Social Utility — MSR-4

This is a reply to the latest from Walter Block.

Walter says that I do not “show” that I’ve read Rothbard’s article on utility and welfare economics. But what Walter’s accusation shows is that he didn’t read my article. As a matter of fact, the article I wrote in 2007 on the subject refers to Rothbard’s paper, provides a link to it, characterizes it correctly, and explains my effort as an attempt to bypass the dead end which our inability to make interpersonal utility comparisons erects. And, by the way, that also shows that another of Walter’s accusations is wide of the mark, for he keeps claiming that I view interpersonal utility comparisons as not being invalid. Here’s what I wrote 13 years ago about Rothbard and interpersonal utility comparisons:

“Rothbard in his reconstruction paper pointed out that when government officials gain utility from an official act that restricts A and B ‘As economists, we can therefore say nothing about social utility in this case, since some individuals have demonstrably gained and some demonstrably lost in utility from the governmental action.’ The problem here and elsewhere in the economics of social utility is that when there is not unanimity, the economist is stymied. I have shown that we can say something when a society has a law against theft; and most societies do, even as they break it. By recognizing that a society has a law against theft, we bypass the unanimity problem.”

I didn’t assail or disagree with Rothbard’s statement and I still don’t. I did view the limitation it presents as something we might be able to overcome. This would, if true, strengthen the libertarian position, and that is what the article aimed to accomplish. I wanted to find a way of saying definitively that a government act of coercion lowered social utility; and that paper makes an argument as to what condition insures that that happens. And that condition is that the society has a foundational prohibition against theft. This prohibition is assumed to be the demonstrated preference of the society. That’s a critical premise of my analysis. That’s an “if” condition. That premise can’t be questioned. It’s not an empirical premise. It’s a hypothetical, like saying “If I strike a match and it lights”, then several consequences follow like a local rise in temperature, other things equal. If a society has a demonstrated preference against theft, then what follows if it passes a statute that compels a wealth transfer? I argue that it causes society to occupy a less-preferred position. In equivalent language, social utility declines.

This explanation is meant to show the complete irrelevance of this statement of Walter’s:

“‘Society’ as such, made no such determination to the effect that laws against theft are justified. Rather, only the overwhelming majority supported it. But, suppose that the minority of thieves, who oppose laws prohibiting theft, lost more utility from this legislation than the rest of us gained?”

Walter has blocked out the assumed premise of mine and replaced it by his own fanciful empirical interpretation. There is of course no known method by which we as observers can measure utility (or happiness) of anyone or any group of people, any majority or any minority of thieves. But such measurement is not needed for us to be able to say something meaningful about the ramifications of a statute that contravenes a prohibition of theft.

As my previous blog read

“The situation analyzed begins with society having created a social good via its prohibition of theft. If, for example, a society adopted the non-aggression principle (NAP), this would entail a prohibition of theft. This adoption would be for the common or social good. Thieves would not regard it as good for them, but society would have overruled the thieves. ‘We’ wouldn’t have to make any interpersonal utility calculations; the social rule against theft would already impound such assessments and value judgments.”

Exactly what part of this premise makes it untenable, according to Walter? Is it that the prohibition of theft is not a social good? If I may take part of a web definition, “In philosophy, economics, and political science, the common good refers to either what is shared and beneficial for all or most members of a given community…” Isn’t a prohibition of theft beneficial for all or most? Isn’t that a strong reason for sponsoring the NAP?

Is it correct to say that thieves would not regard it as good for them? That must be true if the prohibition is enforced and their preferred “occupation” withers away.

Is it true or not that society overrules the thieves by adopting such a prohibition? It’s obvious that it does. Do we as outsiders have to make any interpersonal utility calculations in order to conclude that the society had taken a basic stand against thievery. The only thing left out here is a description of society and its means of effecting its social rules and practices. But these are not essential to the propositions being proven.

This debate is not, as Walter thinks, a matter of proving Rothbard wrong on our inability to make interpersonal utility comparisons. My article didn’t assert that he was wrong on that score.

As for future research, although measurement of happiness of different people appears to be impossible, I take it for granted that people in fact do make such interpersonal utility comparisons all the time and in many circumstances. They make value judgments all the time that involve estimates of utility of different people. It’s all very rough but it’s done. Society as a whole also demonstrates group preferences. That being the case, we may perhaps make some headway on social theorems by taking such preferences and behavior into account to begin with.


8:46 pm on July 12, 2020