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From: hfavr@hogpd.UUCP (A.REED)
Newsgroups: net.politics,net.philosophy
Subject: Re: A short economics lesson for Mr. Mc Kiernan
Message-ID: <476@hogpd.UUCP>
Date: Mon, 28-Jan-85 22:32:29 EST
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Posted: Mon Jan 28 22:32:29 1985
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ichard Carnes' articles bears out his claim that he posseses no expertise
in economics, but the questions he raises are interesting ones. The controversy
about the possibility of calculating/measuring values in the absence of a free
market, started by Ludwig von Mises, Oskar Lange, Enrico Barone and others,
led to the creation of a new field of mathematics applicable to the social
and human sciences called "Measurement Theory". This new field clarified the
concepts underlying the controversy by establishing an exact hierarchy of
scales of measurement. In terms of the new terminology of Measurement Theory,
von Mises proved that in the absence of a free market, no ratio scale of
economic value could be defined, and therefore no relative calculation
could be validated. Barone, however, showed that an ordinal value scale
could be defined even in a socialist economy, and contemporary Socialist
economists believe that comparative calculation, which can be validated against
such a scale, is sufficient for the purpose of economic planning. Thomas
Sowell, the originator of Cognitivist (a.k.a. neo-Austrian) economics,
argues in "Knowledge and Decisions" that individual calculations based on
market knowledge (in the form of ratio scales) are necessarily closer to
optimality than collective calculations based on comparative scales.
The issue, incidentally, has relevance beyond economics, since all existing
theories of distributive justice pre-supppose values measurable against a
ratio scale.
					Adam Reed
					npois!adam