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Comment by andriesm | Hacker News Reader

Wait, HOW does inequality render assumptions about free markers maximising social utility invalid?

You cannot just make such a profound statement without fleshing out the argument for it at least a little bit.

(I'm ignoring the 2nd part about restricting both quantity and price simultaneously - as I am more interested in how you quantity and substantiate your first claim)

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Not the GP, but it's an easily defended view along several avenues.

First, I could point out that the marginal utility of money must decline at least logarithmically with quantity*, which means that egalitarian resource distributions tend to have a higher net utility.

Second, I could point out that the Pareto principle only guarantees an outcome for which, locally, no individual actor can do marginally better without another doing marginally worse, not an outcome in which the total utility of all actors even approaches a local maximum, let alone a global one. We can easily end up in a scenario where a beggar can starve to death while a baron gorges on food whose loss would go unnoticed to him.

I could go on but I think the above is already enough of a basis to support the claim.

* The proof of this is not short enough to type on my phone.

I agree with your argument that a Baron could be gorging himself while a begger starves to death... this is a definite disadvantage of capitalism, but does this disadvantage outweigh the advantages? And how do the alternatives compare... I would say it's still a far leap to say tue system is terrible or worse than most proposed alternatives. I like the saying - Democracy is the worst possible system, except for all other alternatives... which is to say democracy is a way for 51 percent to force their will down the throats of the other 49 percent... but autocracy is still worse in general because it does not have a corrective mechanism like democracy has. The same I believe applies to capitalism. We can improve pure democracy by going for constitutional democracy... some may argue a mostly free market with some taxation is an improvement over pure anarcho-capitalism.

Well, I'm not making a claim in favour of any particular system, merely answering this question:

> Wait, HOW does inequality render assumptions about free markers maximising social utility invalid?

by showing that there is no particularly strong reason to think that free markets maximize social utility.

When it comes to other systems, all I can really say is that the space of alternatives is not very well explored.

Money is essential for commercial work yet when someone hoards it, you have to borrow new money into the economy, often with interest. As interest must be included in consumer prices and interest is paid out according to how much money you already own the bottom 90% are net payers in this system and the top 10% are net recipients.

So now politicians must make the economy grow or be forced to take care of the unemployed. At some point there is a limit to how much growth you can achieve domestically so you start exploiting foreign countries.

Maybe we should just reform money then, capitalism is fine according to your problem description, the problem is fractional reserve banking. Maybe bitcoin, gold, or some similar idea would solve your entire concern? Often times people refer to gold money as "honest money" in contrast to FIAT money (money declared into existence by the government).

It requires no substantiation, it is in the common definition of social utility that each persons contribution to it should have a priori equal weight.

You say by DEFINITION of social utility everyone's contribution should have equal weight?

Are you saying the fat lazy guy sitting on his arse eating cheetos and playing viddeo games have as much value to society as the cardiac surgeon working 14 hours a day and saving several lives per week ?

Why would you bring such a terrible statement ? I honestly hope you are trolling, because if you normalise such bs in your own mind, you are harming yourself - programming your own mind to accept bad ideas as normal, training it to make bad decisions in all areas of your life if you are not very careful.

PS: WHO's definition of social utlity are you using, and why are you uncritically imbibing it ?

Social utility is typically regarded as some kind of sum-like object over everyone's personal utility. When I say contribution, I mean to this figure.

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