The Milei Anti-Experiment or why socialism doesn't fail on its own terms (or at least here)

It is quite common in liberal rhetoric to hear the "Milei Experiment" as an example of how a socialist society works. This experiment, promoted by the Austrian school economist Javier Milei proposes the following:

A teacher decides that, to illustrate socialism, the grades of the students in his class are going to be redistributed so that each one will have the average of his class. In the first semester, the students received a 7 on average, which meant that in the second semester, the most hard-working (who normally had a 10) made less effort, while the lazy ones worked less since they were also going to get good marks . This caused that in the second semester everyone got 4. Finally, everyone was angry with everyone, in the third semester none made an effort, since their grade would depend on the others, so they all got a 1. [1]

The experiment seeks to affirm that (i) meritocratic systems are the only ones that provide the best skills to achieve the greatest benefit; (ii) this system allows a fair distribution of wealth, in the allocation of salary based on work; (iii) and that any redistribution is inherently unfair and unnecessary. Here we will see that, regardless of our conceptions of justice, there is a fundamental difference between an economic market - in which there is a limited money supply -and an academic market - a stock market in which the highest value is a 10 and the lowest it is a 0 in the evaluations.


Why can I sustain meritocracy in academia while not economically


In experiment, many people would say that the redistribution of grades is not fair in any way, since each person's grade represents the effort (or ability to copy on an exam) of each person. And this is consistent, since there is an essential difference between the academic market of value (notes) and the economic market (currency): that in the academic market the value that I believe does not depend in any measure on the actions of others while that in the economic process does. What does this mean? That the Milei experiment would be valid if I added to the premise that there is a score limit (one person gets the highest mark while the rest get the lowest). Can it be the case in economics that each and every one of us reached the highest value? Obviously not. You can reformulate the experiment like this:

A teacher decides that he will allow the students to choose how to distribute the marks: (a) meritocratically (b) or equally. The class has 10 people, and the maximum score is 100 to be distributed. It is enough to pass the subject a 10. Students can choose to (a) compete and opt for the highest grade, which would require one person to get 100 while the rest 0 (b) or redistribute so that each one had enough to promote, that is, a 10.

I think that in this case many of us would opt for redistribution (as long as we are not theorists of the present end) [2]. This reformulation does not differ much from the usual Prisoner's Dilemmas that we can find in the philosophical and economic literature [3]. However, in the case of restricted values [4], an inverted Gaussian bell of pass is formed (in the diagram it looks more like a Gaussian triangle, but it is because I have no practice making diagrams).


Here I must admit that I am smuggling a premise; And it is that in this system I am not taking into account that it is possible that, if nobody creates value (in this case, that nobody studies), that it causes everyone to have 50%. This is because restricted value systems can collapse in the absence of production and consumption, although I think it is easily bypassed as I explain in the last point.


In what way can a meritocratic attack me


A meritocratic person can accept that the Milei experiment is wrong, but can continue to defend a conception of justice of merit, since many people have the intuition that it is unfair for those people who cause more value to have to cede it to other people who believe less or no value. In this case, I have no other arguments than the Keynesian arguments [5] that redistribution is beneficial to everyone since there can be economic equilibrium with unemployment.


However, in this short article I only come to expose the reasons why Milei's experiment is wrong, and that in unrestricted systems, such as the experiment, meritocracy can make sense and be fair since, in ideal conditions, there is no external influence on the result; that is, there is no interference whatsoever for someone to achieve the highest value.


What could be granted to the Milei experiment


We could affirm that what this experiment really seeks is to illustrate that the only way that human beings have to contribute to the economy is through rational selfishness. The way I see it, there are two ways to get people to contribute in the best way possible to the (market) economy without causing social or economic crisis:

  • Socialism in the form of Capitalism: in the same way that it is said that the utilitarian (to do the greatest good) should not contribute to creating utilitarians, we could continue to maintain a system of redistribution but without eliminating the "shark mentality" from people in a way that (1) the economic imbalances that these 'enterprising' people may create are alleviated (2) people who do not have guaranteed access to sources of income (given natural unemployment [5], for example) can have a better life through of social redistribution policies. Thus, we maintain rational egoism at the individual level but not collectively.

  • Create awareness of what is the best way to produce value: we can become aware as a society that the best way to produce is through doing certain tasks for x time by virtue of which we can live in the best way working as little as possible. In the same sense that, in a canoe, all people must row in unison to achieve the best possible advance. However, the realization of this measure is beyond my capabilities, so I cannot guarantee that it is possible (at least in the short term).

The answer to this dilemma is found as soon as we trust the rationality of the agents, that is, our rationality to act.


Notes


[1] (7 de enero de 2019). El "experimento Milei" que refuta el socialismo y se volvió viral. Infotechnology. URL=<https://www.infotechnology.com/online/El-experimento-Milei-que-refuta-el-socialismo-y-se-volvio-viral-20190107-0003.html>. It is a reduced version, but I recommend that you read the article.


[2] Parfit, D. (2004). Razones y personas. Madrid: Antonio Machado. The present end theory has three versions (pp. 241-245), but it basically argues that "what each of us has the most reason to do is what would best fulfill his present desires" (instrumental version, p. 241).


[3] Ibidem. See Chapter 2 on The Prisoner's Dilemma. You can also check the problem on the Wikipedia page Dilema del prisionero.


[4] By 'restricted values' I mean that there is a limit of acquisition of value that one can monopolize, 100% of the money supply for example, which requires that the rest of the participants correspond to 0%; while with 'unrestricted values' I mean that a person can have 100% of the possible value and not force the rest of the participants to have 0% (it could be a system in which all participants had 100% value ).


[5] Keynes, J. M. (2003). "La función de la ocupación". Teoría general de la ocupación, el interés y el dinero. México D.F.: FCE, 249-259.

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