From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Nov 06 2004 - 18:02:37 EST
At 7:02 PM -0500 11/5/04, Gerald_A_Levy@MSN.COM wrote: >The 1st issue (Volume 1, #1) of this online journal >is now out. > ><http://www.newschool.edu/gf/nser>http://www.newschool.edu/gf/nser > >There are articles by listmember Michael Heinrich, >former listmember Duncan Foley, Ben Fine, Stephen >Resnick & Richard Wolff, Robert Pollin and others. > >In solidarity, Jerry Another note on Duncan Foley's paper. In regards to marginalism's economic agent,the subjectivist theory of value accords a wholly unreal power and autonomy to the consumer in the determination of value. Josef Schumpeter long ago pointed out: "First of all, whether we like it or not, we are witnessing a momentous experiment in malleability of tastes--is not this worth analyzing? Second, ever since the physiocrats (and before), economists have professed unbounded respect for the consumers' choice--is it not time to investigate what the bases for this respect are and how far the traditional and, in part, advertisement-shaped tastes of people are subject to the qualification that they might prefer other things than those which they want at present as soon as they have acquired familiarity with these other things? In matters of education, health, and housing there is already practical unanimity about this--but might the principle not be carried much further? Third, economic theory accepts exisiting tastes as data, no matter whether it postulates utility functions or indifference varieties of or simply preference directions, and these data are made the starting point of price theory. Hence, they must be considered as independent of prices.But considerable and persistent changes in prices obviously do react upon tastes. What then is to become of our theory and the whole of microeconomics? It is investigations of this kind, that might break new ground, which I miss." ["English Economists and State-Managed Economy,", 1949]. Schumpeter also wrote in Business Cycles that "we will throughout act on the assumption that consumers' initiative in changing their tastes--i.e., in changing that set of our data which general theory comprises in the concepts of 'utility functions' or 'indifference varieties'--is negligible and that all change in consumers' tastes in incident to, and brought about by, producers' actions. " (p. 73) Nathan Rosenberg (1994) argues that Schumpeter has here destroyed the sanctum sanctorum of the neo-classical citadel--"The commitments to the exogenity of consumer preferences and the associated virtues of consumer sovereignty." Rakesh
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