This paper critically reviews Ken Binmore’s non- utilitarian and game theoretic solution to the Arrow problem. Binmore’s solution belongs to the same family as Rawls’ maximin criterion and requires the use of Nash bargaining theory, empathetic preferences, and results in evolutionary game theory. Harsanyi has earlier presented a solution that relies on utilitarianism, which requires some exogenous valuation criterion and is therefore incompatible with liberalism. Binmore’s rigorous demonstration of the maximin principle for the first time presents a real alternative to (...) a utilitarian solution. (shrink)

In this paper I argue that the criterion of valuation in neoclassical economics is flawed because it is not an invariant measure of value. It is invariant only when unrealistically restrictive conditions are imposed on the class of admissible utility functions, which in fact makes it a special case. The only sensible alternative is to turn to classical value theory based on real sacrifices or opportunity costs.