Please respond to lbo-talk at lists.panix.com
To: lbo-talk at lists.panix.com cc: lbo-talk at lists.panix.com (bcc: DANIEL DAVIES) bcc: DANIEL DAVIES Subject: Re: After the Fall (was Re: religious crackpots in public life)
Ken wrote:
>>That's exactly it. The "lost" object was never possessed. It is imagined.
Ever
flip a coin with someone, where the resulting toss will determine who
sweeps
the floor? Isn't it strange how the winner will sometimes feel guilty about
having won? Why is that? Why would someone feel guilty about the causality
of
chance? Because the winner lost something in the toss. The winner lost
losing.
But this loss *only* appears as a loss *after* the coin toss. It literally
did
not exist until they won.
Economics is a different thing, to be sure, but let me ask you this: how is it that the ubiquitous theme of loss in art has no bearing whatsoever to economics or political economy? I think it is relevant. <<<
This to me seems to map onto one of the dirty little secrets of economics -- von Neumann/Morgenstern axiom number 4 (Independence). This tricky little number, not explicit in the original vN/M work, is also usually illustrated by reference to a coin flip (or at least, it was when I was at university). Thus:
"You walk into your tutor's rooms, and he tells you that he's about to flip a coin. If it comes up heads, he will give you a drink, which will be either champagne or beer, your choice. If the coin comes up tails, some unspecified thing will happen to you, about which you have no choice. What do you choose, champagne or beer?"
The point being that you might want to know what the "something" is before choosing. If he is planning to send you down if the coin comes up tails, then you should clearly choose champagne -- a heads result would mean that you'd want to celebrate escaping this fate. If on the other hand, he planned to give you a fellowship if the coin came up tails, then you wouldn't exactly be in the mood for chamapgne if you missed it, so you should choose beer (to cry into).
vN/M number four basically has the implication that your decision in the example is unproblematic; you purely and simply prefer champagne to beer or vice versa, and other "Lotteries" are independent.
There's no very good psychological basis for this axiom, and it's always regarded as a bit suspect. (Davies' Theorem is a truth of metamathematics which I just invented: For every axiomatic system with more than three axioms, there will be one axiom that nobody is completely happy about). It was basically chucked in there by cowboy mathematicians to make the axiomatisation come out right. There's a whole branch of econ. called "regret theory" (a rather picturesque name, I always think) dedicated to seeing what you can derive if you don't assume independence. It always looks like it's going to get some fantastic result which will explain the unsolved problems about financial markets, but never really does.
>>Isn't the entire profit system based on a logic of lost
objects? (take, for example, when measuring revenue, what counts and what
doesn't count --> potential revenue is *always* determined as the maximum,
to
which actual revenue is compared. Why is that? The result, of course, is
that
even with staggering profits, the corporation appears to have lost out on
valuable potential and with the Marquis de Sade the corporations cry "One
more
effort!" [in the attempt to achieve all that has been lost] (which is
Lacan's
definition of perversion).<<
hrrrrmmm ..... not sure I can follow you here. This, IMO is where critiques of neoclassical econ. like the ones Wojtek occasionally posts sort of overextend themselves. The "opportunity cost" concept is basically an engineering one, analogous to "slack" in a programming model. It doesn't really presuppose any particular view of human nature, as evidenced by the fact that Kantorovich and his pals at the Central Economic Mathematical Institute managed to deduce something equivalent to von Neumann/ Morgenstern Utility Theory from considering properties of pairs of linear programming systems, without needing to talk about human choices at all. My copy of "Soviet Planning Today" has the following passage from Novozhilov, defending Kantorovich against charges of replacing Marxist value theory with a marginal theory:
"[general equilibrium models] are clearly connected with the bourgeois world outlook. But marginal measurements (marginalism) are not among them. One the contrary, marginal measurements (marginalism) are related to what one might call the rational kernel of the models of Walras and Neumann -- to posing an extremal problem for the national economy /as a whole/. Posing the problem of the general optimum with respect to capitalism is unreal and has an apologetic sense. But if we drop the unreal assumptions of these models, there remains the proposition that prices are one of the means necessary for finding and implementing the general optimum. This proposition is analgous to the mathematical method of finding a relative extremum with the help of special multipliers [....]
[...] Hence, treating the multiplier prices as marginal quantites is possible only at the initial stage of analysis of the problem of optimal planning, when it is necessary to pose the problem in the simplest possible terms. To suppose that the method of multipliers is the property of bourgeois economic science, however, has not the slightest foundation, although the representatives of bourgeois economic science consider it so.
The poverty of content of the models of Walras and von Neumann becomes clear if one compares them with concrete models of the national economy, the Soviet perpective plans. The idea of the optimum lies at their base. In particular, the problem of maximising the rate of growth of the socialist economy was posed already at the XVth party congress (1927) [...]
It would however be incorrect to underestimate the role of prices in the socialist economy. Much depends on the correct measurement of costs and benefits such as the compilation of optimal plans, the efficiency of khozraschet, distribution according to work, and so on. This means that the correct determination of prices allows us to utilise still more the advantages of the socialist system over the capitalist system, than is possible with incorrect price formation."
dd
___________________________________________________________________________
_____
---------------------------------------------------------
This email is confidential to the ordinary user of the
e-mail address to which it was addressed. If you are not
the intended recipient, please notify the sender
immediately on (44) 20 7638 5858 and delete the message
from all locations in your computer. You should not copy
this email or use it for any purpose, or disclose its
contents to any person : to do so may be unlawful.
Email is an informal method of communication and is
subject to possible data corruption, either accidentally
or on purpose. Flemings is unable to exercise control
over the content of information contained in
transmissions made via the Internet. For these reasons
it will normally be inappropriate to rely on information
contained on email without obtaining written confirmation
of it.
----------------------------------------------------------