Here’s the difference between our world and your world.
In both worlds, kidnapping children is a crime.
In our world, if you discover that your neighbors are starving their child to death, you call up the police or child welfare. They have the legal authority to step in and take the child away from the parents so it will be properly fed and cared for. The parents will be arrested for child abuse.
If, for some unforeseeable reason (something like a wizard did it), the police or child welfare don’t intervene, you might decide you should kidnap the child to get it away from the parents. You’ll probably end up in court where you’ll argue that you broke the law because the child was in mortal danger. If you can prove the danger was real, you’ll most likely be acquitted and the parents will be arrested.
In your world, there would be no option for calling the police or child welfare. The parents aren’t breaking any law by starving their child to death. If you kidnap the child and go to court, you might be able to show that the child was in mortal danger. But the judge is going to say that’s immaterial and give the child back to the parents so they can resume the starvation.
So I’m seeing some pretty significant differences between our two worlds.
Yeah, kinda hard to have “an ordinal ranking of preferences…” without something to order. I’m surprised that it’s possible to get through a microeconomics class without a discussion of how Utils exist solely to ordinally rank preferences.
And this is worse than your world, which explicitly allows imprisonment and terrorism within family units (unless a family member is sold outside the family unit)?
I have no idea what you’re trying to say. Be specific-- what calculations do economists do with Utils? Might be good to include a calculation in your answer that had “Utils” as a variable.
No, Little Nemo’s world is the real world, the one that doesn’t have those things.
To be fair, there is a difference between a mathematical domain of objects which just have order properties, and one that also has properties like addition. But you lose most of those differences when, as sane economists do, you refuse to define the function relating utils to anything measurable like dollars, beyond specifying that it’s monotonic. On the other hand, though, there are those dollars… They really are measurable, and it’s perfectly meaningful to add and subtract them, or multiply and divide them by scalars, and so on. Is Rothbardian economics incapable of discussing dollars? That seems like a pretty telling weakness, for an economic system.
OK, a conventional economist would say that a person values a house, say, at a certain number of utils, and values a car at some other number of utils. He might then say that the person also therefore places some value on having both, and call that the sum of the two individual utility values.
But by the same token, an economist who recognized only order of value would have to say that a person considers having both a house and a car to be greater than either only having a house, or only having a car. Having rules about addition makes that whole process far, far simpler.
In a universe with n possible goods that a person could own, the conventional economist, in order to form a model, need only assign values to n different variables, one util value for each available good (actually only n-1, since the overall scaling is irrelevant). But an economist using a system with only order must assign values to (2^n)*((2^n)-1)/2 different variables, one for each comparison between every two subsets of possible goods. That’s a number that grows really quickly-- For instance, with a mere 10 different potential goods, you’d need to define over a half-million different comparisons.
It’s no wonder that Rothbardians dismiss the importance of making models.
No, you never sum utils in this way. You say that a person has x utils from owning a house, and y utils from owning a car, and z utils from owning both. Z will be larger than x or y, if one of your initial assumptions is “free disposal”, but will not be equal to the sum of the two.
I guess a better way to put this would be that every potential market basket has a util value associated with it.
Most models assume that more is better than less, so utils are weakly increasing in “stuff” (holding the amount of other stuff constant), and the more stuff you have the less you value getting an additional unit of the same stuff. Throw in a couple of extra assumptions (e.g., all market bundles can be compared to each other, and one will always be either preferred or equally liked), and you have the basis for microeconomics.
(I’m not a microeconomist , and this is from years ago, but it’s roughly correct)
It’s not really a problem. These assumptions only exist to get to tractable equations when you describe behavior mathematically. You never actually go around assigning utils to market baskets. (Note: not a microeconomist…maybe there are people out there actually doing this)
Some of the most famous proofs in economics are about the theoretical existence of an equilibrium point, and their potentially nice properties. The issue is that they’re often computationally intractable problems. So sure, an equilibrium exists… but how do you find it? Or them, if there are several? People in my own department, including the chair, specialize in computation, which means trying to find the equilibrium point efficiently with as many dimensions as possible. “Zeh curse of dimensionality… it’s a KILLER”, as he says. We had one job candidate last year who spent six months crunching out a model, and the only reason why she got it down to six months was she was CS before changing to econ. (That was a macro model, but all academic macro is microfounded these days anyway)
Dimensionality is a problem. That doesn’t mean giving up or whatever. It just means trying to be clever.
And, of course, all of this doesn’t mean utility is somehow not ordinal. It’s completely ordinal. That’s Chapter 1 stuff.