THE MAGIC FORMULA OF THE NEW ECONOMY THEORY “THE PRISONER’S DILEMMA”

The circle: Is new economy so new? Are its contributions really likely to improve economic policy decisions to enhance or optimize the regulating action of the States ? Not to go wrong on the analysis of the behavior of individuals, the basis of all economic decisions, “ Traditional micro economy  had the aim to give body to the intuition according to which the functioning  of competitive markets could be effective. On contrary, game theory underlines the importance of the coordination defects inherent  in the decentralized decisions.” [Chang P ; The microeconomic, collection guides, The discovery, 1993 p 23]

 That summarizes the turn taken by the “new economy” as it defines itself while the major teaching of the 20^th is that this are the centralized organizations that have gone bankrupt in the East and are in crisis in the welfare State countries.

But the new economist can’t stop to this kind of detail. They are hard, instead to demonstrate that the decentralized decisions can’t be “optimal”. Such decisions can’t by optimal by they have the merit to exist. This is a major feature; because optimal solutions will never exist.

It’s like the market economy, it function by ups and downs, which allows it to evolve in adapting and innovating because human perfection is not in this world while the application of models of planned and centralizes organization, considered by their designers as infallible and all powerful, and aimed to solve all economic and social problem never works, despite all disastrous attempts that do the tragic 20^th century history.

The function of the market is precisely to require players to make choices, to make decisions. But error is human and since our childhood is mistaking we learn and we correct our behaviors. And the functioning of economy feeds of these necessarily imperfect choices. The new economists still didn’t integrate the idea that nothing is optimal in this world. A scientific spirit has the duty to interest in what really exists and what exists is necessarily imperfect.

What is the use of a model what would be optimal but imaginary so unenforceable? And who could correct imperfect behavior (From what point of view, what critters?) if not a state itself directed by human beings themselves necessarily imperfects?  Models of contemporary economy assume that we are all unconsciously as a “prisoner” of a narrow selfishness that prevents us to make decisions that a “benevolent agent” – necessarily the State-would be in the right and in the need to take in our place.

It’s for destroying the” parable of the invisible hand” proposed by Adam Smith that the parable  of the prisoner’s dilemma was developed by contemporary economists.

Let’s remember the principle of the "prisoner's dilemma". Two prisoners are accused of committing a crime together and are interviewed separately. The police officer their made the following proposal: "If you keep silence and if your accomplice says, you'll be five years in prison. If you admit both, you are only three years old. It is possible that your accomplice is silent. If you shut you also, may you do only one year in prison.

On the other hand, if your partner does not say anything and if you confess, leave you out in three months. You can see if your accomplice speaks, you have interest to confess; and if your partner is silent, you still have interest to confess. Then, why not confess immediately?"

It appears that if each prisoner follows his self-interest, he’ll find advantage in confessing. Because keeping silent, he takes the risk of staying five years in prison. But confess in not the common interest of the 2 prisoners: in confessing both they’ll be three years in prison. Even thought if they had kept quiet both, they would have taken only a year in prison. This parable is interpreted in a very particular sense, showing notably that the private interest is not the best guide to our decisions when the latter lead to results opposite to the general interest.

Thus, this principle serves as a theoretical pretext to a fundamental questioning of decisions decentralized operating in any process of market. New economists think they have found the magic formula t allowing them to say that the "invisible hand" of Adam Smith is invisible precisely because it does not exist. No to  mention that it is in the general interest that criminals whose guilt is established, be all in prison, it is clear, in this example, we define not the general interest. One merely confounds it, at most, with a "common interest" in this case, the interest of the criminals. . However the interest of criminals is, in fact, a corporatist interest, which has little to do with the public interest (and in the case of criminals, it is even contrary to the public interest).

But since the new economists amuse themself constructing stories in order to arrive at their conclusions, let me tell you another story. What if our prisoners were Bonnie and Clyde, crooks madly in love one another? Out of love for her partner, Bonnie would prefer denounce to save Clyde as Clyde would act in the same way to save Bonnie. In the end, our two brigands would still give themselves up to the authorities. Is this to say that love is not a feeling "optimal" since it leads to decisions that will be harmful to our two protagonists? And how will the State claim to correct this "failure"? In this case, it would have been better being selfish.

Thus, the "prisoner's dilemma" does tells us nothing else that is already known: it may be dangerous to think only of oneself it can be suicidal to think of the other.