Posts are more sporadic nowadays, thanks to exams being round the corner and last minute ‘copy the notes’ syndrome that most are familiar with. Along with day to day stuff, also doing the normal outside reading. Starting off with microeconomics, just came across the fundamental Axioms of Rational Choice. Few questions are in order, namely, why rational, and what is choice doing in economics, which is supposed to be measuring utility. The rational part is simply because, well, economics would be worse than guessing otherwise, and why choice is explained in the appendix of this. Since most would be too lazy to click on the link, it is simply because utility cannot be measured, and only thing that can be measured is choice, and that has to suffice. In essence, measuring people’s welfare degenerates to behaviorism. Since that is the best we can do, we have to live with it, and in most cases choice will reflect utility. But a man who takes up a certain profession just because his family has been doing it for generations, will not choose because of utility but something other than it, whatever that may be. Anyways, these are the axioms.
- Completeness: if A and B are any two goods, a person can make the following decisions, either A > B, A < B or A = B, where <, >, = are taken to mean preference. This means can’t say is not an option.
- Transitivity: if A > B and B > C, then A > C.
- Continuity: if A > B, there is some A’ very close to A so that A’ > B.
These axioms are needed to show that a person can rank all commodities in a linear fashion. The last one is present to insinuate calculus into the picture, which is one of the favorite tools of economists. How many people are aware that this is what defines rationality is a question best left unanswered. These also make the implicit assumption that everything can be priced, and everything can be exchanged for anything else. This may not represent reality too well, but economics is not about to reinvent itself fundamentally anytime soon (Though modifications are happening all the time).
The other part of this post was supposed to talk about conditioning, you can read a classical case about Pavlov’s Dog. This was introduced to us in class, when talking about behavior modification. It essentially says that behavior can be changed by reapeatedly applying certain stimuli along with punishment/reward. The teacher gave an example of a child who is haphazard in her behavior, and how counsellors treat such conditions using conditioning. The obvious question to be asked here is whether the behavioral ‘correction’ is permanent, and the teacher said that the parents have to be trained as to how to deal with the child from now on, and the counselor must make follow up visits. Apart from the obvious question about treating children like dogs, another question that comes to the mind is whether the ‘treatment’ is actually working. Are we actually changing the behavior of the person, or are we changing the environmental stimuli to elicit a desired response? Behaviorism would say that both are the same, since the outward behavior is, after all, the same. There is no ‘free will’ or volition that matters for behaviorism. Going back to the case of the child, how long do the parents have to modify their behavior to suit certain ends ? These, for me atleast, are very disturbing questions. Looking at it from another angle, almost all of social life is conditioning. Our ancestors condition us to certain accepted types of behavior through customs and norms. Finding an ‘unconditioned’ person would be searching for the wolf children, and even these would be conditioned to behave like animals. So why not, says psychiatry, use conditioning to do what is desirable or essential ? This is an ethical question, and each may have their own answer.
And the link between the Rational Choice and Pavlov’s Dog ? Well, any reading of economic history would put two paradigms of society before us: a pre- and a post-capitalist society. We can say that the former essentially did not exercise Rational Choice, and the latter did, their conditioning has changed. Rational Choice symbolises the baggage handed down to us by the distinguished personalities of 16th century onward, like Irrational Choice symbolised medieval baggage. Capitalism is not just a system of economic arrangement, but is far more than that. It provides the environmental stimuli to create people who choose ‘rationally’, as defined by theory. If you look at the axioms and their implicit assumptions again, you will see that people nowadays are more ‘rational’ than during the Indira Gandhi days. The economy does not grow unless people spend, and true to form, people are spending more than their elders just a generation behind. You will hear parents talk about how we ‘don’t realise the value of money’ and such things, which points to this facet of a capitalist economy. They will tell you how much they used to save, but only savings does not stimulate demand which is needed for, what else, supply. When they complain that today nothing is sacred or profane, they are quoting the first axiom. When they say their son chose to dump them in a old age home since he could not take care of them, the second axiom is quoted.
Therefore, I do not believe that what we have today is the most ‘natural’ way to live. It has been a result of systematic conditioning to have us believe so, and therefore we cannot imagine a life otherwise. Whether a liberal society is preferable to a socialist one is a question of ontology and ethics, not some law of nature. We may think we are lucky that we live in a liberalising economy, but the Russians were also made to believe that they were lucky to live in a socialist one. Who knows how Rational Choice Revision 2 will look like :)