Combating the Pareto Distribution Argument.

[Oswy]

What are best ways to address the use by pro-capitalists of the so-called 'Pareto Distribution'?

Here is an intro at Wiki: http://en.wikipedia.org/wiki/Pareto_distribution

The argument based on this idea is that there is a 'natural' tendency in human organisation, especially in industrial societies, for wealth to become concentrated into the hands of about 20% of the population or less. The further argument is thus that any attempt to 'artificially' structure society so as to defy the Pareto Distribution cannot succeed.

[Kwisatz Haderach]

Argument? I don't see any argument - I only see a function that describes the distribution of wealth in capitalist societies. And indeed, it seems to provide a pretty good description. But there is no reason to believe that this distribution is somehow "good" or "justified" just because we found a function that approximates it.

[GPDP]

Of course they don't justify it. From the point of view of capitalist ideologues, capitalism is as natural as the rays of the sun. Thus they are free to assume away what is the "natural" course of wealth distribution.

What they do argue, however, is if such concentrations of wealth are ultimately efficient. Herein is where Pareto optimality comes into place. It states that an exchange is ultimately efficient even if only one party benefits, so long as the other party does not become worse off than before the exchange. So if you ask for justification, they might just throw this at you. And of course, even if such optimality were to take place, the difference in resulting bargaining power assures that future transactions will be less and less likely to benefit one without expense to another.

[Oswy]

The argument often presented isn't limited to the capitalist mode of production, however. Instead, the pro-capitalist argues that all 'civilised' societies, by which they usually mean those other than simple hunter-gathering societies, fit the Pareto Distribution ratio. They say things like this:


"The point is, societies can be organised in any way, but wealth will always obey a pareto distribution. We cannot change this."

In effect, by arguing that historically all civilised societies appear to conform to the Pareto Distribution, unequal wealth distribution appears to be an 'innate' or axiomatic property of such civilisations. By extension they are implying that socialist forms of redistribution are doomed to failure because they attempt to 'defy' what appears to be an unavoidable 'fact'.

[Kwisatz Haderach]

In effect, by arguing that historically all civilised societies appear to conform to the Pareto Distribution, unequal wealth distribution appears to be an 'innate' or axiomatic property of such civilisations. By extension they are implying that socialist forms of redistribution are doomed to failure because they attempt to 'defy' what appears to be an unavoidable 'fact'.
What data or evidence do they use to back up the claim that "all civilised societies appear to conform to the Pareto Distribution"? I wasn't aware that there was any data about the distribution of wealth in pre-industrial societies. Certainly we can tell that it was unequal in some way, but did it follow a Pareto Distribution?

Furthermore, there are plenty of social practices that have been going on for thousands of years - enough to be considered "natural" by these capitalists - but which are now widely seen as evil and have been successfully abolished in most parts of the world. Take slavery for example.

[mikelepore]

What they do argue, however, is if such concentrations of wealth are ultimately efficient. Herein is where Pareto optimality comes into place. It states that an exchange is ultimately efficient even if only one party benefits, so long as the other party does not become worse off than before the exchange. So if you ask for justification, they might just throw this at you.

I would say: Go beyond the case when when at least one party benefits. Let's consider cases when both parties benefit by reaching an agreement. Surely this ought to be a optimum interaction, an exchange for the good of all, right?

Wrong!

Both parties are better off if they can come to an agreement -- such a statement also describes a situation in which the inquisition says to someone: I won't break your spine on the rack if you will confess to witchcraft. Both parties are better off if they make the deal. The inquistor gets to take a confession to the superiors, and the victim gets to survive.

If a kidnapper says I won't kill your child if you pay a ransom, both parties are better off if they can make the deal. The parents gets the child back, and the kidnapper gets some money.

So the next time a someone argues that a situation is a good situation to be put into, an optimum arrangement, the best of all possible worlds, merely because both people are better off after they make the deal, we will know that we're talking about someone whose imagination is confined to a very narrow scope.

Notwithstanding the Ph.D. in economics that they may have. I don't care. Talking stupid is talking stupid, no matter who they are.