To put Dr. Freeman's point in philosophical jargon: utility is a final cause in this sequence.

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Eric Schliesser 
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On Aug 31, 2011, at 20:31, Alan Freeman <[log in to unmask]> wrote:

> As several people have pointed out, this is a strange discussion because the
> distinction between micro and macro did not really appear in the literature
> until late on. I would be interested to know if we agree with Gary that the
> distinction arose only with Keynes' intervention.
> 
> There is a danger in retrofitting the categories we now use onto the
> economists that were writing before the categories emerged - the
> 'whig-historical' method. We cannot make the prior assumption that these
> categories are valid. Thus the classicals may in fact have been correct in
> not making such a distinction. They seem to have achieved quite a lot
> without it. Hence, to search around for some predecessor of the micro/macro
> distinction, in the classical literature, risks futility and irrelevance if
> not downright misrepresentation.
> 
> As a mathematician by training I am always puzzled by the way economists
> deploy the category 'prior'. It is never clear whether they mean 'prior in
> deductive sequence', 'prior in time', 'prior in logical necessity' or
> 'causally prior'. These are four entirely distinct concepts. I suspect that
> the modern use of 'prior' arrived as a consequence of general equilibrium.
> Without general equilibrium, the word is perfectly clear and unambiguous -
> it means 'before in time, and therefore, necessarily prior in cause' (since
> the future cannot cause the past). A similar difficulty dogs the peculiar
> usage that economists make of the word 'determine' which functions as kind
> of sly algebraic substitute for 'cause'.
> 
> Dobb, Theories of Value and Distribution since Marx, CUP 1973, p185,
> provides a very lucid discussion of this issue in assessing Marshall's
> critique of Jevons. Speaking of Jevons sequence of reasoning to the effect
> that 'cost of production determines supply' - 'Supply determines final
> degree of utility' - 'Final degree of utility determines value', Marshall
> writes
> 
> "Now if this series of causation really existed, there could be no great
> harm in omitting the intermediate stages and saying that the cost of
> production determines value. For if A is the cause of B, which is the cause
> of C, which is the cause of D, then A is the cause of D. But in fact there
> is no such series". He then, according to Dobb, 'develops his own view of
> "mutual determination" (which he regards as the "greatest objection of all")
> to Jevons's presentation, he ends by inverting the order of Jevons's
> statements ("a catena rather less untrue than his can be made")
> 
> 	Utility determines the amount that has to be supplied
> 	The amount that has to be supplied determines cost of production
> 	Cost of production determines value,
> 	Because it determines the supply price which is required to make the
> producers keep to the work.'
> 
> The curious thing about this sequence is that the future does in fact
> determine the past: the amount that 'has to be supplied' determines the cost
> of production, yet, the amount that has to be supplied is not known at the
> time that production takes place. 'Determination' works backward in time.
> Dobb cites Marshall's principles, Appendix I, p818, as the source of these
> remarks.
> 
> One cannot but suppose that Marshall's awareness of this logical difficulty
> influenced the critical weight that he assigned to the criterion of mutual
> determination, which mutated into general equilibrium and Samuelson's
> endorsement of Walras as the true founder of modern economic method. 
> Yet there is an unsolved problem. Determination, or priority, in time, has
> been concealed rather than removed. What has since happened, in my view, is
> that conceptions such as 'priority' have come to take the place of time, in
> the discourse of economics. If we bring back time, then a lot of things
> become clearer. This is why, on many matters, the classical and indeed the
> founding marginalists, reasoned in a way that is not properly understood
> today. It is, in my view, a superior way to reason, and that is why we
> should not superimpose on them a way of reasoning that they could not
> conceivably have resorted to.
> 
> Alan