Utility and Austrian Economics

From: Sergey Fedorov

Sent: Monday, September 14, 2020 10:39 PM

To: Walter Block <wblock@loyno.edu>

Subject: question about infamous utility

Greetings, dear Professor Block!

I have a brief question about the “utility” and its aggregation and comparison.

(Please do not take it as an effort to justify Neoclassical models, my question is exclusively on methodology.)

Do we refuse to accept any substance behind the concept of “utility” on praxeological or empirical grounds? That is, would you say it is impossible by definition or impossible due to actual limitations and imperfections of our knowledge?

It seems to me that an objective measure of “subjective satisfaction” might make sense at least when taken to stand for “pleasure”, even if current technology does not allow it practically.

Certain regions of brain cortex activate and certain hormones and neurotransmitters change when a given emotion is experienced. (I am not an expert on brain biochemistry, but I think my statement is sufficiently accurate.) If so, it should be possible to measure these, which would allow us to introduce a common denominator, be it a number of activated neurons, level of hormone in blood or what not.

What do you think?

P. S. I do understand that it is a very narrowly defined “utility” (someone can see a value in a thing that is not pleasurable – on ethical grounds etc.).

Dear Sergey:

I don’t at all think that utility and praxeology are incompatible. For Austrians, ordinal utility is a legitimate concept. We only oppose cardinal utility, indifference curves, etc.

Right now, we can measure body temperature. Normal is 98.6 degrees. But what the thermometer measures is speed of molecules running around, if I understand this correctly. It is not the SAME as temperature. Heat and speed are different.

One day, perhaps, we’ll come up with a similar “measure” of happiness.” Maybe, it will be something like speed of electrons running through the brain. Does this mean that on that day cardinal utility will be licit? The interpersonal comparisons of utility will be possible? I think not. For happiness and speed of electrons, similarly, will not be the SAME.

The best thing ever written on this sort of thing is this:

Rothbard. Murray N. 1997 [1956]. “Toward a Reconstruction of Utility and Welfare Economics.” reprinted in “The Logic of Action” Vol. I. Lyme, NH: Edward Elgar. pp. 211-254; http://www.mises.org/rothbard/toward.pdf

Also see this very important contribution:

Gordon, David. 1993. “Toward a Deconstruction of Utility and Welfare Economics,” The Review of Austrian Economics, Vol. 6, No. 2, pp. 99-112; http://www.mises.org/journals/rae/pdf/RAE6_2_4.pdf

Best regards,

Walter

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5:36 am on December 25, 2020

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