Comment on General Bitcoin discussion thread (June 2011)

Tue, 14 Jun 2011 22:09:04 GMT

Ok, I was confused by "Platonic" which I thought you were using to refer to intrinsic as opposed to subjective value. Thanks for the clarification.

In the sense you intend, I think you're right that mainstream economists do subscribe to a Platonic concept of "real" value. They believe that real-world price indexes are based on a theory of price indexes, which is based on a theory of social welfare, which in turn is based on sound philosophy. But I think they are also aware that there are lots of problems with both theory and practice (perhaps less aware of the philosophical problems) even if they tend to not pay much attention to them in their daily work. Standard textbooks do mention the problems, and intuitively it's pretty obvious that price indexes must be at best very flawed approximations to reality.

Putting aside what mainstream economists believe, when you say "meaningless" or "fundamental arbitrariness", do you mean for example that there is no way, even in principle, to compare the marginal utility of a dollar in 1950 with the marginal utility of a dollar in 2010? Is it due to the standard interpersonal comparison of utility problem, or something else?

To put it another way, do you think the mainstream economics community should be more aware of problems with the theory and practice of price indexes and perhaps allocate more resources to solving them, or do you think they are just not solvable, and an entirely new approach is needed?

Discuss