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Pareto optimal: Whose optimal?
送交者: jingchen 2022年01月07日13:08:48 于 [股市财经] 发送悄悄话

Pareto optimal: Whose optimal?

 

The mainstream economic theory is the equilibrium theory. In equilibrium, a society is supposed to reach the optimal state. If you insist on greater details, economists will tell you that an equilibrium state is not really optimal, but Pareto optimal. What is Pareto optimal?

 

In North Korea, Kim is the big boss there. Any meaningful change will hurt Kim. North Korea is Pareto optimal. A society is Pareto optimal if any change will hurt at least one guy. According to this definition, any society, present or in the past, is a Pareto optimal society.

 

Who will be hurt if a change occurs in a Pareto optimal society? It must be the dominant player. A society is Pareto optimal really means the society is optimal from the perspective of the dominant player.

 

What is the use of mainstream or dominant economic theory? It gives the legitimacy of the dominant class in any society, from North Korea to the US. This is really the main purpose of the dominant economic theory. The dominant idea of a society is the idea of its dominant class.

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