-being assessment creates a potentially more robust basis for interpersonal comparisons, necessary in order to make meaningful comparisons of social states and to avoid Arrow’s paradox. The impossible becomes possible: all that is needed is to untie one’s hands!
Thy Blood and Mine: Distributive Justice and Interpersonal Comparison
Should distributive justice play any role in analyses of social welfare and choice? Social judgment (including in regard to social welfare and social justice) would seem to require that we promote fair consideration of all individuals’ interests, at least by way of the symmetric treatment of individuals in the procedures of social choice. However, we must ultimately ask, in the words of Amartya Sen (Sen 1979), equality of what?
A libertarian might resist engaging in any assessment of the desirability of a particular social allocation, stressing instead whether it was brought about by free exchange, or more generally whether proper procedures were followed in arriving at an outcome, regardless of the inequalities that may be generated (e.g. Nozick 1974). In contrast, if the ‘pattern’ of outcomes realized is taken to be most relevant in assessing a state of affairs, what distributive criteria should be used to rank different outcomes? If interpersonal utility comparisons are taken to be meaningful, different types of social welfare functions aggregating individual utilities differently will result in different social allocations. Going back to Sen’s cake allocation example, a utilitarian social planner will divide the cake so as to maximize total utility (at the point of equality of everyone’s marginal utility).[23] An egalitarian planner would seek to achieve a social outcome whereby each person derives equal utility from eating. A Rawlsian-inspired planner would likely assign a larger portion of the cake to the poorest person, so as to maximize the utility of the worst-off individual.[24] Allocation problems can also be addressed in the framework of axiomatic bargaining (see our prior entry Thirteen Ways To Split a Cake), where utilities resulting from the cake allocation would be assessed on the basis of utility differences from a threat point, as opposed to absolute values.
As we noted above, there are other possible conceptual frameworks that do not involve utility comparisons. The capability approach allows for interpersonal comparisons that take forms other than utility comparisons, with differences in capabilities amounting to differences in individuals’ abilities to live freely and well. Though the capability approach does not suggest any specific formula for policy decision (for example it does not suggest that a social planner should necessarily seek to equate everyone’s capabilities at all costs), it does provide an informational framework for assessing the goal of promoting individuals’ opportunities to achieve outcomes, deemed socially valuable.[25] A greater share of cake going to a starving person might be desirable to the extent it alleviates hunger, not merely because it generates utility or well-being, but because it is intrinsically and instrumentally linked to greater opportunities for individuals to live free and flourishing lives. Where Robbins excoriated interpersonal comparisons on the ground that they involved questions of thy blood or mine, the capability approach begins with the presumption that flourishing lives are valuable: thy blood and mine.
Adopting capabilities or another non-utility space of evaluation of individual lives helps with the problem of interpersonal comparison for two reasons. Firstly, information about individual flourishing in the space of capabilities may lend itself to interpersonal comparisons since it is more tangible and less metaphysical than utility (pace Robbins). To ask, for instance, about anthropometric information on individuals which tells us something about their future prospects for good health and a long life is decidedly to employ measurable and interpersonally comparable information, even if there are methodological challenges which arise in this as in all cases of comparison. Secondly, concern for adequacy, or equality, in the space of capabilities may have determinate implications that are distinct from those which arise in other spaces (e.g. resources). Going back to our prior example of the family inheritance, the capability approach would place less emphasis on the children’s own preferences (the only son should get everything), and instead consider the distribution of opportunities amongst children.[26] A capability-based approach to social judgment (taking into account interpersonal comparisons in valued capabilities and the ability to transform resources into them) can both facilitate interpersonal comparison and thereby sidestep the Arrovian paradox, which is based on a restriction to ordinal subjective preference information. Whether such an approach, or any other, is warranted or not must however ultimately be judged on the basis of underlying evaluative commitments. The scientific approach desired by Robbins must be allied with sound evaluative judgments if we are to overcome the impasse.
The Impossibility of a Computational Democracy
It has been suggested that Arrow’s impossibility theorem establishes the ‘impossibility of a democratic computer’ (Mirowski, 2002: 302). What, in light of our discussion, should we make of this result? Does it establish an inadequacy of computation or of democracy?
Arrow’s result was a foundational development in formal social choice theory. The axiomatic reasoning approach in social choice theory makes it possible to identify specific conditions that may or may not be mutually satisfied, and therefore what conditions we must seek to weaken or to dispense with, and in this respect places us in a “well-lit space as to what we are doing” [Amartya Sen in the Second Annual Kenneth Arrow Lecture]. Signally, it alerts us to the limitations intrinsic to viewing social welfare solely in terms of outcomes determined by a voting process — majority voting or other such procedure need not deliver consistency let alone (as we have seen above) satisfactory decisions. One simple, final example will illustrate this latter point: A proposal of taking the income of the poor minority in a country, cutting it in half and giving the other half to the rest of the population would strike us as unsound social judgment, and therefore a poor basis for policy, though it may well receive the approval of majority voting.[27] Indeed, if the poor minority is reduced to one person from whom we take almost everything, we get the story of Omelas.[28]
MWG’s approach to Arrow’s negative result focuses on how to accommodate the difficulties highlighted by Arrow’s theorem through various possible relaxations of the framework, but it focuses not at all on the role of broadening the informational basis of social judgment by leaving the realm of subjective preference. The Arrovian framework views the alternatives in a fashion which is content-neutral, but that restriction makes it impossible to look beyond individual orderings of social states of affair to form social judgments and choices which are warranted by considered reasoning, whether or not they rise to the level of Solomonic wisdom. Those who take the Arrovian framework as the last word in social judgment and decision cannot step outside the framework to assess such decisions from an independent perspective, and in this respect try to wash their hands of the problem altogether. Arrow’s theorem tells us that, much as this would be nice if it were possible, it is not. As such we might suggest that Arrow establishes the impossibility of a computational democracy, pointing instead to the need for non-algorithmic bases for judgment — an inadequacy of computation rather than of democracy. Viewing Arrow’s impossibility theorem as an invitation for informational enrichment opens up new possibilities for constructive social choice theory, freeing our hands to build and create.
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[1] We are very grateful to Wulf Gaertner for commenting on this text – without of course holding him responsible for its weaknesses.
[2] Edmund Burke famously wrote, in his Reflections on the Revolution in France (1790): “But the age of chivalry is gone. That of sophisters, economists, and calculators has succeeded; and the glory of Europe is extinguished forever.”
[3] A social welfare functional is a rule that assigns to any profile of individual ‘rational’ preference relations (a profile of individual rankings defined over a set of alternatives), a social preference relation (a unique social ranking of such alternatives).
[4] It is possible to approach formal social choice in a manner which allows procedural concerns (e.g. enforcement of contracts, protection of rights, etc.) to be taken into account, alongside social outcomes as done in the formal literature on liberties and rights (in which a foundational contribution is Gaertner, Pattanaik, and Suzumura 1992).
[5] Some of the recent philosophical literature on group minds considers the hypothesis that collectivities may have a claim in social ontology as entities in their own right, with psychological autonomy. See for example Petit (2003) for the claim that thinking of a collectivity as an intentional subject displaying consistency and rationality in decision-making can help solve a ‘discursive dilemma’ in situations where a judgment on a final issue is determined by a number of separate considerations. If a collective view is reached on the basis of first aggregating individual views on each premise (premise-centered voting) and deriving the logical consequences, the outcome may not necessarily coincide with what would have been reached had individuals directly voted on the final outcome (conclusion-centered voting). It is claimed that thinking of the collectivity as an intentional subject displaying consistency in decision-making helps to avert this dilemma.
[6] There must be no limitations on the sets of preferences of individuals to which the functional can be applied, i.e. the social welfare functional must yield a social ordering for every possible combination of individual preferences.
[7] The social welfare functional must respect unanimity of strict preferences on the part of individuals. If every individual prefers x to y, the social welfare functional must yield a social ordering where x is also preferred to y.
[8] There is no one individual in the society whose preference relation determines the social preference.
[9] The social preference between two alternatives must be dependent only on individual preferences over the same alternatives. Individual preferences with respect to other alternatives are irrelevant.
[10] The social welfare functional is by definition taken to be ‘rational’ (complete and transitive in the definition of MWG).
[11] Samuelson, P.A. (1969), “The Way of an Economist”, in International Economic Relations: Proceedings of the Third Congress of the International Economic Association, London: Macmillan, pp. 1–11.
[12] A related result had already been known since the late 18th Century as the Condorcet Paradox in the specific case where the social aggregation mechanism consists of majority voting. In a work published shortly before the French Revolution, Condorcet (a central figure in the Enlightenment who also played a leading role in the French Revolution) showed that pairwise majority voting can lead to cyclic patterns and intransitive social preferences in situations where three alternatives or more are under consideration (Condorcet 1785, 1788). Incidentally, Condorcet’s work on constitutional issues ultimately led to his demise. He was branded a traitor during the Terror for criticizing Constitution’s Commission, and subsequently arrested. He died in prison in an apparent suicide.
[13] A possible approach is to replace the transitivity requirement with the quasi-transitivity of the social preference relation, on which see MWG p800.
[14] If the domain is restricted to single peaked preferences, majority voting will result in social preferences being identical to those of the median voter, which will depend on the distribution of preferences in society. As such, the social aggregation rule will be transitive because under the specified assumptions the median voter’s preferences are transitive (the median voting theorem).
[15] The pairwise independence condition seems to impose some kind of menu independence requirement with respect to the formulation of social choice, but it is not immediately obvious why the social preference between two alternatives should be unaffected by individual preferences over other alternatives. MWG (p794) gives us three possible lines of justification for this condition: a normative appeal (not immediately obvious, for instance because the presence or absence of other alternatives could potentially matter if choice is thought of as being driven not just by intrinsic properties of objects, but also by a range of external considerations – on this, see Sen 1997); a concern for practicality, in that the assumption helps to “separate problems” (in which case could Arrow’s impossibility potentially be overcome if one was ready to accept practical difficulties?); and an incentive issue connected with the need to provide inducements for truthful revelation of individual preferences (this point is not immediately obvious – is it so critical that the social choice function provide for such an inducement mechanism?).
[16] This point is not necessarily obvious. For instance, it may be argued that the concept of volonté générale (general will) developed by Jean-Jacques Rousseau (Rousseau 1762) is meant to capture a notion of common good and public interest that cannot be reduced to whatever decision can be reached with majority rule, or indeed to the ‘sum’ of individual wills arrived at through any ‘static’ aggregative scheme. Rather it appears to involve the idea of the formation of the general will through a dynamic procedure involving the encounter of individual wills in a social whole (through which process the individual will itself can change). The general will is moreover not described even thereafter as standing in any specific aggregative relationship to individual wills.
[17] For a proof of the Field-Expansion Lemma, please refer to Sen (1995). In the particular example of the cake division, if the social preference ranks [50,50] over [99,1], we are allowing B’s preference to prevail and B may be deemed decisive over that specific pair. However, by the Field-Expansion Lemma, B must then be decisive generally and B’s preference of [1,99] over [50,50] must get priority in the determination of social preference as well. By an analogous argument involving A, if the social preference ordering ranks [50,50] over [1,99], then [99,1] must be ultimately deemed socially preferred to [50,50] as well. In either case, [50,50] cannot ultimately be deemed socially preferred. In this particular example, one of the parties is necessarily decisive and indeed dictatorial.
[18] We can think of such an evaluator in terms of Adam Smith’s impartial spectator in The Theory of Moral Sentiments, or Harsanyi’s impartial observer (Harsanyi 1953, 1955). Given that observations and judgments are always formed on the basis of a specified viewpoint, we might expect that the social arbitrator aspire to ‘positional objectivity’, which requires some degree of interpersonal independence once the particular parameters of an observational position are fixed or indeed to ‘trans-positional objectivity’ which requires that all positional perspectives be adequately taken into account (Sen 1993).
[19] Prude would prefer not to read the book (which he views as indecent), but Lewd would rather Prude read the book than not (he gets enjoyment out of Prude having to read it), and vice-versa; Lewd would rather read the book than not, but Prude thinks this would not be in Lewd’s best interest.
[20] Considering three social outcomes “Lewd reads” (L), “Prude reads” (P) and “No one reads” (N), in Sen’s example the personal preferences are (where > stands for strict preference): P > L > N for Lewd, and N > P > L for Prude. By the condition of universal domain, this pattern of preference must yield an acyclical social preference, but it cannot comply with both the Pareto condition and that of minimal liberty, which would require that the social preference reflect Lewd’s personal preference to read the book (L > N), and that Prude should not be forced to read it (N > P). The contradiction arises not just because interfering preferences conflict with the other person’s private choice, but also because of the intensities of the reciprocal interests (Blau 1975). In Sen’s example both parties feel more strongly about opposing the other person’s private decision than fulfilling their own. If, on the other hand, interfering preferences still contradict personal choice (Lewd still wants Prude to read Lady Chatterley’s Lover, and Prude still wants to censor Lewd), but one of the parties is ultimately more interested in advancing his or her own interest than in interfering with the other (for example, ultimately Lewd places his own interest in reading the book above Prude’s), Lewd would be permitted to read the book without violating the Pareto condition (as Lewd and Prude would no longer be in agreement that P > L).
[21] An apposite example involves best-selling author Patricia Cornwell, who was the subject of controversy for allegedly destroying a painting by Walter Sickert in an attempt to establish the identity (DNA) of Jack the Ripper.
[22] “If we disagree about ends it is a case of thy blood or mine”. Robbins (1935: 150).
[23] Note that it is also possible to adjust the profiles individual utilities by attaching decreasing weight to successive units of individual utility with the generalized utilitarian social welfare function such that, for instance, a person with a uniformly high capability of enjoyment (e.g. a “utility monster” who never experiences diminishing marginal utility) would not attract as high a share of resources as his or her utility function would suggest (see MWG p827). One could conceive of other possible adjustments – e.g. from a complementary point of view, a person who derives lower levels of enjoyment from an available resource (e.g. due to some disability) could receive a compensatory allocation. However, such adjustments would seem to involve identifying the non-utility reasons for differences in the ability of different persons to translate resources into utilities.
[24] The maximin (Rawlsian) social welfare function reformulates Rawls’ maximin principle in terms of utility. However, we note that Rawls’ original analysis in Rawls (1971) was framed in terms of ownership of primary goods rather than utilities, and also defined as an institutional principle aiming at bringing about ongoing outcomes as opposed to a resource allocation rule meant to be applied in single instances.
[25] There is a growing literature which implicitly invokes interpersonal comparisons on the basis of capability sets. The development of the Human Development concept and index is the best known applied effort. See also e.g. among others, Gaertner and Xu (2006) or Reddy and Pogge (2010).
[26] If one child was disabled and required a much higher income to maintain a quality of life on par with that of her siblings, an application of the capability approach aiming toward equalization or at least sufficiency of capabilities might suggest that the disabled child should be allocated a higher share of the family wealth so as to have equal or at least adequate freedom to achieve well-being.
[27] This is an example directly taken from Sen’s Second Annual Kenneth Arrow Lecture.
[28] Majority voting is not the only candidate for a social aggregation rule, of course. This example merely illustrates how a meaningful exercise in social judgment cannot be reduced to a mere aggregation of individual preference rankings (whether this is done via majority voting or another aggregation method) but must rather integrate other concerns relevant to social choice, such as rights. Indeed any consideration relevant to individual and social well-being not properly captured in the parties’ ordinal preferences falls outside of the standard informational framework of social choice theory and must be separately noted and integrated into social assessment and decision making, if it is to play any role at all.
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From the essay:
We are to split a cake between two people A and B, with three potential cake allocations: [99,1] (where A receives 99%), [50,50] (equal division), and [1,99] (where B receives 99%). …
Although it is not obvious, the Arrovian framework only allows us to consider either [1,99] or [99,1] as the most socially desirable outcomes.
The framework is already excluding an outcome without even considering its merits. What further proof is needed that this framework is just wrong? Why would we need to spend time trying to correct a model that starts from the wrong assumptions?
This looks like modern economics or modern physics to me, where an enormous amount of time and energy is wasted to work from assumptions that are proven to be wrong.
Warranted, though I think misled by the article.
I am quite sure Arrow does not say the [50, 50] outcome is excluded or not considered. There are preference aggregation rules that do consider the merits of equal division based on the rankings of voters, and will choose equal division.
Arrow received the Nobel Prize for proving no election system can be perfect. This discovery is enormously helpful in designing a near-perfect voting system which is indeed necessary in a democracy.
The article raises the question of majority rule and its morality. The current state-of-the-art, I believe, is a constitution that limits majority power. For example, a majority can not vote to genocide a minority in the U.S.
The problem when we try to consider the morality of [50, 50] instead of just the preferences of the voters, who determines the morality? How is this person elected? What if one voter requires 99% of the cake for survival, and the other has abundance?
If we try to score options, without objective criteria, one voter’s perverse pleasure can have arbitrary power over another’s survival interests. This is why the choice order of voters (e.g. ranked preferences) is regarded a highly democratic model for group decisions.
To keep the morality of a democratic decision in check, I believe we come back to a reasonable interpretation of constitutional law by a court, albeit imperfect.
>This looks like modern economics or modern physics to me, where an enormous
>amount of time and energy is wasted to work from assumptions that are proven to be wrong.
Uh, which parts of “modern physics” have been “proven” to be wrong ?
Do tell.
The problem is, the article starts off with a false dichotomy then proceeds to make a bit of a meal over it. It does on occasions, to use a rather impolite phrase, get its intellectual knickers in a bit of a twist. I’m glad now I never pursued a career in academia; I’d never ben able to get past my first cup of coffee without sinking under an immense weight of existential contradictions.
However readers might be well advised (if they’ve still got any strength left, I needed both the aforementioned coffee and a biscuit to get through the whole thing, and I think I still need a period of rest in a darkened room) to revisit Yves’s intro: The author is indeed attempting a “difficult task” and “is working through some of the implications” of ‘Arrow’s Impossibility Theorem’ not attempting to solve them.
It’s worth stopping for a minute and considering that, if it is slightly mind bending to step along all the permutations of trying to implement in practice a rigidly formulated Specific Fairness Criteria (e.g. using a democratic decision making process) which are at least mathematically straightforward, then how anyone seriously expects pure economic theory to provide a solution is being equally deluded.
For me, the whole piece started to make a lot more sense when I plugged in a “what if?” scenario. (academics, like the one that I’m going to characterise the author of this feature as being do tend to not like “sullying” their works with helpful real-world examples but this always helps with thickies like me when trying to read them). The scenario being, “what if a chemically dependent (i.e. a drug addicted) person wanted (“needed”) the rest of society to support their habbit?” This apparently simple question soon unravels into a myriad of related sub-decisions. Such as:
– Should the addict’s painful withdrawal (which would definitely be “suffering”) be something which society willingly inflicted if it decided not to provide the continued ability of the addict to indulge ?
– Should society then take over the supply of the chemicals the addict requires ? Or should it pay the “street” price and support underworld supply chains ?
– Should society incarcerate or forcibly hospitalise the chemically dependent person if they refuse to give up their addiction
– … and so on
My point here, like Yves said at the start, isn’t to “solve” (in this case) the conundrum of addiction, addicted individuals and society’s range of responses. It is to illustrate how impossible it is to both a) alleviate “suffering” or “want” or “need” in individuals while at the same time b) getting universal buy-in from everyone in society.
I’d have saved a whole load of time and effort by simply saying “You can’t please all the people all the time”. But then, that’s why I’d have bombed in academia… At least (if you accept the conclusions of Chappe’s thesis above) you can now safely bandy this piece of homespun wisdom around in knowledge that it’s been scientifically proven ;-)
LOL, Clive. Thank you for your succinct summation. I confess I did not make it all the way through the essay.
It does seem to me that the “Omelas” parable is directly borrowed from Dostoyevksy in The Brothers K, where Ivan puts the same question to Alyosha, in terms of God and theodicy. Alyosha hesitates, but ultimately rejects the suffering of the one little girl as unacceptable, even if it guarantees the happiness of everyone else. It’s one of the most magnificent and memorable passages in any novel I know.
Raphaële Chappe reminds one of José Arcadio Buendía, Gabriel García Márquez’s character in One Hundred Years of Solidtude, who spends most of his time in his “scientific” pursuits, like trying to turn lead into gold.
In Chappe’s case, like all good social scientists, the goal is not to turn lead into gold, but theology and metaphysics into science. Economists are especailly good at this. Einstein repeatedly warned of the follies of this, as did Swift with his example of the scientists in Lagado who worked tirelessly to transform human shit into food.
“Since the Enlightenment culture of eighteenth-century England tended to view humans optimistically as noble souls rather than vulgar bodies, Swift’s emphasis on the common filth of life is a slap in the face of the philosophers of his day. Thus….when the scientist in Lagado works to transform excrement back into food, we are reminded how very little human reason has to do with everyday existence. Swift suggests that the human condition in general is dirtier and lowlier than we might like to believe it is.”
http://www.sparknotes.com/lit/gulliver/themes.html
And as Wikipedia explains of Garcia’s novel:
“One Hundred Years of Solitude (1967) is the story of seven generations of the Buendía Family in the town of Macondo. The founding patriarch of Macondo, José Arcadio Buendía, and Úrsula Iguarán, his wife (and first cousin), leave Riohacha, Colombia, to find a better life and a new home. One night of their emigration journey, whilst camping on a riverbank, José Arcadio Buendía dreams of “Macondo”, a city of mirrors that reflected the world in and about it. Upon awakening, he decides to found Macondo at the river side; after days of wandering the jungle, José Arcadio Buendía’s founding of Macondo is utopic.[1]
Founding patriarch José Arcadio Buendía believes Macondo to be surrounded by water, and from that island, he invents the world according to his perceptions.”
http://en.wikipedia.org/wiki/One_Hundred_Years_of_Solitude
I thought giangi75 summed it up nicely with this question near the end of a thread on MMT:
“Am I the only one in this thread whose first tought, after reading the essay, was like ‘that’s purely an ontological debate’?”
http://www.nakedcapitalism.com/2013/12/essays-monetary-theory-policy-nature-money-continued.html
Most of the literature I have read in the Arrow tradition employs very strong individualistic assumptions. You start with some individual preferences that are assumed to be stable over time, and then consider various social outcomes and the ways in which those outcomes aggregate the individual preferences, and the extent to which those outcomes fall short of optimality for this or that individual, in light of the individual preferences.
But our preferences are modified over time. And one of the ways in which they are modified depends on the processes through which they enter into social decision-making and by which a social choice is made. In other words, we come to feel better about a given outcome than we felt initially, if that outcome comes to pass and we feel good about the process through which it was brought about. Deliberative, fair and participatory decision-making processes modify the preferences of the participants and generate good feelings about their outcomes.
Reducing the depth and breadth of human existence to mere “preferences,” as Amitai Etzioni explains in The Moral Dimension, is part and parcel of neoclassical economic ontology.
The essay seems to me to be a spoof of academese. What the heck is MWG? The footnotes links, BTW, don’t work on my browser (Chrome).
But let’s get to the point here. What the author is trying to do is to analyze social morality and attempt to use terms that, ultimately, stem from the Aristotelian fetish for classification. To put it another way, there is no such thing as “an individual” and society is not made up of these things. We are, from our birth, intimately linked to our parents, their social and cultural milieu and, though contemporary people don’t like even thinking about this, to the Earth, it’s food, water and air. The Solomon decision illustrates this by introducing a bit of chaos to his judgment that defies, in my view, the sort of approach presented by the author.
To put it another way, the issues we are talking about are philosophical and moral. The idea, for example, of choosing to make one member of society suffer so all could live well perverts the idea of the “good” dramatically. What do we mean by living well? What do we mean by maximizing utility? Utility to do what? Is living well having big-screen TVs, designer handbags and a Ferrari? Or is living well living in a monastery and writing like Thomas Merton? Life is too complex and chaotic to be described in equations–for example, my view is that if ease and luxury was given to a population at the expense of the torture of an individual then karma would be accumulated and their next lives would be somewhat less pleasant–you see it depends on your moral philosophy. In my POV life is not about comfort or longevity but spiritual growth which I can simply define as feeling connected to everything around you including this moment. To construct an economics that makes sense we have to start with deeper issues–the author argues from a set of assumptions that has not philosophical core that is defensible–I mean, is this some perverted form of Utilitarianism (a philosophy almost as jejune as Objectivism)?
Hi Banger. I was bothered by “MWG”, too. I don’t have a definitive answer, but an internet search of MWG, arrow, and theorem suggests that it might be the book Microeconomic Theory, by Andreu Mas-Colell, Michael D. Whinston, and Jerry R. Green, published by Oxford in 1995. There are 1008 pages, so it seems to match the footnotes. See:
Microeconomic Theory at the Oxford University Press website.
What is a good mother? We all assume we know what a good mother is but in reality there are many different views on mothering. We could argue that Marie-Antoinette’s mom did a good job on the wealth acquisition skills, not so good on survival skills…
The other issue is that we know that there is a higher concentration of sociopaths at the top who thrive on win-lose deals. So our strategy should revolve around placating the sociopaths first. All the books I read assume that there are no personality types , that we are one big melting pot..
If you read stuff like this every morning when you wake up, you’ll go mentally blind. Then you won’t see that person A wants X on Day Y then wants Z on Day T when |X-Z| > 0 and T-Y > 0. Then you won’t see the “Intertemporal Utility Diffraction Wave” that negates the possibleness of any summation of states over a time-bounded equilibrium continuum which negates the possibility of state optimization in any form other than a time-independent singularity, which through Zeno’s Paradox can’t exist in reality Batman. Then you walk right into a wall and pass out from the blow. Bwaaaaaak. Be careful dudes! Keep one eye on the screen and one eye on Youtube, just as a hedge.
Instead of YouTube, if I read the above feature then Zero Hedge, do they sort of cancel each other out ? Or will it be like some matter/anti-matter reaction and my brain will melt ?
LMAO!! Good sh*t, Craazy.
There’s another component of analysis missing in the essay. Let’s take the ol’ cake example, wherein two people must decide how to divvy up the cake.
A gets it all.
B gets it all.
They split it 50/50.
What interests me is that I’ve been in this situation before and I usually decide to allow the other person to have all the cake. No, I insist. It makes me feel good on the inside and I don’t like cake that much anyway.
So wait, I can feel good on the inside, and the other person gets a bit of cake and a feeling of gratitude? That’s a win-win! Of course human nature is more complicated than simplistic mathematical equations!
tl;dr Turns out that ignoring human nature when writing papers on social sciences means a lot of wasted ink and bored readers.
don’t you feel guilty when you see their belly fat rolls bulging over the top of their belt? :)
That’s is a perfect example of the Intertemporal Utility Diffraction Wave!
I’ll take science over this any day. I hate this stuff. In fact I’ll take scientistic over this. This is like discussing the rift between equality and freedom, or choice versus paternalism, or capitalism versus socialism, this question never gets answered. I mean, this stuff makes mainstream economists look very practical. Here’s a way to pose a question of human equity – not necessarily equality: base human entitlements across the board – maybe using their weight or something measurable and unequivocal – on what is equitable for the environment. What allows not just sustainability but a restoration and a renaissance of the planet. OK, maybe obesity would have to be handicapped.
I do find it interesting wading through these kinds of topics, but I guess I get a bit impatient wanting to come to some sort of resolution. Personal exploration is critical, but our social need from academia is developing solutions to concentration of wealth and power in our society.
***
Also, I don’t understand the introduction. Happiness and choice are subjective terms, not objective observations. We humans do choose to let Others suffer.
That is why we are at where we are at – the individual choices of millions of educated, comfortable leftists over the course of the past few decades to protect themselves and their loved ones from the sacrifices necessary to repel and ostracize the psychopathic ruling class.
That’s not a moral indictment of complicity; it is an indictment of the silliness that academic discourse has become that ignores this complicity, this crumbling of institutional governance across our entire system. How does one write a piece on judgment and not mention words like fraud, torture, corruption, war, or racism? Our systems of education, medicine, law, journalism, banking, governance, and so forth are fundamentally broken. What we need from academia is hope and guidance for how to change this, how to make a difference without having to compromise your children, because as long as the technocratic liberal class has to choose between social change and their own family, they will choose their family every time. That’s welfare economics.
One specific comment I would offer on the detail:
“It follows that the only social outcomes to be considered ultimately are the outcomes preferred by either party, precluding some “middle-ground” solution where neither party gets what they originally wanted but some sort of a compromise is reached.”
This is actually a problem worth exploring in much more detail. I would argue that one of the major problems in leftist thinking today is the notion that compromise is good in and of itself, rather than simply a means to an end. One party getting to set the strategy, to pick a course of action, is often much better than splitting the difference – as the Solomon story brilliantly captures. A baby split in two is the worst possible outcome.
We have to remember that here in North America there is a lot of scorn toward social sciences which offer lesser degrees than hard sciences. The irony is that most admired hard science degrees do not lead to good paying jobs either.
My initial reaction was that it is a lot easier for a philosopher to do economics than it is for an economist to do philosophy. This echoes many of the comments here, especially those of From Mexico and Banger, although crazyman does convey well the frustration with the academese. My point is that while philosophers can be remarkably opaque in their language, they and their readers do tend to keep in mind more where they are beginning from, where they are wanting to argue to, and how they got there.
Chappe’s problem is that he is wandering around in that space between starting and end points, between causes and effects, between questions and answers. Of course, he is not going to get anywhere.
Welfare economics is for a start a misnomer. What Chappe is, I assume trying to get at, is the social dimension of economics. But this is a hierarchy error. Society precedes economics, that is society is a much larger concept. What he should be talking about is the economic dimension of society. This gets into his equally mistaken use of economic methodology to model society and social processes. And it is all exacerbated by the dubious nature of those methodologies even as they are applied to economics.
Putting on my philosopher’s cap, let me explain the nature of the exercise as I see it. Chappe is exploring how to transition classical microeconomics to the social, and what some might call the macroeconomic, level. Although I claim no expertise or interest in the academic teaching canon, this explains Chappe’s mysterious invocation of MWG (the commonly used textbook Microeconomic Theory by Mas-Colell, Whinston, and Green). I say classical because Mas-Colell is a mathematical economist who works in equilibrium theory. So at once we have the main author Mas-Colell who is heavily invested in quantifying the unquantifiable and in describing equilibria that don’t exist. So this was always going to end badly.
Now to be fair, Chappe almost gets the nature of social decision making when he writes,
“Social judgment (including in regard to social welfare and social justice) would seem to require that we promote fair consideration of all individuals’ interests,, at least by way of the symmetric treatment of individuals in the procedures of social choice. However, we must ultimately ask, in the words of Amartya Sen (Sen 1979), equality of what?”
The bit in italics (mine) is OK, but then he has to go and ruin it with that econo-babble of “symmetric treatment of individuals in the procedures of social choice,” and he really finishes it off by demanding “equality of what?” even though he hasn’t mentioned equality. Equality of what indeed. I suppose we could guess he is talking about symmetric treatment as equal treatment, but this is just Chappe erecting and demolishing a strawman. Fair consideration means just that, fair, not identical, not equal down to the last atom of impossibly unquantifiable quantity, but fair. Chappe goes on and on about judgment. Well, that is what fair is. It is not a measure. It is a judgment. Social does not mean an aggregation of individual anythings. It means what we want for ourselves and each other and the kind of place we want to live more generally beyond the me’s and the thee’s. These are ideas beyond the scope of economics. Trying to fit them into economic theory just results in the tortured process we see in the article where concepts are bent and twisted until the square pegs of society fit in the round holes of economics.
Just another whack at a dead horse (reminds me of a time in grad school where a group of us grad students were sitting around after a student seminar and harping on the mistakes made by the student speaker when a prof butted in and growled about beating a dead horse (the poor speaker was a student of the prof) and then turned away. A new grad, a quiet one, unexpectedly piped up “Yeah, but it’s so much fun!”. Fortunately the prof was out of ear shot…
Back to this posting, to chose a paragraph almost at random:
There are practical difficulties associated with establishing a common denominator of states of mind, of course, but this does not mean that it is an impossible task, or that it is always unwarranted to make the attempt. …. Is comparison of such a kind utterly ‘meaningless’ regardless of how rich the rich person and how severely deprived the deprived person in the comparison? If it is not, then what are the guideposts for determining what comparisons are meaningful as guides to judgment and decision?”
Love it! Questions raised and then ignored! The questions raised, “…Is comparisons …’meaningless’…”what are the guideposts…”, and their answers, are to be found in the written works of the major religions. In other words, in theological studies! What really gripes me is how these so-call researchers of social “truths” ignore a field of study that attempts to find answers to these question. You don’t have to agree or subscribe to a religion to understand their answers and use those answers as a starting point for further work.
Fascinating stuff, including the comments! Many of the latter seem to indicate that social choices are too difficult and complex to try to understand, we may as well just bumble along, making those choices anyways without the benefit of trying to understand how they could better be made. It is interesting to perceive how people rationalize a preference for ignorance over understanding! Yet, I suppose, the very same commenters often make binary decisions that reflect the outcomes of these complex judgments – they turn right somewhere, or left; they make a donation to help those in need, or not. They make real judgments and real decisions.
The question is if we can understand how these judgments are arrived at, and if so, if we can model them to gain insight into their consequences and alternatives. The process has to start somewhere and may be faulty at first and for a long time (it is, after all, a complex problem), but in many cases it is better to get started than to wait in order to get started right. I’m not convinced that there is an inadequacy of computation; apparent inadequacies are often the result of missing variables or a faulty framework. Regardless, even if these problems cannot be ‘solved’ computationally, we may nevertheless get useful insights by trying to solve them.
On a side note, if the inadequacy of computation were true, it casts a spell over the concept of procedural justice at the level of procedure (i.e. computation), no?
“…casts a pall…” might have worked better…
Chappe’s article was a hard slog for me. I’m not an economist. But I think there’s something important here. I don’t know how well Chappe answers his question, but I give him credit for widening the field of inquiry. A simplified, slap-dash list of what you already know will, I hope, make my idea at the end a little clearer.
1: Economic Man, that mythical creature who solves so many spreadsheet problems.
http://www.investopedia.com/terms/e/economic-man.asp is part of financial theory.
“First coined in the late 19th century, the term ‘Economic Man’ has developed to refer to a hypothetical individual who acts rationally and with complete knowledge, but entirely out of self-interest and the quest to maximize personal utility. Economic Man is an imaginary figure who is able to satisfy economic models that push for consumer equilibrium. “
Leads to
2. the Chicago School of economics, which relies on Economic Man.
http://www.businessdictionary.com/definition/Chicago-school-of-economics.html
“It relies to an extraordinary extent on mathematical models through which, its critics charge, it can prove anything it wants to.”
It includes the Theory of Rational Expectations.
http://www.businessdictionary.com/definition/theory-of-rational-expectations-TRE.html
Which leads to
3. Market Fundamentalism
http://www.longviewinstitute.org/projects/marketfundamentalism/marketfundamentalism
“Market Fundamentalism is the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems. Market Fundamentalism has dominated public policy debates in the United States since the 1980’s, serving to justify huge Federal tax cuts, dramatic reductions in government regulatory activity, and continued efforts to downsize the government’s civilian programs.”
An economics paradigm built on perfect mathematical models and spreadsheets, based on a fictional creature – Economic Man, and ignoring the real world. No Solomon’s allowed.
Finally to my idea: Chappe is examining Arrow’s impossibility theorem from the perspective of including the real world costs of excluding the theorem’s mathematically impossible answer. Can they be included at all? If they can’t, is it a useful model for the real world? That’s an important question. Economic ideas matter; which theories are used in constructing the ‘universal economic truths’ accepted by politicians matters. I don’t know how well Chappe answers his question, but I give him credit for widening the bounds of inquiry. Market Fundamentalism may be mathematically perfect. But why does Wall St. still need an $85 billion dollar a month bailout ?
Looking for beautiful meaning when there is – none – is hard yakka… tho trying to create it ex nihilo… well…
skippy… Sixth Extinction
Given the choice, would you accept to live in a society where happiness and prosperity is guaranteed for all on the condition that one single person be kept permanently unhappy?
False premise since no one can be kept permanently unhappy in this world since our stay here is temporary. The next one is a different matter though:
“I say to you, My friends, do not be afraid of those who kill the body and after that have no more that they can do. But I will warn you whom to fear: fear the One who, after He has killed, has authority to cast into hell; yes, I tell you, fear Him! Are not five sparrows sold for two cents? Yet not one of them is forgotten before God. Indeed, the very hairs of your head are all numbered. Do not fear; you are more valuable than many sparrows.
“And I say to you, everyone who confesses Me before men, the Son of Man will confess him also before the angels of God; but he who denies Me before men will be denied before the angels of God. Luke 12:4-9 New American Standard Bible (NASB)
The Wisdom of Solomon is not that he decided correctly A, B, or C. Nor that he recognized the problem presented to him is a false dilemma. Nor even that he identified a right question (to the satisfaction of most). His wisdom was that he discovered an elegant way to answer the question, which forcefully argued that it is the only correct question, and also forecloses all reasonable appeal against its answer (to the satisfaction of most).
Le Guin, on the other hand, does not answer any questions. She does not even ask any questions. She invites us to ask our own questions… many more I think than she realized.
Considered together, Solomon and le Guin perhaps teach us that all dilemmae are false, especially when presented by others.
To her credit, Chappe seems to be vaguely aware, and uneasy. Unfortunately, her training forbids her Solomon’s reframing. Also, she thoughtlessly continues to identify democracy with choosing between false dilemmae.