Interpersonal Utility – MSR-2

Conducting a friendly debate via this blog is likely to prove difficult and confusing, so I propose labeling entries. WB-1 was here. MSR-1 followed. WB-2 is here and this blog is MSR-2. In addition, I proved my case in an article that is here.

Any proof has if-then statements. The “if” statements are the premises or conditions. A comparison of Walter’s proof with my proof reveals immediately that he has adopted conditions that limit his result, and he has ignored the conditions in my proof. That is why his criticism of my proof fails.

Walter limits his proof to two people, him the robber and me the victim, although he also mentions getting a law passed which would involve society. He explicitly rules out all other effects:

“I [Block] pull out a gun and aim it at him [Rozeff] and demand that he give me $100 (or I get a law passed to the same effect). He will now be poorer, and me richer, ignoring all other aspects of this ‘transaction.’ In my (Rothbardian) perspective, his utility or welfare decreased, mine increased. But the only way to say that social welfare was thereby reduced is to claim that he lost more utility than I gained.” [Emphasis added.]

Walter ignores the effects that his robbing me has on everyone else in society. They are included in “all other aspects of this ‘transaction'” that he tells us that he is ignoring. My proof explicitly discusses these aspects. They are essential conditions in that proof. Walter goes on to conclude that “social welfare” must be evaluated in his example by comparing his utility to mine [“the only way”], and only that comparison counts in this evaluation. Walter’s being consistent, but within his restrictive two-person setting that I didn’t use in my article.

I posited another way by which social utility would fall, no matter what a two-person comparison might show or be entirely unable to show. That way starts with the premise that society has laws against theft. They are a social good. Allowing theft by statute or court judgment damages that good and contravenes the laws against theft. This reduces social welfare by a great amount because “many possible thefts can occur now and in the future; and the effects of widespread theft on society are to undermine its productive capacity and divert immense resources to protection.”

“Social utility is not simply a compound of individual utilities of ordinary goods such as bread, cheese, and automobiles. It importantly depends, clearly in the case of theft, on the utilities of other goods called social goods, the prohibition against theft being one such good. Social utility depends on society’s rules, laws, norms, and customs. These are factors of production or part of the recipes used in the production of wealth. Condoning a known theft destroys people’s property interests in a social good that all possess.”

Walter alludes to one of my article’s conditions in the parenthesis (“I [Walter] get a law passed to the same effect”.) My article discussed social utility when society has laws against theft and then when the government nonetheless passes a law that forcibly redistributes wealth. My proof explicitly brings in the social utility of laws forbidding theft. When these are present, they are as if society has spoken and revealed what its utility depends upon. They create a condition that’s critical to evaluating a law that robs me and passes the proceeds to Walter.

But Walter ignores all of the detail of that socially-conditioned proof and provides his own two-person example. However, that logic doesn’t apply to my proof because my case starts with a very different set of conditions. There is more in my original article. It is proven there using a proof by contradiction that laws against theft take precedence or are sovereign over statutes that create theft.

The article applies the same reasoning to murder:

“Another application of this proof is a law that legalizes the killing of all hunters. There are those people who gain from this law because they dislike hunters. The hunters lose from such a law. If society has a law against murder, which I assume it does, then condoning murder lowers social utility. At the same time, society’s law against murder trumps a law that allows hunters to be murdered. If it did not, then society considers laws allowing murder as allowable. This makes legal murder an exercise of power, essentially arbitrary and unjustifiable, since anyone could be made the subject of murder. This makes legal murder an illegitimate law.”

The original article provides grounds for concluding that free market exchanges always raise social utility, even when third parties have their welfare lowered by the competition:

“I have not shown directly that free market exchanges always increase social utility, but we can reach that very important conclusion as follows. I have shown that interferences with free market exchanges that involve theft always decrease social utility. Consider a free market exchange. Suppose persons A and B raise their utility through an exchange involving no theft (which is by definition what a free market exchange is), but person C’s utility is indirectly adversely affected. Then the theorem shows that any interference that involves theft (like taking from the gains of A and B to compensate C’s losses) must reduce social utility. Hence, despite C’s loss, society cannot raise social utility by using force to help C. But since A and B’s exchange raised their utility, this means that free market exchanges always increase social utility (ex ante.) If society wishes to help C and raise social utility still further, the appropriate means is voluntary help.”

This reasoning in my view is much stronger than Walter’s approach, which is by definition to rule C as not being in the market. In WB-1, Walter states

“I believe that the market necessarily improves the economic welfare of all participants. What about the horse and buggy workers after they were no longer needed due to the automobile. They used to be market participants, but are no longer market participants.”

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9:45 am on July 11, 2020