One of the better-read thorns in my side is a guy (I assume) calling himself “Lord Keynes.” He is definitely smart, and has read a lot of economics, but he’s slick as glass and at best is Chaotic Neutral. I’m posting this exchange on the main page here because it will clear up some confusion over the utility debate, but also because LK frequently tries to trip up my commenters here with quotes from my own work. This places them in the awkward position of either defending what they thought was the Austrian orthodox position and throwing me under the bus, or of staying quiet and letting LK run victory laps. Usually (but not always) this is grossly unfair on LK’s part. I don’t know how his mind works well enough to speculate on whether that is his intention or not, but regardless, here you go…
==> In this comment, Bala wrote: “Utility is the subjective appraisement of the usefulness of a means towards end satisfaction. Nothing to do with emotions, happiness or satisfaction out there.”
==> LK licked his lips, sensing his prey had made a tragic mistake. He dug up three of my books and wrote:
Better break the sad news to Bob Murphy. Apparently he is such an idiot he thinks this:
“marginal utility: The marginal utility of a good or service is the amount of satisfaction—utility—you get when consuming one unit of it.”
Robert P. Murphy, The Politically Incorrect Guide to Capitalism, p. 18.
“We can say that individuals rank outcomes in terms of happiness, utility, satisfaction, contentment, etc.“
Murphy, Robert P. Study Guide to Man, Economy, and State, p. 6.
“In praxeology, happiness (or utility, or satisfaction) is a purely formal term, defined entirely by the subjective goals of the individual actor.”
Murphy, Robert P., Study Guide to Human Action, p. 2.
Poor old Bob: doesn’t understand basic Austrian concepts.
==> OK, so what’s the deal? Is Bala totally wrong? Or is Bala right, and I’m an idiot?
Actually, it comes from using the terms “happiness” etc. in different senses. It’s easy for me to explain the distinction, all I have to do is give you the fuller quotation from my study guide to Man, Economy, and State that LK quoted from in the middle, above. Here is the fuller quote:
All action aims at exchanging a less satisfactory state of affairs for a more satisfactory state. We can say that individuals rank outcomes in terms of happiness, utility, satisfaction, contentment, etc. Regardless of the name, these terms are purely formal, and do not imply hedonism or crude Benthamite utilitarianism.
Value rankings are always ordinal, never cardinal. There is no unit of happiness or utility, and hence we can only say that a man preferred A to B; we never say he preferred A “three times as much.” — Yours Truly, Study Guide to Man, Economy, and State, p. 6