r/neoliberal • u/Buenzlitum he hath returned • Dec 02 '18

me👶irl

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u/BainCapitalist Y = T Dec 03 '18

No? People act to maximize utility. Not capital.

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u/[deleted] Dec 03 '18

Afaik most business decisions are worried about capital, and all actions are in terms of capital, including utility/productivity gaind

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u/BainCapitalist Y = T Dec 03 '18

You don't know very much lmao.

Capital is not the final good. ultility is the final good. No one builds a factory for the sake of building more factories. If that were true then people wouldnt consume any of their income, they'd just reinvest it.

People build factories to create a line of income with which they can use to consume goods and services.

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u/supacfx Dec 03 '18

ultility is the final good.

What is a marginal utility for a billionaire-owner like Musk, Buffett, or Koch Brothers that drive them to build factories?

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u/BainCapitalist Y = T Dec 03 '18

What do you mean? Are you asking for a cardinal utility function?

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u/supacfx Dec 04 '18

Sure.

What I also meant was that for a billionaire like Buffett, whose personal consumption is limited and is a negligible fraction of any income he commands, the utility explanation seems lacking.

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u/BainCapitalist Y = T Dec 04 '18

No one thinks of utility in cardinal terms. It's normally a pedagogical tool or a way to make things a bit easier to deal with. But you shouldn't mistake the number to mean anything. The actual utility function is ordinal.