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Social Choice and Beyond
Monday, December 19, 2005
Issues for a Social Choice based Political/Economic System: (1) Taxation
Mood:  lyrical
Now Playing: Jeff Tain Watts
Topic: Social Choice
There are some major issues which need to be addressed in regard to a social choice based political and economic system or preferensism as we have called it. Some (but not all) of these are the following: (1) Taxation, (2) Investment, (3) Advertising, (4) Property Ownership, (5) Innovation and Invention, (6) Welfare (7) the Environment, (8) Poverty, (9) Defense, and (10) Health Care. Preferensism is mainly concerned with the basic economic system functions of work allocation, remuneration for work and pricing and supply of consumer items and services: what is produced, who produces it and what is consumed and by whom. Also it is concerned politically with voting for candidates or alternatives. There are, however, issues outside these basic functions such as the ones listed above that need to be addressed with regard to how they would be handled in a social choice based economy.

One consequence of preferensism would be the merging of economic and political functions. Since both the economy and the political system are characterized by "one person, one vote," many functions previously thought to be strictly political, would now be subsumed in the economic realm. For instance, how much money would be devoted to the Park System, instead of being fought over by elected representatives, could now be handled directly by the populace since that would be a part of the alternative set of each individual and would be automatically integrated into the overall economic picture. There would be an increased degree of direct democracy not in terms of up or down votes of specific propositions but in terms of each individual's preferences regarding how much more would he or she be willing to work in order to fund various government functions. There would probably still be a need for some degree of representative government to cover certain functions which it would not be prudent to subject to a direct vote. The question is how much democracy is too much democracy, and should the citizenry be trusted to make all decisions by voting even if that were feasible. Should the decision to go to war, for example, be put to a direct vote of the people?

In this first blog entry dealing with this general subject, we will deal with the issue of taxation. Generally, taxation is thought of as money the government takes from us, the citizens, in order to fund the government. However, in a direct democracy such as preferensism, the question is how much longer is each individual willing to work (as reflected in their preference list) in order to fund various government functions or what are now considered to be government functions. Government functions can be thought of as consumer goods which are consumed collectively as opposed to individual consumption. Each individual can include in his preference list data as to how much he is willing to pay for a variety of societal functions. Examples could be the following: research, education, parks and recreation, mass transit, libraries, bridges, dams and infrastructure, defense and welfare.

So instead of taking money out of an individual's paycheck for taxes, each individual's work and pay schedule would automatically reflect the quantity and quality of collective as well as individual consumption. It could be thought of as working an extra amount in order to have the things that are consumed collectively. If there were no collective consumption, each individual's work week would be lessened to some extent for the same pay. Of course, there would be no need for standardized work weeks. Each individual would decide how much he would prefer to work in exchange for his or her individual standard of consumption. Some individuals might prefer to work less and have less, for example. Bear in mind that each individual would not necessarily get his first preference. The goal would be to maximize utility or satisfaction in society and to achieve the best "fit" given individual inputs. As in all democracies, there would be trade-offs both economic and political. In general it would be hard to envision how those who wanted to work more and consume less could not be accommodated while those who wanted to consume more and work less might not always be accommodated. The best fit need not mean that everyone put in the same amount of work either for items consumed individually or collectively - just that the individual's work-consumption schedule reflect his or her individual preferences and tastes and each person's input would be treated the same as every other's. In other words each person would have the same amount of political-economic power: "one person, one political-economic vote."

So taxation need not be considered as a separate entity outside the system or as an "add-on" to the system, but would be subsumed in each individual's preference list. Each individual would have one political-economic vote in such a way that minorities (down to the level of individuals) would be accommodated to the greatest extent possible. There need not be majority rule in most situations since most issues are non-binary. If the wishes of a thousand subsets of the population can be accommodated, why only accommodate the wishes of the majority? There would be individually-tailored solutions not "one size fits all" both politically and economically and to a large extent politically-economically.

Posted by jclawrence at 9:21 PM PST
Updated: Friday, January 20, 2006 4:46 PM PST
Thursday, December 8, 2005
Workability of a Social Choice Economy
Mood:  incredulous
Now Playing: Ryan Kisor
Topic: Social Choice
For a Social Choice Economy to be feasible, it must be workable or have user friendliness. It must expedite the choices individuals make in a real world capitalist economy. The basic decisions of an economy have to do with work and consumption. In the most simplistic terms you work, you get paid, you take the money and go out and buy things, and there are a lot of things you can buy, a lot of things to spend your money on, a large number of choices. A Social Choice economy has to be at least as workable as a capitalist economy in terms of the ease of use and the number of choices available.

According to Arrow, each individual in a Social Choice economy expresses his or her preferences over a number of work-commodity bundles, and then all this information is amalgamated to reach a social decision as to what to produce, how much of each commodity and service to produce, work assignments for each individual and the distribution of each commodity and service to individuals. Obviously, this is cumbersome.

What would serve the individual best is first work placement according to his or her preferences. Obviously, this service could expedite work placement over the current system. As far as consumption is concerned, it is far less likely that an individual would be willing to take the time to sit down and make out a preference list of commodity bundles. He would rather just go to a store or make a purchase over the internet without having to specify in advance what he or she wished to purchase.

However, the total production in a society for toothpaste, for example, can be predicted by monitoring past consumption. Also survey techniques can be used to predict consumer trends. Therefore, each individual would not have to be polled regarding his or her consumer preferences. Production can be predicted for each commodity and service, and also for new commodities and services.

Therefore, the social decisions that would have to be made would have to do with the work assignments for each individual, how much they were to be paid, and how much of each commodity and service would be produced. The goal would be to come as close as possible to an economy in which production matched consumption (no surpluses or shortages), and the work was distributed among the populace in such a way as to maximize job satisfaction as measured by each individual's stated work preferences. There is an implication that pricing of commodities would correspond to the consumers' ability to buy them according to their predicted consumption and predicted income.

Note that in a strict Social Choice sense, the alternative set would be time varying with new alternatives becoming available and old alternatives becoming unavailable on practically an instantaneous basis. The Social Choice dilemma of what to do if one alternative is dropped from the alternative set (the Principle of Independence of Irrelevant Alternatives) becomes magnified beyond belief. Obviously a practical system has to deal with this in as good a way as possible.

Since I believe that Social Choice is possible as opposed to those who believe in Arrow's Impossibility Theorem, I think a system can be devised which deals with 1) instantaneous changes in the alternative set; 2) instantaneous changes in the number of participants; 3) incomplete information regarding individual preferences; 4) probabilistic information.

Therefore, I believe an algorithm can be devised which maximizes satisfaction or utility in society in an economy which would resemble in most respects, as far as the individual worker-consumer is concerned, an advanced capitalistic economy. A supercomputer would process an enormous amount of data to achieve work and consumption outcomes which result in a harmonious society as far as both work and consumption are concerned.

Posted by jclawrence at 6:11 PM PST
Wednesday, November 23, 2005
Would there be money in a social choice economy?
Mood:  spacey
Topic: Social Choice
Arrow says in "Social Choice and Individual Values": "In the present study the objects of choice are social states. The most precise definition of a social state would be a complete description of the amount of each type of commodity in the hands of each individual, the amount of labor to be supplied by each individual..." and various other things such as collective activity, municipal services and "the erection of statues to famous men."

The social choice then would be the amalgamation of all the individual choices in some optimum way. The question is would everybody work in order to receive a commodity bundle or would individuals get paid in money (euros, dollars, pounds etc.) for their work and then purchase their commodities on the open market? It seems that any practical social choice economy would have to be a money rather than a barter economy. People would get paid in currency and then purchase their goods on the open market. But wouldn't this invalidate the purpose of social choice? After all, it is supposedly assumed that all the individual labor bundles would add up to exactly produce all the individual commodity bundles.

My answer is that social choice could still work in a money economy. There would have to be a translation of each commodity bundle into an amount of currency. Workers would get paid in currency exactly the amount that it would take to purchase their socially chosen commodity bundle. Of course they would be free to spend their earnings as they saw fit which would presumably and hopefully have some realistic and meaningful relationship to the commodity bundle they selected in their preference ordering. To the extent that there is not an exact correlation there will be a surplus or deficit of production which can be anticipated and corrected over time.

Looked at in this way the individual preference orderings and the social choice are more in the manner of a survey than an exact prescription insofar as the amount of goods and services produced.

How is the currency value of a commodity determined and how would the exchange rate be determined? The currency value of a commodity could be determined in various ways one of which would be based on the cost of production compared to other commodities. The exchange rate could be determined as it is today by floating the currency against other currencies.

The general idea is that a social choice economy would have to function in many ways as a general capitalist economy functions today. I doubt if many people would accept an economic system in which their commodity bundle was predetermined even if by their own preferences, and they weren't free to change their mind and spend their money as they pleased.

Posted by jclawrence at 10:20 AM PST
Updated: Wednesday, November 23, 2005 10:22 AM PST
Tuesday, November 22, 2005
International Trade
Mood:  on fire
Topic: Social Choice
This is part of the series, "Is social choice practical as an economic system in the real world?" What about international trade. How does social choice relate to that? The citizens' of a particular country would each have a consumption preference ordering. If it turned out that products offered from abroad were cheaper than those produced domestically, the social choice might indicate that those products were preferred. If so, would this not build up a trade imbalance and wouldn't this create a problem? Not necessarily. The country providing those products would either buy products from us or build up credits toward future consumption of products from us just as a country's holding dollars represents a claim on future consumption which is manifested when those dollars are spent. There would have to be some provision that those claims could not be all redeemed in such a manner as to jolt the economic system, but, as long as they were redeemed in a gradual manner, there should be no problem other than that the citizenry of the overly consuming country would have to be willing at some later date to become harder workers to make up for their previous laziness.

Posted by jclawrence at 2:35 PM PST
Can Social Choice Be Viable in the Real World
Mood:  don't ask
Topic: Social Choice
The question is "Would Social Choice as an economic system be workable in the world as we know it?" For instance, consider how people are hired for jobs. One goes to an interview with company A and if there is a match, company A hires employee (let's call him) B and everyone is happy. Wouldn't social choice depersonalize this hiring process? Actually, no. There is no reason why B's preference to work for a specific company could not be part of his preference ordering. Also no reason that company A's preference for employee B could not be part of its preference ordering. In other words company A would not just have to specify its desire for a generic employee but could specify person B in its preference ordering. In addition, the desire for B to work for A and for A to hire B is not an absolute in itself. What if company C was willing to offer B a lot more money. At some point B's enthusiasm for A would dwindle. This would all be reflected in B's preference ordering. A's enthusiasm for B would dwindle if C was willing to do the same job for a lot less money and so on. The point is that all this could be sorted out by amalgamating the sum total of individual choices to come up with an overall social choice in which not only individual workers but also companies would be better off.

Posted by jclawrence at 2:21 PM PST

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