The Political Economy of Rational Entities
| Date | 01 March 1978 |
| DOI | 10.1111/j.1467-9248.1978.tb01529.x |
| Author | Norman Schofield |
| Published date | 01 March 1978 |
| Subject Matter | Article |
THE
POLITICAL
ECONOMY
OF
RATIONAL
ENTITIES*
NORMAN
SCHOFIELD
University
of
Essex
Rational
Choice
THIS
essay considers some recent contributions1 to the formal theory
of
political
behaviour which make use of the notion
of
rational choice to clarify the problem
of
co-operation among individuals. The models themselves will be modified
or
adapted
in various ways in an attempt to more fully understand the complexity of the problem.
Before considering the models themselves, it
is
worth discussing the logicai calculus
underlying the theory of rational choice, and the economic theory from which it
developed.
Micro economics deals with the rational behaviour of economic entities over the
consumption and production
of
private goods. The primitives in its logical calculus
consist
of
utility functions, one to each entity, and a representation of all possible states
of the world as
a
state space. Each entity is presumed to act in a way which maximizes
its utility. Note the first difficulty of this calculus. A utility function is necessarily
unobservable; an attempt to model a particular individual’s preferences by a utility
function may
be
made by asking questions, etc., but in all cases it is behaviour, a
response perhaps, that is observed. Any practical attempt to model a particular
situation within the terms
of
the logical calculus depends on the relevance of the
inferential change from observables to unobservables. However, the calculus is useful
if its particular style
of
reasoning can
be
used to shed light on the complexities
of
the
observable world.
To
be
able to
do
anything with the calculus one has to make certain intrinsic
assumptions. General equilibrium theory deals with the existence
of
one,
or
a number,
of
stable outcomes resulting from rational,
or
utility maximizing behaviour, over a
compartmentalized state space. In this theory
a
state of the world
is
assumed to
correspond to the consumption production levels
of
all individuals. The utility assigned
to each individual depends only on his own consumption and production, and is
independent
of
the consumption and production of everybody else. No externalities
exist.
A
price structure assigns a price to each good,
or
commodity, produced
or
consumed in this economy. All this makes up
a
formal model. Assuming that utility
and production functions are convex, then for each price structure there exists a unique
outcome,
or
state
of
the world. It may be the case however that there
is
an imbalance
between the production
of
a good and its consumption.
A further result is that there exists at least one, and possibly any number,
of
price
Completed while visiting the International Institute of Management, Berlin, under
the
auspices of a British Academy Wolfson Fellowship, Summer
1976.
I
would like
to
thank
my
colleague Thomas Schwartz, and
the
anonymous referees of
the
paper, for their useful
comments.
1
R.
E.
Goodin,
The Politics
of
Rational Man
(London,
Wiley,
1976);
R.
Nozick,
Anarchy,
State and Utopia
(Oxford, Blackwell,
1974);
M.
J.
Taylor,
Anarchy and Cooperation
(London,
Wiley,
1976);
G.
Tullock (ed.),
Explorations in the Theory
of
Anarchy
[A
Public Choice
Mono-
graph] (Blacksburg, Virginia: Virginia Polytechnic Institute and State University,
1972).
Political
Studies,
Vol.
XXVI,
No.
1
(138-147).
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