Monday, August 01, 2011

How to Mess Up an Interesting Essay

Stuart Kauffman (University of Vermont) writes an essay on utility theory (Edgworth Box diagrams, Gerald Debreu’s general equilibrium, and the Gund Institute, “value” of “bads” as opposed to “goods”) in NPR (?) (HERE):

Current economic utility theory derives from the utilitarian ethical theories of Bentham and Mill: act for the greatest good (utility) of the greatest number. This becomes a "social welfare" function that Adam Smith's Invisible Hand was to insure.”

Modern utility theory (1870s onwards) has little to do with Adam Smith (despite Bentham’s early musings) and “social welfare” functions have even less to do with his singular use n Wealth Of Nations of the metaphor of “an invisible hand” in terms of the modern misleading and fallacious attributions of modern economists (post-Samuelson, 1948) and post-Pigovian (1923) Welfare Theorems to Adam Smith.

What is meant by stating that “Adam Smith's Invisible Hand was to insure” a “social welfare” function is a mystery beyond comprehension. Stuart Kauffman perpetuates a modern myth about Adam Smith.

Labels: , , ,


Post a Comment

<< Home