in the last blog i made an attempt to understand marxism by incorporating a greater degree of objectivity in my appoach....i concluded that i am anything but a marxist...this is something i know now...something i did not know back in college....
ideologies facinated me..they do now too...the difference lies in my perspective...
liberalism was one strand of thought with captured the imagination of many , including me ( if i may say so at the cost of contradicting myself)...
the economics taught in delhi univeristy with a neoclassical framework, emphasized the benefits and the 'goodness'of leissez faire... the merits of competition.... the condition for efficiency seemed to be equated with profit maximization..MR=MC...
these things appeared very mechanical to me...for the humanistic touch was so absent in the study of this'dismal science'...
papers like macroeconomics , national income accounts, discussed development and growth in the context of a rising GDP...that is if the government expenditure rises on things as arbit as financing the junket of a minister , the GDP figure will register an increase...
i was relieved to finally find that the stream of welfare economics, did have some answers to my questions....
the welfare of society could be incorporated in the general equilibrium framework, with the purpose of attaining efficiency...the only problem was the choice of social welfare function...Arrow's imposibility theorm , negates the possibility of a well behaved social welfare function ... so it is the interpersonal decision making , which can be used in arriving at such functions...a society which values the well being of the poorest will have a different welfare function than a dictatorial regime... or a society could assign weights to well being different income groups to arrive at a social welfare function...
the approach may seem elegant...but the question arises--who decides the weights??????
the question may seem simple...but the answer to it holds the key to failure of economic theory in answering questions of greater relevance to mankind... from an academic perspective one may make assumptions about the nature of decision takers....but we really need not be Einstein
to figure out, the distortions that creep in with relaxation of these assumptions...
so i was disappointed in college for failure on my part to get answers to questions pertaining to the synergy between competition and welfare....
contd..
