chapter
Comparative Statics
Pages 43

Weighty as these criticisms are I wish to make it plain from the start that my concern is with the narrower but less controversial aspect: with the validity ofal locative criteria within their own limited framework. Let us be certain what this framework encompasses. First, an unchanging population of 'rational' and 'responsible' beings. Rational in two senses, (a) that the choices made by each individual in any situation are consistent with all his other choices and (b) that the well-being of the individual depends only on his own real income and not at all on those of others. Responsible in that each individual is taken to be the best judge of his own wants. Clearly both senses of rational are simplifications which may or may not be generally true, while individual responsibility is an ethical judgment without which nothing may be said about allocation. Further­ more - in order to ease the exposition but not necessary for its conclusions - the factor endowment of the economy is fixed3 as also is the number of finished goods in the economy.4 Arbitrary assumptions are usually made in order to deal with the government as a supplier of goods and services. 5 But since our conclusions do not depend in any way upon such assumptions we wi ll confine our attention to the market sector of the economy. Uncertainty, which gives rise to theoretical difficulties at many points, is conceded to be the preserve of dynamics, and is there­ fore excluded from an analysis which is basically static.