gain maximization

[Roberto Verzola <rverzola@phil.gn.apc.org>]

Vic Marasigan:
>This suggests the need to fine-tune the term "gain-maximization" by
>distinguishing 4 levels of "gain": A. personal gain;  B. corporate gain;
>C. social gain; and D. planetary gain.  What has fruitfully (95%?)
>promoted A and B must now be raised to C and D, in view of the risks that

In fact, mainstream economists say that if every economic agent
maximized his own gain, he was actually maximizing overall social
gain. It was the moral justification for a pure gain-maximizing
strategy. It made greed ethical.

Jay Hanson:
>I suggest a different approach.  Optimize for the welfare of the
>"individual", but define his welfare in explicit indicators. These
>indicators would have a biological, scientific basis designed to
>insure the long-term health of the individual and his descendents
>(There is no biological basis for humans to "need" GDP.)

To Jay: Who will optimize for the individual's welfare? If we are
talking of an individual's own ruleset, we can presume that every
individual will be looking mainly after their own self-interest (the
selfish strategy), instead of others' (the altruistic strategy) --
although this is of course open to debate. The selfish strategy is
actually not so bad (even the Ten Commandments presumes it: "Love your
neighbor as you love yourself."), since the concept of Self can expand
to include family, neighbor, tribe, country, the Earth, etc.

I suggest that economists explore an alternative selfish strategy
based on risk-minimization instead of gain-maximization. My hypothesis
is that this alternative strategy will drive self-interested
individual economic agents to spread the risk as a means of reducing
it. This will lead the individual (still acting according to
self-interest) to give more importance to:
* cooperation over competition
* pool resources (collective ownership) instead of monopolizing them
  (private ownership)
* longer planning horizon instead of short planning horizon (unless a
  selfish agent works to keep transferring risk to the future -- the
  ruleset must be fine-tuned to prevent such a strategy)

In short, a risk-minimizing strategy will tend to make an individual
more altruistic (as if, in the words of Adam Smith, an invisible hand
guided him so). Note that a risk-minimizing strategy will recognize a
finite limit (ie, zero risk), while a gain-maximizing strategy does
not (ie, infinite gain).

In a way, risk-minimization is a negative way of expressing the desire
to optimize welfare, if you want to put it that way. It is difficult
to imagine the Millennium Bug occuring under a risk-minimizing
paradigm.

The Millennium Bomb crisis will be a time when communities will be
reorganizing themselves, and will therefore be a perfect occasion to
review these behavioral rule-sets.

Roberto Verzola