7. Ask mainstream western economics to test your knowledge in economics

7. mainstream Western Economics
Lu shanmin
"Economics knowledge is required by everyone with a high school or higher level of culture. Therefore, political economics must be taught in high school and university. However, the traditional political economy can teach useful economic knowledge, but there may be problems, so he has seven common problems, one exam for non-professional students who have studied general political economics. If most questions cannot be answered, it proves that today's economics, as a public course in a university, has to be reformed. These seven questions are not uncommon and strange, but they seem easy to answer ." These seven problems are:
1. Why do the poor and the rich countries share the same purpose? 2. Do speculative activities create wealth? 3. Can exchange create value? 4. What determines the exchange rate? 5. What's wrong with "Planning and proportional? 6. Can money measure value? Under what conditions? Under what conditions? 7. What determines the price of a thing?(For details, see the original article)
These seven questions have been around for nearly ten years. I don't know how many of my students and economists have answered these questions. After answering these questions, I have come to answer these questions again in a few years. People naturally and patiently waited for a standard answer. However, over the past decade, they only listened to the sound of the stairs and no one came. Let's take a look at the latest answers from the netizens behind the post. If the answers are satisfying to the post, the post will be accepted in time. Some people suspect that the question creator has answers to these seven questions? I think, if he published his answers, he would surely be the target of all people, and the voice of question would be endless. He was so confused and worried that he was probably impressed by the following: this is not the case for masters.
Graduates who have learned "Traditional Political Economics" will only make great criticism and cannot answer these seven common economic questions, can those who have learned the mainstream western economics majors answer these seven common economic questions? I don't think so. The answer to the question is not a question, but a correct answer.
I have also imitated Mr. Mao Yushi's seven questions here, but I don't want to test anyone. Even if I have been a teacher, I can only test students. I want to teach you, but do you have to have a teacher.
1. What determines the price of a thing?
Mr. Mao Yushi asked the students of "Traditional Political Economics". I turned to ask scholars of mainstream western economics. Although the question is the same, the question content is different. We all know that modern western micro-Economics only talks about price, not about value. In fact, there is price but no value. This is a theoretical form and we will not comment on it. However, people can always ask: What is the product price? What is the product price? In other words, when a book first mentions the "price" concept, it must first define the price? It cannot be understood by the reader based on common sense? Micro-economics is often described as follows: "The price of a limited m yuan in the market is P1 ,..., The quantity of purchased products under PN is X1 ,..., XN makes U (x1 ,..., XN. The corresponding mathematical model is:
Max U (x1 ,..., XN)
S. T p1x1 +... + Pnxn = m "(Zhang jinshui, 1999, 16th pp)
What is the actual price? No definition; no explanation is given for how the price unit "Yuan" comes out, so we can start to list and solve the equation. Such a "theory" should not be accepted by the academic community logically. If the concept of "quality" in physics is not defined, what quality of life and marital quality may be involved. The concept of "value" has been strictly defined in economics. Isn't it still related to values such as "Love value" and "Life Value?
2. What is the basis for establishing utility functions?
One of the theoretical foundations of mainstream western micro-economics is utility functions, but they do not clearly indicate the basis for the establishment of utility functions. Someone may disagree with me. Let's see what the basis is.
"Utility has commonalities and personality. Food can fill your stomach, and clothes can protect your body from the cold, which is common. Southerners are used to eating rice, northerners ......" "Utility is related to aesthetic habits. Some people look clear, rough, and beautiful, and some people ......" "Unfortunately, the utility of commodities is not as easy to measure as the object of physics, or even as unmeasurable ." (Yang junchang, 1999, pp. 20-21)
From the above citation, it is not difficult to know that the root cause of commodity utility functions being unable to be measured is not anything else. It is precisely the basis for the establishment of utility functions that are all subjective factors. Since the amount of utility and satisfaction is a subjective volume that is transferred with the subjective will, it must be justified by public opinions, without accuracy. Is there a way to measure it?
The establishment of utility functions is based on problems, but the requirements of micro-economists on utility functions are unambiguous. First, the first derivative of the utility function must be greater than zero, and the second derivative of the utility function must be smaller than zero, that is, the utility function is a concave function. For example, if a person eats steamed bread and the first steamed bread has the largest utility volume, the marginal utility volume of the second steamed bread is smaller than that of the first steamed bread, the marginal utility of eating the third steamed bread is smaller than the marginal utility of the second steamed bread. After eating three steamed bread, the fourth steamed bread is uncomfortable, the marginal utility of the fourth steamed bread is negative. This satisfies the requirements of the concave function. However, I can also think that eating the first steamed bread can only be a bit of a heart, the amount of utility is average, the amount of marginal utility to eat the second steamed bread is greater than the marginal utility of the first steamed bread, eat the third steamed bread, full and not full have a qualitative difference, so the marginal utility of the third steamed bread is the largest; after eating the fourth steamed bread, the stomach is uncomfortable, the total utility of these four steamed buns becomes negative. Now, as I mentioned above, the first derivative of this utility function is greater than zero, the second derivative is still greater than zero, and there is a break point. Which of the following is unreasonable about the utility function I described?
3. What is the unit of the utility function?
It is reasonable to say that since the utility function cannot be measured, you do not need to further question "what is the unit of the utility function. However, things are not that simple. "Some economists insist that one day the utility can be measured, but there is no measurement method yet. For example, for example, the speed of light and noise, which were previously unmeasurable, can now be measured. I think that the utility is not measurable, and may fall into the 'unnotification' (Yang junchang, 1999, 22nd pages). This metaphor has some truth, but it is obviously not true. Why? Because physical quantities, such as the speed of light and noise, are definite, objective, and shift beyond the subjective will, it can be said that one day in the morning will measure. The utility volume is a subjective volume, which is uncertain and not unique. Therefore, in the past, present, and until the future, there is certainly no way to measure it, let alone its unit. Open any micro-economics textbook, there are many kinds of utility functions, common include the Les type, the logarithm Linear type, the CES type, and the LEs and CES hybrid type. Which utility function is used to eat steamed buns? Which utility function is used to eat roast duck? Or any one of them can be used. If there is a clear unit for the utility quantity, will the calculated utility quantity be the same if different utility functions are used for eating steamed bread? Impossible. Don't say that the satisfaction of different people who eat the same steamed bread is not the same. The satisfaction of eating two steamed bread today may be different from that of eating two steamed bread yesterday. This uncertain and ununique subjective utility function is surprising to many people.
4. What is the basis for determining the production function?
In western mainstream micro-economics, in addition to utility functions, there is also a production function. Interestingly, the requirements for these two functions are almost the same, that is, the first derivative of the production function must be greater than zero, and the second derivative must be less than zero. That is, the production function is also a concave function. It is reasonable to say that a utility function is a subjective function. The production function comes from the actual production and should be objective. How can it be a concave function? People suspect that the production functions generated in this way are probably just like the ideas of shoot heads and then imposing them on objective reality, rather than being abstracted from production practices.
5. Why is the profit equal to zero under the principle of maximum profit?
Many people believe that the premise of mainstream western economics deduction is often very different from reality. Now I will go on to say that the conclusions drawn from mainstream western economics are often very different from the actual reality, and scholars and celebrities are often calm at these results. If someone doesn't believe this, I will give you an example here to show readers. For the frequently-used COBU-Douglas production function, the maximum profit is equal to zero if the scale compensation is not changed. "Therefore, the manufacturer's extremely large profit is zero ." (Example 6, 2002, 93rd page) What is the condition for survival of capital? The purpose of capital is to pursue profit. Now, the manufacturers' extremely large profits are zero? In addition, the COBU-Douglas production function that satisfies the condition of constant scale compensation does not meet the condition of the concave function, but it is used everywhere for such a production function. Is this a logical contradiction?
6. What is "balanced "?
Many scholars have raised this question, not including students. In textbooks of mainstream western economics, there is no clear definition of "balance", just like "price", which should be understood by common sense. Therefore, it is not difficult for people to understand "balance" as equal and consistent supply and demand based on common sense and habits. However, some people regard "balance" as "unchanged", that is, a certain economic volume does not change with time. For example, Robert Solow, a Nobel Economics Prize winner and an American economist, believes that the per capita capital K does not change with the time t, that is, DK/dt = 0. To sum up, "balance" is the so-called "static and unchanged balance state". Does this mean exactly? I had to ask the mainstream western economics masters.
7. Why do the poor and the rich countries share the same purpose?
This is the first question of Mr. Mao Yushi's seven questions. If fans of mainstream western economics ask this question "Traditional Political Economics", it is usually understood that mainstream western economists are well-held. However, according to my opinion, mainstream western economics, including micro-economics and macro-economics, have not answered this question well or even better. There is a macro-economics textbook that answers the above question in this way. In the book, the hairdressers in the United States are compared with those in India. Everyone is a hairdresser, with the same technology, doing the same job, but in the United States, hairdressers are much more paid than Indian hairdressers, because the overall scientific and technological level in the United States is higher than that in India. The implication is that the benefits of a country's overall high level of science and technology will average to every person in the country. Similarly, the disadvantages of the low overall level of science and technology in backward countries will also be evenly distributed to every national. Therefore, even if China also has a highly automated flow production line, the treatment of the workers there cannot be comparable with that of American workers. This seems to have answered Mao's question. But it is not satisfactory to think about it. This answer only provides a possible result and does not answer the question. In some rich countries, the level of science and technology is not high, because the resources are sold to enrich them, where the payment for dishwashing and haircut is higher than that of the poor countries. In fact, this issue does not have to begin with rich countries and poor countries. There are also various typical cases in China. The payment for a haircut in Beijing and Guangzhou is definitely different from the payment for a haircut in Rural Areas in Shanxi and Henan. Why? You said, "Traditional Political Economics has never given any minimum explanation of the fact that rich and poor countries share different wages for working together ." However, in my opinion, Marx answered this question in the first volume of capital theory. However, mainstream western economics seem to answer the question, rather than messing up people's thoughts.

References
[1] Tang liutang, 2002, dynamic economics method, Peking University Press.
[2] Yang junchang, 1999, micro-macro economics, Shanghai: Accounting press.
[3] Zhang jinshui, 1999, mathematical economics, Tsinghua University Press.
[4] Zheng Hui, 2001, capital control and short-term macroeconomic dynamic stability, Fudan University Press.

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