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January 31, 2014


Luis Enrique

I don't think neoclassical economics asserts that preferences are exogenous, I think it's another assumption made to make life simple. I suppose neoclassical economists must claim that we still learn something useful from models that have fixed preferences.

I think it's also possible to overdo endogenous preferences. Economists might occupy one extreme (starting from the assumption of exogenous, fixed preference) but my impression is that others (left wing intellectuals?) start from the other extreme, where everything is socialised, we are all sheep manipulated by capitalism. If anything I prefer to err on the side of the economists.

(plus of course endogenous preferences are a reasonably active research field in mainstream econ)

Deviation From The Mean

"we are all sheep manipulated by capitalism"

Sheep is your word.

Re wants and desires. Under feudalism there wasn't a constant demand for commodities in all their wonderful variety, no one was demanding flat screen TV's. Even in capitalism no one really demands flat screen TV's prior to their invention (though there are exceptions), they get produced, speculatively, and it is hoped they find a demand. Therefore desire and want are driven by the system and people react. It is an innate feature of capitalism that an endless variety of products are made and then demanded (or not), competition etc leads to this. Then people become conditioned to this reality and start to ask questions like, I wonder if the product could do this?

Working in systems development I have noticed that the internet has allowed people to really think more in terms of improving products, and companies can get more feedback etc.

But I maintain that if we didn't have capitalism and moved to socialism what got produced would look very different. I.e. I reject the idea that capitalism just gives people what they want.

Luis Enrique


won't socialism produce new things in the hope that people might like them?


Im the last century, didn't we have a 70 year or so comparison between what consumers could buy (want) in Moscow, versus New York or London?

Luis Enrique

See now I'm pretty sure that my preferences were fixed such that in 1990 if I was comparing my telly against a larger flat one, I'd have preferred a flat one. In this example I think a model with fixed preferences is better than one in which the emergence of flat screen tellies somehow altered my preferences

Deviation From The Mean

Flat tellies are better, who says otherwise?

Socialism will produce to meet human need, who says otherwise? And it will look to improve how products are made and how they function. But it's priorities will be different, ans will reflect more conscious human activity, rather than an alienation of human thought.

My point really was against those leftists who do not give capitalism enough credit for developing the productive forces, the preferences of consumers are driven by the system. The wonderful variety of goods and constant revolutionising of the means of production are features of capitalism.

Forget Moscow v New York, let us compare the rich parts of New York to the poorer parts of New York, let us compare the USA to Vietnam. The things the New Yorkers desire are made in places like Vietnam by the Vietnamese. If everyone consumed at the rate of the average American we would need 3 planet Earth's, so some scientific studies have claimed. So even a cursory contemplation about that question raises a whole variety of related issues, and is never as simplistic as suggested by Andrew. But people like Andrew don't want to know about these deeper issues.

My point was also that capitalism doesn't reflect thoughtful, conscious human needs but is a particular set of wants based on the nature of capitalism. So in capitalism you get a huge amount of waste, you get production for productions sake. You get speculation. But the challenge for the left is how do you envisage a socialist market working. It is an unresolved problem in my opinion. But the iniquities of the capitalist market are things the apologists for capitalism do not want to address or acknowledge.

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