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I’ll update as I go, in response to comments and criticism; this may create some difficulties reading the comments thread, but hopefully the improvement in the final product will be worth it.My first snippet is about The situation where there is no way to make some people better off without making anyone worse off is often referred to as “Pareto optimal” after the Italian economist and political theorist Vilfredo Pareto, who developed the underlying concept.
Mill’s philosophical framework implied support for political democracy, including the enfranchisement of women.
Since everyone’s welfare counts equally in the classical calculus, the political process should, as far as possible, give everyone equal weight.
In ordinary language, describing a situation as “optimal” implies that it is the unique best outcome. Pareto, and followers like Hazlitt, seek to claim unique social desirability for market outcomes by definition rather than demonstration.
If that were true, then only the market outcome associated with the existing distribution of property rights would be Pareto optimal.
(Fn Supporters of Hayek and Mises commonly describe themselves as “libertarians”, but their alliance with brutal dictators makes a travesty of the term – they have been derisively described as “shmibertarian”).
Now back to “Pareto optimality”, and why it is such a misleading term.Orwell almost certainly derived the idea from James Burnham, an admirer of Pareto whose work Orwell saw as the embodiment of ‘power worship)) All of this led Pareto to become one of the first advocates of a political position combining an extreme free-market position on economic issues with hostility to political liberalism and democracy.Pareto welcomed the rise of Mussolini’s fascist regime, and accepted and accepted a “royal” nomination to the Italian senate from Mussolini. Rather, he developed a version of liberalism similar to that of his more famous successors, Hayek and Mises, both of whom embraced and worked for murderous regimes that had come to power by suppressing democratic socialist parties.Like Pareto, neither Hayek nor Mises can properly be described as fascists – they weren’t interested in nationalism or in the display of power for its own sake.Rather, their brand of liberalism was hostile to democracy and indifferent to political liberty, making them natural allies of any authoritarian regime which adheres to free market orthodoxy in economics.“Pareto optimal” is arguably, the most misleading term in economics (and there are plenty of contenders).Before explaining this, it’s important to understand Pareto’s broader body of thought, one which led him in the end to embrace fascism.A highly egalitarian allocation can be Pareto optimal.So can any allocation where one person has all the wealth and everyone else is reduced to a bare subsistence.The supposed constancy of income distribution implies that any attempt at redistribution must be essentially futile.Even the aim is to benefit the poor at the expense of the rich, the effect will simply be to make some people newly rich at the expense of those who are currently rich.