+2 votes
asked ago in General Economics Questions by (930 points)
It seems to me that the prime directive of economics is to maximize net social benefits of the economy. The economy must cover the social costs to labor, environment, and society.
I really never see in internet discussions between economists that this prime directive is mentioned specifically.
I have seen many talk about maximizing the private benefits to corporations leads to the best economy.
How common is it for economists to use a method for evaluating net social benefits from the economy?

What are your thoughts about what the prime directive of economics really is and should be... and how that prime directive can be accomplished.

3 Answers

0 votes
answered ago by (2.7k points)
edited ago by
From my point of view the best way to know how well or bad an economy is doing on a society is through the democratic elections. Asking the people you can know their opinion and I think that a majority on earth thinks that the economist are doing something wrong. I'm a good man and I think that good men are who change the world and make it a better place. The earth is full of people who cares almost nothing about social welfare and you can find them hiring Chinese workers for 300 euros and making them work for 10 hours 7 days per week. If that increase the welfare of an economy the world is a wrong place so I think that what really improve the social benefits are good wages a good health care system and a good life standart under a free market based in the sovereignty of the consumer and a "controlled" lucrative motive all of that ruled by a goverment that look after their people. We keep improving but I think that we are forgetting that the highest goal of a company is to improve the society earning a profit in exchange.
I have developed a theory about business cycles really accurate and a sistem called Sustainable Capitalism that allow low developed countries, into the poverty trap, to develop their economies, secure the full employment and vanish the negative cycles. The firms will have a better profit and the workers a good wage even with a workday of 6 hours. This full employment will improve the revenue in taxes of the goverment securing a welfare system. The inflation can be managed by the government but I would like debating it. I would like having a private discussion about my theory and system with a few good economists.
I'm sorry if my English is not perfect I had to edited the post again because I wrote the message yesterday and I was really sleepy.
0 votes
answered ago by (3.5k points)
The problem is that "net social benefits" isn't always a well-defined term. If you transfer $100 from a rich man to a poor man, is the net social benefit increased? (You might want to look up the term "Pareto efficient.")

Past that, if we think that maximizing average welfare is a reasonable goal, then economists almost always study "net social benefits." No economist would take maximizing the private benefits to corporations as a general goal.
commented ago by (930 points)
Pareto efficient is not a good way to measure net social benefits. You have to look at social costs. If the poor man must pay $100 to stay healthy in order to work and feed his family, while losing $100 does not change the rich man's life, then net social benefits have been increased by transferring $100 from the rich man to the poor man.
There are some economists that say tax cuts, which maximize private benefits, are socially beneficial. They say wages will increase, but labor still has not seen their wages rise.
+1 vote
answered ago by (3.3k points)
Prime directive?  The last time I heard that phrase was in Star Trek...

I always that economics was about studying what happens when resources are scarce?  

This certainly could include discussions of what is optimal for society vs what happens.  But any of those discussions involves a ton of simplifying assumptions.  

For the prime directive economics goes back to the original definition in most textbooks, studying goods are allocated under scarcity.  And for me, that's a super broad umbrella because pretty much everything is scarce.
commented ago by (930 points)
Hello BenHansen451, Yes... Prime directive comes from Star Trek. It seems that allocating scarce goods is a basic reason for economics, but how does economics measure and evaluate the allocation? That would be a Prime directive in the Star Trek sense.
commented ago by (3.5k points)
Economics respects individual preferences (usually). That means individual utility functions. There is not a general theory of how to aggregate individual utility into social welfare. Sometimes we decide to look at average utility.

In general, economists think an allocation is bad if there is a different allocation that would make everyone better off.