TELEOLOGICAL OPACITY AND DETERMINATE PREFERENCE FAILURE: A Structural Critique of Revealed Preference in Complex Social Systems

Revealed preference theory holds that from an agent’s choices we can infer her preferences, and from her preferences her welfare. This paper argues that this inference systematically fails under two structural conditions independent of each other and of the psychological biases on which behavioural economics has focused. The first condition is teleological opacity: the structural disconnection, in complex social systems, between chosen means and realised ends. Teleological opacity is produced not by epistemic deficiency but by ontological indeterminacy — the genuine non-existence, at the moment of choice, of outcomes whose determining causal process is the future exercise of another agent’s discretion. The second condition is Determinate Preference Failure (DPF): the threshold below which the evaluative architecture required for autonomous preference formation is destroyed rather than distorted. The paper introduces the Magic Machine thought experiment to generate the Counterfactual Preference Stability (CPS) criterion, develops the agency functioning threshold with three convergently validated population proxies, and defends the Preference Validity Condition (PVC) as a necessary condition already carried by any normative deployment of revealed preference theory. The paper responds to five principal objections, engages with recent empirical literature on scarcity and deliberative capacity, and provides an immanent critique of Hayek’s epistemology that does not rely on the concept of genuine labour disutility. Keywords: revealed preference theory; teleological opacity; Determinate Preference Failure; Counterfactual Preference Stability; agency functioning threshold; Lexical Shield; Hayek.