Mainstream macroeconomics distorts our understanding of economic reality
from Lars Syll
For a good many years, Tony Lawson has been urging economists to pay attention to their ontological presuppositions. Economists have not paid much attention, perhaps because few of us know what “ontology” means. This branch of philosophy stresses the need to “grasp the nature of the reality” that is the object of study – and to adapt one’s methods of inquiry to it.
Economics, it might be argued, has gotten this backwards. We have imposed our pre-conceived methods on economic reality in such manner as to distort our understanding of it. We start from optimal choice and fashion an image of reality to fit it. We transmit this distorted picture of what the world is like to our students by insisting that they learn to perceive the subject matter trough the lenses of our method.
The central message of Lawson’s critique of modern economics is that an economy is an “open system” but economists insist on dealing with it as if it were “closed.” Controlled experiments in the natural sciences create closure and in so doing make possible the unambiguous association of “cause” and “effects”. Macroeconomists, in particular, never have the privilege of dealing with systems that are closed in this controlled experiment sense.
Our mathematical representations of both individual and system behaviour require the assumption of closure for the models to have determinate solutions. Lawson, consequently, is critical of mathematical economics and, more generally, of the role of deductivism in our field. Even those of us untutored in ontology may reflect that it is not necessarily a reasonable ambition to try to deduce the properties of very large complex systems from a small set of axioms. Our axioms are, after all, a good deal shakier than Euclid’s.
The impetus to “closure” in modern macroeconomics stems from the commitment to
optimising behaviour as the “microfoundations” of the enterprise. Models of “optimal choice” render agents as automatons lacking “free will” and thus deprived of choice in any genuine sense. Macrosystems composed of such automatons exclude the possibility of solutions that could be “disequilibria” in any meaningful sense. Whatever happens, they are always in equilibrium.
Modern economics has become increasingly irrelevant to the understanding of the real world. In his seminal book Economics and Reality (1997) Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject.
It is — sad to say — as relevant today as it was seventeen years ago.
It is still a fact that within mainstream economics internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models is beyond my imagination. As long as mainstream economists do not come up with any export-licenses for their theories and models to the real world in which we live, they really should not be surprised if people say that this is not science, but autism!
Studying mathematics and logics is interesting and fun. It sharpens the mind. In pure mathematics and logics we do not have to worry about external validity. But economics is not pure mathematics or logics. It’s about society. The real world. Forgetting that, economics is really in dire straits.
Economics and Reality was a great inspiration to me seventeen years ago. It still is.
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The day is long ago … Could Axel Leijonhufvud be one my favorite yet challenging econ writers of the late sixties? Or is this quote from a younger relative? Really the idea of equilibrium in the midst of an ongoing and accelerating big bang is tough to visualize.
Garrett, doesn’t mathematical as against physical equilibrium simply mean no change? So though the Big Bang has three degrees of freedom to expand, the surface of the space its expansion has swept out (Hubble’s Bubble) has only Newton’s unchanging two degrees of freedom and mathematically (i.e. ignoring realities like turbulence) is everywhere at the same distance from the location of the Bang. One can drive a car at an equilibrium speed of 30 mph, the force required overcome the friction at that speed being mathematically analogous to the gravitational pulls on water cancelling as water finds its own level in the two arms of a U tube. In economics the question no-one asks is, what type of equilibrium? Most people think in terms of cancelling forces or a fixed quantity of money [forgetting per year], but it is more realistically a flow, and since the economy is supposed to be growing, even more realistically a rate of inflation due to printing money to pay a rate of interest.
@davetaylor1.
I think Yogi Berra might have stated the difference as: “Laissez Faire…all over again!”
While I am a staunch believer in critically assessed empiricism, it is a myopic presumption to say that economies are open systems, and this leaves to the belief that economies are not subject to ecological constraints and resource exhaustion. Economics as perpetual wealth expansion in growth models that are not sustainable are readily argued as destructive creation these days, while expansion and intensification has decimated the Americas in less than 3 decades while it currently plunders the earth creating “Open Markets” against whatever pristine sources it can find . The limits of ecological economics are bounded and closed, the exploit by wealth in social forces against those boundaries are open systems of economic class circumvention of those boundaries. The reality is that social and market forces exploit open models of commercial gains against closed systems of natural restrictions. They do so arrogantly and in the short term it “appears” that there is unlimited growth and innovative capacities that circumvent restraints. The truth is that such ‘open system exploit’ against closed systems of maximizing and exhausting resources, (that are not left to regenerate ecologically speaking), leave “emerging” nations to suffer the costs, and push wage and austerity progressively under that same squeeze as the “Silent Spring” becomes global and we build Dubai highways to the sky.
great postings lately, maybe there is still hope for economics to exact a science of man and not an apologia for destruction as paradise?
From anything goes to nothing goes right
Comment on Lars Syll’s ‘Mainstream macroeconomics distorts our understanding of economic reality’
Economists owe the world the true economic theory, that is, a theory that satisfies the scientific standards of material and formal consistency and that explains how the economy works.
Economists have not delivered. But they have delivered a lot of reasons why they have not delivered. Complexity is number one. Hypotheses-testing-is-not-possible is number two. Duhem-Quine comes next. Very popular is also the solidarity of ignorance: “There is no objective truth in economics,” “Nobody understands the whole picture. Everybody gets a piece of it.” (Roosevelt) URL http://larspsyll.wordpress.com/2014/11/10/understanding-capitalism/
Here is the mother of all excuses:
“Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the “laws” of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses.” (Solow, 1998, pp. x-xi)
Indeed.
When we turn to Heterodoxy things seem to get better at first, but then they become abysmal.
Tony Lawson has properly identified the methodological blunder of green cheese assumptionism. In short, it is inadmissible to put assumptions like optimization, equilibrium, decreasing returns, perfect competition etcetera into the premises. This mistake is known as petitio principii and J. S. Mill, the founder of economic methodology, dealt with it at length in his System of Logic (see also 2014b).
The crucial point is: standard economics is based on behavioral axioms (McKenzie, 2008) and this is not a solid enough foundation.
“. . . if we wish to place economic science upon a solid basis, we must make it completely independent of psychological assumptions and philosophical hypotheses.” (Slutzky, quoted in Mirowski, 1995, p. 362)
Axel Leijonhufvud sees this quite clearly: “Our axioms are, after all, a good deal shakier than Euclid’s.” Indeed, but then comes the Great Heterodox Methodological Horror.
Instead of replacing the shaky behavioral axioms with something objective and solid, Heterodoxy rejects the axiomatic-deductive method (2012). Does it really come as a surprise that since Lawson has written about open systems Heterodoxy has not produced much of scientific value? Instead it has become the most outspoken proponent of the pluralism of wish-wash.
Note that the profit theory of Keynes, Kalecki, or Keen, for example, is as far away from reality as any mainstream profit theory, “… surely, therefore, they fail to capture the essence of a capitalist market economy.” (Obrinsky, 1981, p. 495)
Each paradigm stands or falls with its premises. For the scientific beginners among economists it is all in Wikipedia URL http://en.wikipedia.org/wiki/Posterior_Analytics:
“When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle, Analytica)
For the correct axiomatic foundations of the open market system see (2014a). Seventeen years of methodological distortion are over for Lars Syll — thank Heaven and Euclid.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Crisis and Methodology: Some Heterodox Misunderstandings.
SSRN Working Paper Series, 2083519: 1–22. URL http:
//ssrn.com/abstract=2083519.
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper
Series, 2511741: 1–29. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=
2517242.
Kakarot-Handtke, E. (2014b). Objective Principles of Economics. SSRN Working
Paper Series, 2418851: 1–19. URL http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2418851.
McKenzie, L. W. (2008). General Equilibrium. In S. N. Durlauf, and L. E. Blume
(Eds.), The New Palgrave Dictionary of Economics Online, pages 1–18. Palgrave
Macmillan, 2nd edition. URL http://www.dictionaryofeconomics.com/article?id=
pde2008_G000023.
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University
Press.
Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics,
3(4): 491–502. URL http://www.jstor.org/stable/4537615.
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The
Academic Scribblers. Princeton, NJ: Princeton University Press, 3rd edition.
Lars, Tony Lawson’s “Economics and Reality was a great inspiration to me seventeen years ago. It still is”. Me too, if a little belatedly at fifteen years.
The one thing I was never able to agree on with Tony was a definition of “open” and “closed”. There is a paradox here, for where a road has a gap in it has to be closed, and it can only be open when the gap is bridged. Tony’s view seems to be more of an entity enclosed by a skin, which can be considered open if it has inputs as well as outputs. Let us consider Tony’s economy as an open (in his sense) sub-system within Bruce’s closed (except for sun-light and space-dust?) but evolving ecological system. My original view saw the economy as a subsystem of roads within an ecological subsystem, its trade providing not bridges linking but bypasses short-circuiting the routes into towns. This turned out to work equally well in understanding brain function, for the more familiar things become, the less we think or feel when dealing with them.
In electrical theory, however, there is another twist to this story, for electricity passing round the INSIDE of a looping closed circuit generates a side-effect in the form of a magnetic field THROUGH the loop; this can affect things outside the loop. Conversely, magnetic changes outside the loop can have side-effects on the electricity circulating inside it, and to put the matter most simply, the circuit can be open to information and power [in the root ‘horsepower’ rather than political sense] even when it its ‘skin’ of insulation closes the closed circuit to input or output of electricity. Which opened up the question, is an economy based on horsepower or information (even allowing the latter has been conveyed to slaves with a horsewhip)? Having asked the question I could hardly doubt it was based on information
.
In my first comment at https://rwer.wordpress.com/2014/11/06/still-dead-after-all-these-years-general-equilibrium-theory/#comment-83231 I found myself combining my original thoughts with others I’d had about time-sharing. Open systems like us don’t have our mouths open and our limbs active all the time, but only when we need to. Visualising traders as making a living by bypassing face-to-face market towns, the logic of an information-based PID control system will more or less ensure the captain (the trader in money) gets where he eventually wants to go, but the better the system, the more surely it will bypass the towns en route which he is supposed to be supplying. So isn’t the answer for the captain to supply each town in turn with all it needs by deliberately NOT using its bypass, for with over-supplying, he’ll still leave more than enough for his own needs?
Without directed-graph diagrams here, I can only apologize for the story-telling!
There is an interrelationship between open exploitation technology and closed global “peak” potentials that is fairly well observed. However, if we consider something along the classic tragedy of the commons we must now recognize that the royals will eventually generate a population of their own and in time exhaust or compete for the limited resources in question.
But bringing this up to date with privatization, corporate yields and global markets, the so called conservation is actually in the box with the “commons” that seek to sustain a balance while the (wealth) corporatist seeks to control a monetary value that care little about the actual measure of exhaustion. it legitimates and justifies the process of monetizing the values and has the hubris enough to create derivatives (open system) over the reality of any authentic (entity based) economy that manages the (conservative) limiting factors of its own survival. What is missing is the original ideal of ‘economizing” as a saving grace over frugality. Today such a notion is considered a market failure!
In that regard I consider true “economies” as evolving (…thank you davetaylor 1…!) but closed, while technologies allot new levels but ultimately it is “slash and burn” depletions that must be managed not only against diminishing returns (closed system) but against an expanding demographic which is exponentially serviced (and simultaneously exploited) by economies of scale and political economies of capital gains and domination (once again open cultural systems over closed survival options). The results are conflict and war after the normative zombies get done spinning tales of bubbles and unlimited production techniques to evade the “mass liquidity trap” of reality.
That probably as confusing as reality itself, but I think the multivariate levels of open and closed systems can be interactive at levels. Capital is an open system while privatizing and elitism seeks to cut the pie for themselves in a more exclusive closed society of forces that lends itself to a rationale that closes the door to the domestic economy itself (commons). When “Economists” try to homogenize it all as one Hegelian working machine…well that’s when perpetual motion is sold to us in the form of theories and ideology.
Just viewed “Who’s Counting: Sex Lies and Economics” by Marilyn Waring. Timeless. Still relevant today. A clear example of looking at the reality. Also am reminded of what a professor, Dr. Donald Morgenson, said to us in the last class of Abnormal Psychology. Be careful not to reify theories! That was 1969.
Coming after my contribution, Herb, this looks a bit like “there’s none so blind as don’t want to see”. The evidence that communication channels exist is that one can communicate down them. The evidence that there can be parallel as well as sequential paths is that we can create them. The theory is supposed to represent (not mirror) the evidence, so my theory is that men, women and children are different, whereas economic liars (wanting to justify employing them indiscriminately) claim they are all the same: zombies who react only to external forces. Perhaps Dr Morgenson’s advice was aimed at feminists and economists?
Dr. Morgenson’s advice was for all of us. Every day I see people who have bad beliefs due to reified theories. It might be about smoking bans, politics, religion, immigration, etc. None are so blind that they will not see. A person I know with a communication language disorder that she said prevented her from learning French in school as child condemned older immigrants for not learning a country’s language when they immigrate. Because we think metaphorically in frames we are all subject to these anomalies of thinking.
I am not sure who is for what here! It seems to be impossible to write about macroeconomics and closed/open systems and mathematics without entering into a world of strange comparisons and little straight-forward analysis. I assure you that the world of macroeconomics is logical, scientific and easy to understand. However very few are will to enter this world on the terms that good science demands. That is to say: axioms, assumptions, definitionbs and logic must all be used to build a model which we can all use for analysis and debate. My approach does this through: DiagFuncMacroSyst.pdf which the curious can find in Wikimedia Commons in macroeconomics, along with a whole lot of other models most of which are hoipeless for the purpose outlined above.
When a serious scientific methodology (systems analysis) is applied, there is every chance that the writings of the less logical but intuitive gropers in the Walras tradition will give way to the balancers and substituters of the modern scientific school.
It is very wrong to classify economics with women and lies. As long as we continue to believe that our subject is so vague as to have no alternative to this kind of presentation, we will never get the serious world problems of poverty, peace, sharing resources, polution prevention, social satisfaction, religious tolerance and happyness solved.
Scientific thinking: Aristotle is right, Leijonhufvud is wrong
Comment on Lars Syll’s ‘Mainstream macroeconomics distorts our understanding of economic reality’
Each paradigm stands or falls with its premises:
“When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle, Analytica), see Wikipedia http://en.wikipedia.org/wiki/Posterior_Analytics
The axiomatic foundations of Orthodoxy are wrong and this fully explains its failure. From this does not follow that axiomatization is wrong. This is Leijonhufvud’s error.
Egmont Kakarot-Handtke
A note from the archives of cultural anthropology:
http://www.primitivism.com/search-of-the-primitive.htm
In Search Of The Primitive
by Stanley Diamond
(this essay is excerpted from Stanley Diamond’s book of the same title)
In machine based societies, the machine has incorporated the demands of the civil power or of the market, and the whole life of society, of all classes and grades, must adjust to its rhythms. Time becomes lineal, secularized, “precious”; it is reduced to an extension in space that must be filled up, and sacred time disappears….
…Primitive societies may be regarded as a system in equilibrium, spinning kaleidascopically on its axis but at a relatively fixed point. Civilization may be regarded as a system in internal dis-equilibrium; technology or ideology or social organization are always out of joint with each other – that is what propels the system along a given track. Our sense of movement, of incompleteness, contributes to the idea of progress. Hence the idea of progress is generic to civilization. And our idea of primitive society as existing in a state of dynamic equilibrium and as expressive of human and natural rhythms is a logical projection of civilized societies and is in opposition to civilization’s actual state.
http://www.primitivism.com/search-of-the-primitive.htm
Herb, Egmont, Bruce, going back to Lars and Tony, thanks all of you for contributing something to my understanding – not so much of the relationship between economics and reality as of the problems in our (and especially my own) different ways of expressing it. That’s making this debate, this blog, Tony’s way of raising of its issue, really worth while.
Let me respond first to Herb by quoting Egmont. OK, I can agree Dr Morgenson’s advice was for all of us, but my question amounted to: why should he address his advice to someone who was advising much the same thing, albeit in Erich Fromm’s imperative form: “Thou shalt not mistake the image for the reality”?
In light of your further comment, could I have interpreted you as endorsing rather than criticising my own? I think not, for the point at issue so far is the difference between ‘either/or’ and ‘and’ logic. If one is trying to convey a formal invariant which exists in reality but evades quantitative mathematical expression, i.e. the topological closure of a circuit, then one can only point to examples of the reality even if the example contains extraneous information which (to acknowledge Dr Morgenson’s point) might be mistaken for what was intended. Egmont is right: from that fact that an axiomatically true theory is embedded in reality doesn’t mean it is not true.
However, isn’t Egmont taking as one of his axioms the truth of Aristotle’s static logic of invariants, and in throwing out the false Orthodoxy based on the bathwater of Economic Man, throwing out with it the error correction baby of dynamic navigational logic made possible by the formal invariance of right angles, i.e. Cartesian Orthogonals? I was put on to this by G K Chesterton’s little book “Orthodoxy”: as I’ve previously said, rated by a professor of literature as “without any doubt the greatest work of English literature this [20th] century” and its author by a physicist as a “seer of science”.
This begins with the insanity of academic man [studying only theory]. It offers as a solution the forms of the Christian cross and a snake eating its own tail [if misconstruing the latter by seeing the snake and not the circuit!].
A wonderful chapter on ‘The Paradoxes of Christianity’ ends with an aphorism conveying an image of Complex Truth (what Christ the Carpenter would have understood by truth): “there are an infinity of angles at which one falls, only one at which one stands”.
At almost exactly the same time Bertrand Russell [originator of non-Aristotelian logical types] was learning the equivalent from discovery of paradox in Frege’s “sense and reference” logic. In Boolean terms, if one has a reality to sense as well as a theory to refer to, one needs two bits to indicate which is true and which (or both) of the others is false.
Add in Shannon replacing Chesterton’s snake with switching circuits performing Aristotelian logic, his feedback circuits correcting errors, and with the intersections of two looping coordinates (latitude and longitude) enclosing the whole surface of our world and even Hubble’s Bubble (the surface of an expanding universe), and one ends up with a PID servo correcting distorted or even changing data.
Aristotle’s logic remains as the special case ensuring mutual consistent of unchanging definitions not needing correction – so long as we don’t change them in practice.
So I’m seeing Egmont doing better than most, using Aristotle’s logic to make his system of formal equations mutually consistent, but not establishing they will remain consistent with a changing world and not seeing that Aristotle’s logic is one of his axioms.
Having myself worked with Shannon’s transforming unreliable information into improbable error, with hardware forms of both Aristotelian and cybernetic error control logic and with an algorithmic programming language making explicit the ordering of changes and of loops within loops in the processes realising change, I’m inviting him (and Tony Lawson, Lars, Bruce, Herb and any other bloggers reading this) to consider basing economics on a much more up to date world view in which:
(a) there haven’t always been things to change, only processes of becoming, with nothing to prevent perpetual motion (c.f. electronic superconduction);
(b) there was nothing to measure and no absolute way of distinguishing anything until we superimpose looping Cartesian coordinates as formal axioms representing absolute differences.
(c) real things change and evolution of new generic types (as against species) can be shown to involve four distinct phases (c.f. ice, water, steam and ions – which last can be free or incorporated in more complex chemical structures).
(d) control processes evolve from having an aim to being able to make short term corrections (P), make long term corrections to the aim for accumulated positional drift (I) and when necessary to change the aim temporarily to avoid approaching danger. But it is then feasible to change the aim permanently (either by mistake or deliberately), whereon if what it does is what it is, it becomes something else.
[Thus one can be naively mistaken in seeing the aim of economics as enriching oneself rather than everybody, wicked in saying that is the aim so others will let you get away with it, and evil to mass-produce theory equivalent to a compass facing south, so that those who aim to feed everybody actually feed the self-serving. That is not economics. What it does is called by Aristotle and Soddy ‘chrematistics’. It has little effect in the short term, for the steersman corrects his course by aligning it with the needle, not north or south; but the effect on long-term corrections for drift (as in the austerity of the present time) is to make matters worse rather than better].
I find it encouraging that the great Keynes, on p.16 of his General Theory, was actually fishing in these waters – no doubt with probabilities, expectations and Einstein in mind. “The classic theorists resemble Euclidean geometers in a non-Euclidean world. … [T]here is no remedy except … to work out a non-Euclidean geometry”. As I see it, economics has evolved from the Aim of a just balance in distribution recognised by Aristotle by adding the invisible hand of the negative feedback of P correction recognised by Smith, adjusting production and prices in proportional to non-clearance of interpersonal markets. In principle, entrepreneurs provide the D by diverting production from goods which aren’t selling to ones which will. Keynes I see as having proposed a non-market I correction for “sideways” drift made evident by unemployment, using redundant capacity to [re]produce goods which everyone needs but are too big to sell.
Smith’s position was “distorted” by Ricardo seeking profits in impersonal markets (rather than avoiding personal losses), and further, by Jevons et al justifying this by treating wages impersonally as costs and all markets as equilibrating [automatically clearing] product markets rather than what the “economy” had become: a money-mediated distribution heirarchy in which real profit had become mistaken for its financial image and controlled by how much credit monopolistic money markets have allowed to “trickle down”). Anti-government and monetarist extremists have argued that everything should be monetized and marketed. But Keynes added the I correction for drift, not in monetary terms but as real investment via government. This logical position was distorted by neo-classical monetary economists portraying his proposal as monetary investments by governments, the budgets of which are in fact largely controlled by tax evasion and a supply of credit from financial markets (the National Debt) mainly created by reserve banking. The net effect has been to divert regeneration from unprofitable need to investment of borrowed money in profitable large-scale private enterprises, so tax-payers money is not paying for new hospitals, railways etc but paying profits as well as interest on increased National Debts. This is manifestly not working, but the evil done by the likes of extremists like Hayek and Friedman has done its work: economists now don’t understand Keynesian error-correcting logic and are still demanding more of their same: the marketing of homelessness, education, ill-health, infrastructure maintenance etc. As I discovered in London yesterday, even going to the loo at the railway station now costs 84 times was much as it did in my youth, and near the Tower of London, 120 times much)!
Bruce, thanks for your latest commnet. I’ll follow it up, but for now it reminds me of what I was trying to say at my second comment above: that as I see it, if the PID eliminates all errors it determines the aim, and the only ways of allowing for the instrumental aims of sub-systems are by time-sharing and/or leaving a bit of slack or redundancy in the system, e.g. via generous incomes. I like to visualize the proper role of government in all this as like the conductor of an orchestra keeping everyone on song and in time and tune with each other: this of course involving a good deal of discipline and voluntary restraint on our own part.
This discussion is very cool. I am always intellectually stretched by everyone here, gratefully. Though I mainly nibble around the edges, a more curious cosmological idea than the surface of Hubble’s bubble being equidistant from big bang center is the companion observation that every thing inside the bubble shares the same exact trait.
Though with telescopes we see in every direction, is this where the idea of a flat universe fits in? Cosmos is the skin of a bubble with accelerating radius growth?
My equilibrium is clearer with your differentiation of type of equilibrium. Thank you.
Not quite, Garrett. Given Einstein’s accepted thesis that the constant speed of light is modified by bending in the presence of mass, Hubble’s Bubble is more like an atmosphere than a skin, and if you look back, you will see I said the expansion (growth) of its radius, not acceleration (expanding growth). “The companion observation that everything inside the bubble shares the same trait”? If you don’t mean “dark energy”, no! I had in mind “at some time HAS SHARED the same trait”! “Though with telescopes we see in every direction”? Are you forgetting the presence of the mass of the universe in Hubble’s Bubble bending the path of the light reaching the telescope, and the “flat” spirals of the galaxies? There is a technological analogy of this in the bending of of long-distance radio communications by means of the Heaviside layer.
Remember I said that whether to believe this or not is a philosophical, not an empirically decidable decision. We can see no further than the electromagnetic “noise” emanating from the turbulence of the early universe. My reason for being prepared to believe it is that it is consistent with what we know of our own bit of the universe and the intelligent traditions or revelations of its genesis. It doesn’t (like the atheistic Humean philosophy) leave scientists building a causeless virtual reality from an immaterial curtain of noise which obscures any reality within: used by Hume to contradict as unknowable at once the Genesis account, Aristotle’s pre-Christian arguments for a first cause, and therefore the “bite” of the Christian ethic of the Brotherhood of Man: so inconvenient to the financially self-serving..
How to look at reality
Third comment on Lars Syll’s ‘Mainstream macroeconomics distorts our understanding of economic reality’
When Galileo stood in the cathedral of Pisa and watched the swinging chandelier, as certainly many had done before him without much reflection, he asked himself: how much time does the pendulum need for a full swing and what does the period depend on?
He did not ask: do my fellow citizens pursue happiness, or do they maximize utility, or who will eventually go to heaven, to hell, or to Bedlam? He somehow felt that the chances were good that he could answer the first question and nil that he could answer the second.
As a genuine scientist he was content with the petty problem of time, length and weight and left the really big, important, interesting, fateful and insoluble questions of humankind to the so-called social sciences. And there they remained, after countless promising attempts and the application of the most powerful analytical tools, unsolved up to the present day.
When they founded science and sought the material principle of things, the ancient Greeks in effect excluded psychology. We know today that this was a wise demarcation.
Economics could not emancipate itself from the social sciences. The axioms of rationality formalize a rather unconvincing variety of psychology. There is nothing wrong with axiomatization to be sure, only with psychology (2014a). An economist who philosophizes about optimizing human behavior is dislocated — he finds himself on the wrong side of the line that demarcates science from non-science. Neither naive empirical realism, nor ill-understood formalization, nor rhetoric helps to the other side.
Demarcation may be difficult in every concrete case, but it is not negotiable. No serious methodologist could ever let orthodox or heterodox economics pass as science. The flaws are obvious and numerous.
Physicists know the Law of the Lever. And it is almost trivial. Economists cannot tell the difference between profit and income (2014b) but they are pretty sure about what is good and what is bad in the economy and, above all, who has to be blamed for the latter.
Not to forget, they are pretty sure about what a distorted understanding of reality is.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014a). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2418851.
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2489792.
This has vindicated my view of economics
Bruce [Nov 13th], I’ve now read Diamond: very interesting. Chestertonian Dorothy L Sayers has an interesting take on the earth spinning on its axis, in a sonnet in “Gaudy Night”. Her alter ego sees Oxford from the inside, as the peaceful centre of her world. Her detective Lord Peter Wimsey sees that dependent on the orthogonal tension between centrifugal and centripetal forces, and changes the model to a child’s spinning top:
“Lay on thy whip, O Love that I upright
In no lax bed may lie …”.
Her position and mine come under Diamond’s mention of “Christ’s passion”, where for sure one can be pretty certain of the reaction of hypocrites to truth, see Russell Brand’s ‘Revolution’ – Part 1, ‘The Fun Bus’; Russell Brand’s ‘Revolution’ – Part 2, The Backlash. One plants pears for one’s heirs, and little acorns – hoping that mighty oaks from these may grow. Given time.
But Egmont has weighed in, missing the point of my flexible Cartesian coordinates and Shannon’s hardware logic to make the same mistake as his ancient Greeks and Hume, the originators of both the quantitative science he adores and the ‘social science sans psychology’ he deplores. By delimiting science to the numerically quantitative he excludes the logical [dimensional] quantification, directionality and freedom of geometry and topology. But these are the very tools necessary for exploring system boundaries and the physical and behaviour-directing mechanisms of the organised psychology which Plato intuited, Christ had to deal with but Hume and the ancients couldn’t see. Since Chesterton, Jung, Shannon and the development of electronic systems architectures and instrumentation, now we can.
So, Bruce, introducing Plato, Diamond says “Even the most brilliant and fearful utopian projections have been compelled to solve the problem of the human response, usually with some direct or allegorical reference to a prior or primitive level of functioning”. Well, little men stand on great men’s shoulders, so I too have seen the need, and have mentioned my response previously. You have given me an opportunity to elaborate a little further here.
Using latitude and longitude to partition Hubble’s Bubble, i.e. an expanding universe with nothing initially to differentiate [by abstraction] but time from motion, we can distinguish only a beginning, past, present and future, with the remainder being undifferentiated energy (there being as yet no end). But energy allows us to differentiate time itself, with initially only outward motion but an asymmetry between the still empty future, the now of the Bubble and the remaining energy expanding it impeded by its discontinuity like waves crashing upon a sea shore. Such waves curl up into breakers which break up into spray in which the particles are contained by surface tension: here found in the opposite polarities of the beginning and end of a fragment of energy moving towards and away from its inner position, which bent by the turbulence of the wave-front, takes on the form of Chesterton’s snake eating its own tail. Here I must differ from current usage in physics. Though there are “fragments” of energy which are becoming or have been so self-attracted and localised, I consider ‘particles’ to be only the two stable ones (electrons and protons) apart from ‘figure of eight’ neutrons, atomic and molecular forms which combine these. Waves and things constructed from such particles account for all we can detect, leaving a residual of “dark energy” without a waveform to inform us of its presence, e.g. energy stored in unchanging magnetic fields.
Material construction can proceed one, two or three dimensionally, as molecular chains, films or crystals; sunlight can ionise these to form chains into rings, and films into tubes, or encompassing surfaces like cell walls and skins. Within these, subatomic particles and ions are more (as in electrical conductors) or less (as in insulators) free to roam, with a few materials one or the other of these depending on impurities (c.f. semiconductors and the semi-permeable membranes of cell walls). [I am seeing this via the physics of electronic materials; for biological observations see James Lovelock’s “The Ages of Gaia”, ch.5].
Discussing form here rather than detail: with cells thereby opened to food, excrement and therefore change, coalescence of two like cells led to cellular organelles and reproduction by cloning. Coalescence of two different cells led to sexual reproduction in which chains of four-protein DNA form mirror-image RNA which moulds copies of the original DNA, These are initially clones, but en masse become subject to local availability of nutrients, which differentiates them to form multi-cellular organisations.
The point of all this now begins to become apparent. Multi-cellular organisation first became tubular (as in light-sensing plants and food-sensing worms); then multi-tubular and cyclic (as animals evolved, in addition to digestive tracts, external senses to direct complex action systems and vascular systems to circulate blood); and finally tubular and twice cyclic as use of language led to a “split” human brain, reorganised to be able to sense and remember the relationships between sound, vision, action and the feelings aroused by chemically activating emotions. Hence the possibility of self-consciousness, with awareness of waiting and the transience of emotions freeing us not to act until the right action has been found: this by suppressing automatic reaction to the senses by thinking of something else. Though I am able to explain physical details from gravity to consciousness, isn’t that mechanism the point of the criticism of the garbage which now passes for economics: that most of it is distracting us from seeing what is right, enabling them to continue to do wrong?
What has not so far been discussed is what the blood circulating in our vascular system is distributing: not just energy and the oxygen to release it but also repair mechanisms in the form of clotting platelets, antigens able to recognise infections and specific memories of cures for these in the form of antibodies.
Much like Lovelock arguing for ecology as a system, Christian culture has argued that Mankind is a “Mystical Body” of human form, intended to be God’s son and supported by Earth’s ecology. Its diverse “members” (we would now say “cells”), having different functions, need to cooperate rather than compete (1 Cor 12), to share available resources as needed (Acts 3), and by an ethos (antigen) of love – forewarned with the “antibodies” of cultural taboos and moral codes (Luke 10:25-28, Mtt 5: 17-18) – to avoid conflict with the laws of nature. Whether one is prepared to believe in the Golden Rule of a Father God whose evolving household works in some ways but not others (Mtt 7:32), or with Hume, that there are no rules except what are democratically agreed by a plutocracy, is not a scientific but a philosophical choice. We can choose to appreciate merit or be jealous of it ( Mtt 25:14-40); the talented can succumb to the temptations of power or deliberately reject them (Mtt 4).
My own thesis has been that the point of Shannon’s “Mathematical Theory of Communication”, abstracting encoded forms of information from the power carrying them, was to devise generic antigens, able to detect and generate specific antibodies to neutralise the equivalents of viruses in information systems; that an economy is made up of generic family types and specific families of people using money much like our own cells use blood; in short that there is a philosophical choice between basing economics on a physical science about the transmission of power, or an information science about human communication and its physical channels of communication; on a tree-based scientific method unable to account for uncountable leaves, or an algorithmic (arabic number) method memorably re-using the same method and fewer symbols (four phases as against ten fingers) to account fully for the accumulating significance of generic differences. The first pair haven’t worked out well; the second fits in with the rest of what we have learned about God and our universe, empirically with our communicating information (e.g. invitations) rather than transmitting power (generic) to activate human powers (specific).
So, to refocus on Diamond’s comment about the compulsion “to solve the problem of the human response”, I’ve realised (after many years puzzling) that Chesterton and Jung between them have (in a generic sense) resolved it. I structurally and Isobel Briggs-Myers behaviourally have gone far enough into detail to enliven intuitive understanding of actual behaviour. There are four intercommunicating generic parts to our brains; if one of them becomes our best, two others provide its input and output and our capabilities are narrowed down because memories of the fourth tends to remain childish. Hence the problem of academic economists playing with words in their own back yard, their emotions and actions as yet inadequately triggered by their vision.
My own response has been to base my reconstruction of economic theory on a generic diagram (Leavitt’s Diamond) emphasising the interconnections between the successive outcomes of generic evolution, but given academic minds and my inability to share diagrams here I’m working on a four-column algorithmic table showing not numerals but the genera formed during successive quarters of the evolutionary clock. Though well aware of the “not invented here” syndrome and how Keynes cast his pearls before swine, in old age I am increasingly aware of limited time and my own verbal limitations, so would much appreciate academic help in making this acceptable to WEA’s “New Thinking in Economics”.
P.S. Here are the Brand links in full, since the shortcuts haven’t transmitted.
http://medialens.org/index.php?option=com_acymailing&ctrl=archive&task=view&mailid=314&key=bd1dbf45731c9f23de7f2175308eba17&subid=7628-4dbd98f68a9a6151dfca2ec5f392edfd&tmpl=component
http://medialens.org/index.php?option=com_acymailing&ctrl=archive&task=view&mailid=315&key=21a2f111133afd8e968850a5fbf01911&subid=7628-4dbd98f68a9a6151dfca2ec5f392edfd&tmpl=component
@davetaylor 1:
Dave: I am not technically a devotee to Niklas Luhmann but I do suspect that some of his acclaimed work might add some potent reflections to your own approach that is (I surmise) along similar lines of rigorous methodology as your own..
see:
Theory of Society, Volume 1 (Cultural Memory in the Present) Paperback – October 10, 2012
by Niklas Luhmann (Author), Rhodes Barrett (Translator)
and:
Theory of Society, Volume 2 (Cultural Memory in the Present) Paperback – August 21, 2013
by Niklas Luhmann (Author), Rhodes Barrett (Translator)
——————–
You might sample it at Amazon:
here:
[and]
Thank You Dave (davetaylor 1):
Stanley Diamond inspired a great deal of people with that particular work and it remains as powerful as it was when it was first published and, perhaps, more relevant to today where the disconnect is so lost in the market moment.
You might also be interested in taking a look at
Culture as Praxis (Published in association with Theory, Culture & Society) – December 28, 1998
In Search of Politics Paperback – May 1, 1999
Both titles by Zygmunt Bauman
(You can also preview his work & works at Amazon for samples of his perspective. He has been very prolific but more poetic at heart than the methodological and systems based work of Niklas Luhmann.
In fact, between the two I suppose one could say there is a continuum
between rigor and vigor)
Regards to you:
Bruce
Bruce, thank you very much for the Luhmann links. From the contents and preface it does seem he is following the same route, though his starting point is flawed by assuming that the cycle of observation changes the subject when it may merely regenerate it, tolerating rather than resolving paradox by “[making] do with a slimmed down concept of self-reference”. He is thus missing the significance of the relationships of self-referential data to languages like the scientific language Algol68: like the brain, referential at four different levels. His notes are interesting, too, apparenly referring to George Spenser Brown of “Laws of Form” glory. I’ll see if I can acquire a copy. Bauman will have to wait: it’s bed-time!
All the best
Dave
Hi again, Bruce. Having had a closer look in http://en.wikipedia.org/wiki/Niklas_Luhmann, any parallel of my thought with his looks fairly limited. He’s on about communications but equating information with complexity rather than the capacity of the symbols and encodings which are what are actually communicated; he’s reluctantly atheistic, meaning he’s not going back to the big bang; he’s misrepresenting autopoiesis by seeing systems as operationally closed. In particular he was “devoted to the Hume/Weber/Popper ideal of “non-normative” science whereas despite Shannon’s theory of communication being mathematical its ethos is error-correction and its opposition to Logical Positivism’s demand for proof is not Popper’s falsification but what one might call Positive Morality: the inclusion of parity checks, error location and error correction codes in redundant information capacity so as to be able to automatically put right what will invevitably go wrong in practice.
Glory
Final comment on Lars Syll’s ‘Mainstream macroeconomics distorts our understanding of economic reality’
“In tradition standard economic textbooks, the market phenomena are described in the framework of laws of supply and demand and market equilibrium. Historically this framework has been widely criticized over centuries by different schools of economic thoughts. However, other economic schools have not come up a different and convincing framework.” (Wayne, 2014, p. 14)
There is no understanding of the fundamental economic phenomena. This is what Heterodoxy has always criticized. So far, so good. Yet, Lawson’s new ontology/methodology also flatlined (2012), thus verifying Popper — at least as economic methodology is concerned.
“Profound truth are not to be expected of methodology.” (Popper, 1980, p. 54)
The dustbin is full. Time to come up with a consistent theoretical framework.
“It is brilliance of imagination which makes the glory of science.” (G. C. Evans, in Weintraub, 2002, p. 57)
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Crisis and Methodology: Some Heterodox Misunderstandings.
SSRN Working Paper Series, 2083519: 1–22. URL http://ssrn.com/abstract=2083519.
Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne,
Sydney: Hutchison, 10th edition.
Wayne, J. J. (2014). Fundamental Equation of Economics. SSRN Working Paper Series, 2522492: 1–31. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2522492.
Weintraub, E. R. (2002). How Economics Became a Mathematical Science. Durham,
NC, London: Duke University Press.
Egmont
I really appreciate your ability to flesh out references via the SSRN system, but in this case you, Popper and most significantly Wayne are all missing the point. You have an habitual belief in Popper, but Popper’s unprofound methodology is a Humean one. Wayne, though quite right that economics can be considered as a subsystem of physics, appears to be thinking in terms of four-dimensional particle physics rather than the physics of particle flows constrained by established channels, i.e. electric circuits, the original use of which was not for distribution of power but for railway telegraphy.
What I’m saying, in effect, is that one cannot get to know about either of these without differences within them communicating information, nor to measure them without a ruler. In short, physics has to be a subsystem of information science, which understands the measures and communication systems it has constructed. Price is such a measure, money such a means of communication, and the market system a way of escaping the laws of physics by making valuation variable over a two-dimensional surface (free to match a monetary valuation with a real one, or to seek an alternative commodity). However, the physical process of communication is line of sight, so its channel does not exist when one of the price-setters is over the horizon in the head office of a corporation. In short, the concept of a market is fine, but it only applies one-dimensionally in supermarkets and not at all when a market participant is denied the medium of communication by a banker constraining the account of an employer.
The happy end of distortion
Comment on Dave Taylor
The outstanding characteristic of physicists/engineers is that they clearly see the green cheese assumptionism of economics. Here is the key scene:
“The physicists were shocked at the assumptions the economists were making — that the test was not a match against reality, but whether the assumptions were the common currency of the field. I can just see Phil Anderson, laid back with a smile on his face, saying, ‘You guys really believe that?’“The economists, backed into a corner, would reply, “Yeah, but this allows us to solve these problems. If you don’t make these assumptions, then you can’t do anything.”And the physicists would come right back, “Yeah, but where does that get you — you are solving the wrong problem, if that’s not reality.” (Waldrop, 1993, p. 142)
And physicists/engineers draw the correct conclusion:
“When Phil Anderson first heard about the theory of Rational Expectations in the famous 1987 Santa Fe meeting, his befuddled reaction was: You guys really believe that? He would probably have fallen from his chair had he heard Milton Friedman’s complacent viewpoint on theoretical economics: In general, the more significant the theory, the more unrealistic the assumptions. Physicists definitely want to know what an equation means in intuitive terms, and believe that assumptions ought to be both plausible and compatible with observations. This is probably the most urgently needed paradigm shift in economics.” (Bouchaud, 2009, pp. 7-8)
But then physicists/engineers walk straight into the wood, that is, they apply what they have learned in their respective courses, that is, they resort to sheer toolism. See my comment ‘Yes, listen to the Econophysicists’ on this blog:
This is how marginalism, chaos theory, complexity theory and recently the Schrödinger equation came to economics. Thus, it were physicists/engineers who messed the whole thing up in the first place (Mirowski, 1995).
For the undistorted three-dimensional view of supply and demand on the product market click here:
And for the successful methodological shift from two-dimensional supply-demand-equilibrium to the correct market paradigm see (2014); it is hard stuff for physicists/engineers who cling to the notes of their introductory courses.
Egmont Kakarot-Handtke
References
Bouchaud, J. P. (2009). The (Unfortunate) Complexity of the Economy. EconoPhysics Forum, 0904.0805: 1–9. URL http://www.unifr.ch/econophysics/paper/show/id/0904.0805.
Kakarot-Handtke, E. (2014). Economics for Economists. SSRN Working Paper Series, 2511741: 1–29. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=
2517242.
Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University Press.
Waldrop, M. M. (1993). Complexity. London: Viking.
Comment on Egmont K.:
I looked at some of your papers on SSRN. I just skimmed them, but one thing I note is there seems to be alot of redundancy and some of the notation I find confusing.
Also you seem to say you want to get rid of all psychological assumptions and focus on what i guess are ‘real’ things, or ‘structural’.
But it appears all you really have are accounting identities (coupled with some sort of discrete dynamic process, so you get some time series plotted on graphs).
I have no problem with that, but I think economiocsd and social sciences do need behavioral assumptions—ie the issue is ‘why’ those particular structural or real phenomena hold. This is like ecology—you can just look at an ecosystem and measure say, flows of organic and inorganic material, energy, etc. But evolutionary biologists also look at processes of speciation and behavior of animals.
Thats why economists introduce utility functions (which really are simply dynamic analogues of say, the potential function of some chemical). Utility functions in a sense get rid of psychological assumptions about humans, and just replace them with little computers which have no real reasons for anything—-they just compute. (This is one reason why alot of humanist types hate economic thinking—-they replace love, empathy, envy, sadness etc with an equation which says that, say a person who acts out of hate is no different in pricniple than some atom in some particular ‘hating’ quantum state. Note that physics is quite psychological—-some quarks have charm, can be up or down, have color and be racially biased as a result, etc.).
Also you cited this paper by Wayne. I am actually partly sympathetic to people who apply ideas from physics etc. (eg Badiou applying transfinite set theory to communism) to other fields, but Wayne is over the top. He writes down ‘the equation for economics’ (ie something like a schrodinger or diffusion equation) and then says quantum theory explains all of social science using his intepretation. Sure—turbulence in fluids is describable using 5 goldstone modes (i can’t derive it personally though i’ve seen some of that work—Lorenz on chaos used some of those equations and goldstone modes occur many places). But he doesn’t derive in the same way that physicists his 16 goldstone modes for society. (Also his interpretation of maximum entropy is wrong in my view, though a common form, especially among libertarians —or panglossians (voltaire’s parody of leibniz)—the actual world is the best of all possible worlds. Another view is Ray Charles (american musician)—while one person is suffering, everyone is suffering, though thats not a Pareto optimal solution unless you use the 1st and 2nd fundamental laws of economics (John Roemer, i think was at Yale). I’m in between charles and pangloss; i’d call my position a sort of iterated Rawlsian view via diminishing returns—-Rawls however, like arrow-hahn general equilibrium theory (which is static) never did the dynamics; if he had, he might have realized he might have to find a new job or at least income and curriculum. But he was in the status quo, and hence just dealt with static cases. )
How about a real free market? Economists seek a market that is sustainable in reality. Many are alarmed at seeing Earth’s life support system collapsing. Regulation of life threatening pollution and effluence is economic disequilibrium, a fully functioning free market will associate cost of disruption with each product price. Laws of supply and demand will nudge civilization toward equilibrium. Distributed intelligence of cosmic powered biology expressed as human approximates the economic idea of perfect market knowledge. Economists hold these basic ideas as self evident. Obfuscators who call themselves economists make the ceaseless shrill claim that education is better than regulation of the free market; they say regulation is bad for business. This same argument can also be used to eliminate speed limits in school zones. It also implies that a free market can only profit with unregulated effluence, which results in uneconomics.
Comment on ishi
I agree with you. You are perfectly right, particularly with regard to Ray Charles (american musician) in the unforgetable scene as Nietzsche (german philospher) wandering around Lake Silvaplana (engadin, switzerland) to the tunes of ‘A la recherche du temps perdu’ (french chanson) before he embraced a horse on Piazza Carlo Alberto (turin, italy) after reading ishi.
Egmont (as Mickey Mouse):
“But then physicists/engineers walk straight into the wood, that is, they apply what they have learned in their respective courses, that is, they resort to sheer toolism”.
From an economist, isn’t this a case of the coal calling the sheep black? If the economists had understood why Maxwell’s mathematics were mistaken in their Gibbsian assumption of hypergeometic orthogonality (as the telephone engineer Heaviside did, drastically simplifying them, Newton’s calculus and the characterisation of electric circuit dynamics), they might have seen through Jevons and not imported them into economics.
“It is hard stuff for physicists/engineers who cling to the notes of their introductory
courses.”
If this dig was directed at me, may I remind you that I moved on from physics to experimental circuit and systems engineering. I’ll add that I was dissatisfied with physical theory from age 18 and picked up most of my understanding from recognising my limitations despite my courses and recognising effective answers when I found them.
Ishi, good for you.
Its possible you know this or I am repeating myself but gabriel Kron (wikipedia) showed one can translate all equations of physics into circuits and the reverse. I knew someone who applied this in biology , but i find the formalism exceedingly clumsy though it may be i am both lazy and stupid. (My main intellectual interest is ‘dimensional reduction’ or ‘occam’s razor’ colloquially, which also was Shannon’s interest or even Hilbert’s 10th problem——-what is simplest or best formalism (including school curricula)—-how many theories (or axioms) are there, how many economic journals or blogs do we need, how many jobs and hours of work are ‘optimal’, how many times should we reinvent the wheel and how many lawyers do we need to decide who gets to own the patent? In the emerging knowledge economy, it seems everyone could be a lawyer since computers along with ‘structural’ features of the economy (labor, technology) can be outsourced and viewed like the environment as a free lunch from god..
(I have actually met PhD researchers at IBM working on cellular automota who didnt know they had a differential equation representation, and another one working on the quantum hall effect who didn’t seem to understand the 2nd law of thermodynamics, but I have heard similarily that great athletes in running may not be great boxers or basketball players due to overspecialization. I like well rounded individuals, since like spherical cows they are easy to work with.
I think this is psychological—my main science profs had about zero interest in anything besides calculating things (which they often were quite good at) and the problems i was interested in they viewed as like quantifying the number of angels on a pin—so often they are dealt with by philosophers of science (eg elliot sober in biology). . This is like some economists who want to study ‘elasticity of demand for cigarettes’ (cost/benefit analyses) but not what work should be done and who should do it and who gets the product. Some people (eg J Haidt) say for example conservatives and liberals react very differently to images which are disgusting—some with pity, some with aversion—and I think intellectual (and also musical, or artistic) preferences like this are also ‘quantized’. Biologist D S Wilson calls this ‘species of thought’ but its an old idea. (He is sortuh the arch enemy of R Dawkins.)
(I was reading something about Saunders McClane who came up with ‘category theory’ as an alternative math foundations to ‘set theory’, a field I totally disliked because I thought it was redundant, and just another way of cutting the cake—start with the top versus the side—but after reading that, written by a set theorist, I changed my mind. McLane wasn’t such a bad dude after all. There’s also the chance, as Sapir-Whorf showed, learning eskimo language may provide me with new insights into reality, along with all the other 100000 languages on earth; i’ll just have to more effectively budget my time. I still havent finished reading wikipedia or my encyclopedia.)
But maybe with ‘big data’ we can now solve the problem of the Tower of Babble—the meaning or semantics of life can all be reduced to pure syntax (structural and empirically observable rather than psychological or motivational axioms), and in the limit everything will be a power law (or Gaussian if you use a logarithmic transformation )). This also solves Isiah berlin’s hedgehog and fox problem—knowing one big thing is equivalent to knowing many little things’, a sort of bootstrap (geoffrey Chew’s democracy of particles). . 1=infinity=0.(see thomas cool—boycottholland— on dividing by zero).
But I’m also a hypocrite—-i don’t want to reduce all biological diversity to one DNA string, nor make all music the same, or people either. I’m more for diversity in/coherence.
Ishi, wow. Can we ever find a way to focus on a rational approximation of reality as a specie?
Let’s enjoy this banter a little longer, as I at least am finding it reminding me of insights from the past. For instance, on that “hard stuff for engineers”, the famous riposte is that “an engineer is a person who can make for a penny what any fool can make for a pound”.
That was notable in the case of Heaviside, where rather than aping the master, economists would have done better to learn from the student who had thought through Maxwell’s mathematics for himself. (Those interestingly concerned radiation both into free space and within closed vessels). George Bernard Shaw’s riposte to that was paradoxical: “Those who can, do; those who can’t, teach”. As George Spenser Brown put that in “The Laws of Form”, “the condition of being able to learn is not already knowing”.
Knowing they and others don’t know, good teachers take the trouble to work out what needs to be taught, while leaving enough mystery to tempt students in turn into finding out for themselves. I’m thinking of the effect on me of struggling with G K Chesterton, who sadly is now remembered more for his “Fr Brown” detective stories than his essays in economics: “The Outline of Sanity”.
Knowing how much I myself don’t know – or having learned, still don’t know, or have forgotten, or cannot articulate – I have tried to followed the Delphic advice, “Know Thyself; physician, heal thy self”. In going back to mathematical basics have stumbled on two outstanding books: W W Sawyer’s “Prelude to Mathematics” and Jacques Hadamard’s “Psychology of Invention in the Mathematical Field”. In the first I discovered the secret of the engineer’s economy: topology, in which you don’t need to quantitatively account for everywhere a circuit goes to establish the logical order in which things happen inside it. The second (with more than a little help later from Chesterton and Jung), gave me some insight into why I have been a slow learner but (I was surprised when told this by my manager) a quick thinker. Life for me has been like a jig-saw puzzle, the picture on which only slowly becomes apparent but suddenly makes sense. Any remaining difficulties with such pictures are then resolved by matching the shapes of the pieces: starting with the outside pieces before there is any picture, and a gradual realisation about the inner pieces. Almost always one is matching the interconnections of just four sides.
So, “mainstream macroeconomics distorts our understanding of economic reality”. When the first transatlantic telephone cable was put down, it was discovered that speech became distorted over long distances because short sound waves travelled faster than long waves. Heaviside resolved this by slowing down the faster ones. A similar problem with long distance short wave radio not following the curvature of the earth was resolved by using long wave radio and bouncing it off a layer in the ionosphere which in his honour has been named the Heaviside layer. The academic purists of his time refused to publish his method (analogous to taking logarithms) of reducing Newton’s calculus to algebra; only later was he shown to be right. The point here, though, is that he wrote up his findings in a theory of electric circuit dynamics, which reduced electric circuits to just four types of components: one relating the others to the present, past and the future.
Is there not something to be learned here about globalisation distorting economic reality unless money (treated by today’s theorists as a good) is made to travel as slowly as real goods? To look forward to a better future we need to learn from the mistakes of our past.
The way ahead
Summary of ‘Mainstream macroeconomics distorts our understanding of economic reality’
• There is almost unanimous agreement that orthodox macroeconomics is a failed approach.
• Heterodoxy has meticulously worked out the weak spots and provided clues for improvement.
• However, Keynes’s and others’ alternative approaches are halfway houses.
• Heterodoxy is stuck in the methodological discussion about the best way to proceed.
• Helpers from other fields (physicists, biologists, historians, psychologists, sociologists, mathematicians, engineers, etcetera) have repeatedly tried their tools and tricks to no great effect.
• The definition ‘Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses’ has misled research in the direction of pseudo-sociology and pseudo-psychology.
• Looking around elsewhere for solutions does not work. Economists have to do the paradigm shift themselves.
• Ingenuity replaces critique as Heterodoxy’s primary virtue.
• There is no political presetting about what the new paradigm should look like.
• The new paradigm must only satisfy the criteria of material and formal consistency.
• Economists voluntarily refrain from giving policy advice until they have worked out the true theory.
Egmont Kakarot-Handtke
After all I’ve been saying, I’ve been glad to see you beating me to it, Egmont! Briefly, in respect to your second last comment, Energy as a label for things happening, Cartesian coordinates, Symmetry and Degrees of Freedom to change are all purely formal.
Lars, I have been brought back to your initial theme by the very recent death of Tony Lawson’s philosopher friend Roy Bhaskar, who impressed me (and from their reactions to this news, most other Critical Realists) not just as a brilliant philosopher of science (articulating in the “Dialectic” my own experience of it) but as an extraordinarily kindly man. May he rest in peace. His work now done, I would like to draw attention to it.
You (or is it Axel Leijonhufvud?) say Tony Lawson’s ontology “stresses the need to “grasp the nature of the reality” that is the object of study – and to adapt one’s methods of inquiry to it. Economics, it might be argued, has gotten this backwards. We have imposed our pre-conceived methods on economic reality in such manner as to distort our understanding of it”.
It may be thought Egmont and I, in our different ways, are simply advocating different pre-conceived ways. What we agree on is that (a) it needs to be different, and that (b) it needs to be “structural” rather than superficial. The axioms of mainstream economics are literally superficial: its Economic Man parroting the Hume who denied we can see the insides of heads. It sees cells, where science sees DNA as a double encoding of four proteins and Bhaskar sees science as a double (roughly pure and applied) specialisation of four types of scientist. Way back in 1969, I joked in my then professional journal that these should be renamed “scinoleers” rather than segregated (by the preconceptions of ignorant administrators) into supposedly brilliant scientists, clever technologists and mundane engineers. (Telephone engineers Heaviside and Shannon at least had contact with reality, and as a youth the great quantum physicist Feynman earned his pocket money repairing his neighbour’s radios. Not to forget the great project managers and systems engineers – I’m remembering Telford, Stephenson and Brunel – who orchestrate the specialisms).
Where Egmont and I disagree can be seen in the graph he links in above with a red ‘X’. “For the undistorted three-dimensional view of supply and demand on the product market click here: …”.
Sure price brings together output, stock and sales, but these are graphs, not reality, and they are graphs of one element of the economy as if it could e considered in isolation from the rest. The graph can be derived from the reality, but having the graph doesn’t produce the goods.
As I have tried to say elsewhere, the heuristic driving the updating of economic textbooks needs change from “the micro-foundations of macro” to “the macro-foundations of micro”.
Damn this blog handler stripping out blank lines!
Nov. 21 2014
M. Dave Taylor,
If only you had restricted the content of all your epistles [ including Nov. 21, 12:08 PM] to that last line ! You would have said it all !
Sounds like the main thrust of TELOS & TECHNOS. An authentically workable & truly [Popperian} ‘falsifiable’ paradigm for economics, can ONLY go “from the MACRO foundations to the micro”. Not “from the micro-foundations to the MACRO”. See p. 153 of the 197 page edition: “Why going from micro to macro is NOT obvious” .
That’s why economics is essentially “non-arithmomorphic” [Georgescu – Roegen’s term]. That’s why almost no economic relationships can be aggregated along a continuum ! See page 158 of the 197 page edition. It’s the insistent & underlying presence of the GESTALT that’s to blame. Is it possible that some of you have attempted to read TELOS & TECHNOS ? e.g. Egmont Handtke’s quote that: “Keynes is a half-way house” ? Straight out of the text of T&T.
I’m definitely not the first to have noticed the Gestalt in economic processes. e.g.Keynes, Elizabeth Hoyt, [ explicit in her Oct, 1944 article on the Gestalt in Consumer economics] Friedrich Von Wieser [Implicit in his factor imputation principle], the hapless Marxian Otto Neurath, [p.89 of the 195 page edition], Ludwig Von Mises, George Shackle, etc. Keep it up guys. I think you are beginning to see the light at the end of the tunnel. And you’ll never think about the subject in the same way again.
Norman L. Roth, Toronto, Canada. Please GOOGLE:
[1] Economics of Technos, Roth {2} Origins of Markets, Norman Roth (3) Norman Roth, Origins of Markets {4} telos & technos
Egmont and Ishi
I’d been thinking again about axioms (with mine being at a much more primitive level than Egmont’s) and our differences on scientific method, when I saw the point of all this as being to agree an effective strategy for going about what we do agree on: the need for “scrapping the lot and starting again”.
A remark by Ishi could also apply to both of us: “you seem to say you want to get rid of all psychological assumptions and focus on what i guess are ‘real’ things, or ‘structural’”. Perhaps it was that which took my mind back to about 1963, when I was reading up on the post-Baconian development of the empirical British philosophy of science I’d been introduced to in 1958, and found it being contrasted with a Continental rationalist approach due to Descartes. I’d rather forgotten that, taking for granted that both had their place, as in establishing probabilities for a dice either by throwing it or by counting its symmetries.
What just occurred to me, though, was that the axiomatic method I have been demonstrating is essentially the Cartesian method focussed not on a mind emptied by doubt but a universe emptied by not having yet evolved, as seen empirically by our instruments having allowed us to see further and further back in time. More or less as recognised by Ishi.
Perhaps one or both of you might be able to develop that theme here?
Addendum to: The way ahead
• “People who say it cannot be done should not interrupt those who are doing it.” G. B. Shaw
• “What particular reality is described by a given theory can be ascertained only from that theory’s axiomatic foundation.” N. Georgescu-Roegen
• Psychological, sociological or behavioral assumptionism cannot yield anything else than a gossip model of the world. Second-guessing the agents is not economic analysis.
• ‘Nothing is clear and everything is possible’ (Keynes) is poor science but good enough to avoid outright refutation. Inconclusiveness is the scholar’s magic cap.
• The light at the end of Norman L. Roth’s tunnel is Dave Taylor’s notebook.
Egmont Kakarot-Handtke
Ishi, Norman, Egmont: I am as embarrassed as much as you seem to be irritated about how much I’ve been “going on”, but I’ve not only been seeking understanding for 75 years: over such a long time I’ve found rather a lot of it. Nevertheless I’m still learning. Only this morning my friend told me something highly relevant to this discussion that I didn’t know: that orientals have difficulties expressing emphasis in phonetic languages because their languages use four (plus expressionless) tones to differentiate meanings much as we use five vowels to differentiate words.
Ishi, given Einstein’s version of Occam’s Razor, for me the issue is, what is “simple but not too simple”? Complex numbers able to account for direction, or commercial counting numbers which can’t? What we start off with or what we end up with? No language or 100,000 languages? Shannon’s meaningless digits or his error-correcting logic? Chomsky’s problem of how any child can end up acquiring not only knowledge but understanding from any of 100000 different languages made up as required in different contexts, or his specification of how to create one (in “Aspects of the Theory of Syntax”) that provides for the understanding as well as the knowledge? [That anyway was the source of the grammatical architecture of the Algol68 I worked with: this making sense of Frege’s “Sense and Reference” logic and mapping directly on to the memory architecture and primitive instruction set of the PDP4 micro I had already studied. Its four levels of reference plus logic words holding it all together are the equivalent of the four regions mapped out by latitude and longitude. As my friend this morning reminded me, the prime meridian didn’t have to pass through Greenwich, but historically that’s where it started, and likewise Algol68 was for me the starting point for understanding ontology as “a thing is what it does” and meaning as “what it does to me”, i.e. us or a computer].
But what is hypocritical about wanting to have your cake AND eat it? I too “don’t want to reduce all biological diversity to one DNA string, nor make all music the same, or people either”, for I also want what I can have: symbols: these being (as the mathematician Poincaré put it) “hooks to hang ideas on”. An icon of the common structural form within the diversity of DNA; a single form of musical notation whatever the music; a brain with four specialised regions wherein (as in an expanding universe mapped with latitude and longitude) any thought can be macro-assigned to one of the four regions and micro-assigned in terms of more or less use of its two adjacent regions, i.e. those connected to it as input and output. [For this last, which in human terms is critical, read up on Myers-Briggs personality typing].
Norman, if only I could have restricted the content of all my epistles to that last line: “the heuristic driving the updating of economic textbooks needs change from ‘the micro-foundations of macro’ to ‘the macro-foundations of micro’ ”! The problem is, the phrases convey nothing if one doesn’t already know what they mean. The first may be familiar to economists, but it doesn’t work. The second is not yet familiar, and over the years I have yet to find anyone, even exceptional people like Tony Lawson and yourself, showing much sign of having gone beyond understanding it as an aim, to seeing what we need to do to make it happen. I have skimmed your “Telos and Technos”, but I must follow up your comments, reading it more thoroughly to at least validate my first impressions.
Your clause about “beginning to see the light at the end of the tunnel” seems to have stirred Egmont a little: whether to cynicism or insight I am not quite sure. I’m wondering whether you used it just as a familiar figure of speech, with vague associations with birth canals or near-death experiences, or whether you were conscious of Plato’s story of the cave, and of the order of events in Genesis? Light doesn’t show you the world as it really is, but it is a necessary condition of being able to see it. Anyway, Egmont’s reference to my notebook is just, since I’ve previously explained how, frustrated in performing the duty of a scientist to publish his findings, I’m using this blog as my notebook.
Egmont, as I was answering someone else and struggling to keep my comment short, I didn’t want to disagree with you in the first part of your “The way ahead”. One point there, however, needs comment:
“Helpers from other fields (physicists, biologists, historians, psychologists, sociologists, mathematicians, engineers, etcetera) have repeatedly tried their tools and tricks to no great effect”.
Patience is a virtue; possess it if you can…”! Have you forgotten that “he who plants pears, plants for his heirs”; that it can take centuries for “might oaks from little acorns [to] grow”?
In your addendum, what George Bernard Shaw said about critics not interfering is true, but not the whole truth. When what “can’t be done” has been done, the critics can redirect their criticism to the presentation and details, or (since none of us is perfect) become a little kinder and help the doer with what they are better at than he is.
The Keynes quote is not poor science but good philosophy, encouraging practical thought and actually getting something done. “Inconclusiveness [may be] the scholar’s magic cap”, but “inconclusive” motivates the thinkers and “unconcluded” the doers.
As I said to Norman, I don’t know what you meant by your last comment, but I hope it’s true and/or good-natured banter.
Nov. 23, 2014,
Mr. Dave Taylor,
Thank you for the compliments. I don’t say anything I don’t mean. And I’m not an ill-natured old guy. And I’m in no way irritated by most of your “going-on”. But I do think that a few of you out there might just be capable of changing the way you think about our miserable, perennially inconclusive, polemic /critique- crippled subject. There are at least five others out there that I know of : Besides yourself. But I’ll refrain from identifying or commending them. Because they still have active careers.
A few words of well-intended advice for one & all. Ease up on your ‘expectations’ [oops! not entirely a dirty word] ] that macro- economics is capable of the same degree of control as a closed-loop [P.I.D.] control system. Although I’m guessing that some micro-sectors are. e.g. Inventory control systems & transportation routing optimization: They are found in every text-book in Operations Research & Linear programming for Business. I myself worked at them half a century ago in the Department store industry. Setting them up, that is. They still have a remarkably good batting average. But it would be making the fallacy of composition to assume they could be applied to “controlling” the macro-economy: or even major sectors of it. And stop “going-on” so much about whether you are being “scientific”. That’ll all “come out in the wash”.
If In the near future, possibly sometime before Christmas, I will elaborate at some length on “what I mean”. I’m glad you have kept an open mind over so many years, You’ll need it for TELOS & TECHNOS. And keep in mind something that Peter Abelard [not Eloise] is supposed to have said in the Middle Ages” “Doubt is the beginning of wisdom”. If you’re selective about it. But it’s not the completion.
Norman L. Roth, Toronto, Canada
Its altogether possible that Dave, Egmont, Norman and myself are actually all talking about the same thing except from (apparently) opposite ends of a continuum. How is that possible? Because consciousness is/can be both anything and everything. In other words both sides of legitimate Dualities are real…..but there is also a primary one.
Manifest distortions
What the 20 top heterodox economists say
In its present state, economics is unsatisfactory. Most economists can agree with this, albeit for different reasons. It is not surprising then that blaming and debunking flourish. Not much can be said against this, except that it is a detour. As Schumpeter, one of the 20 top heterodox economists (see link below), already noted:
“If we feel misgivings nevertheless, all we have to do is to start appropriate research. Anything else is pure filibustering.” (1994, p. 577)
So, what is urgently needed is a paradigm shift. Is Heterodoxy following Schumpeter’s advice? What can be seen all around resembles nothing so much as pure filibustering.
The two criteria of science are material and formal consistency. The latter is guaranteed by the axiomatic-deductive method. What does Georgescu-Roegen, one of the 20 top heterodox economists, say about axiomatization (= arithmetization in his terminology)?
“Lest this position is misinterpreted again by some casual reader, let me repeat that my point is not that arithmetization of science is undesirable. Whenever arithmetization can be worked out, its merits are above all words of praise. My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine.” (Georgescu-Roegen, 1971, p. 15)
Repeat: the merits of axiomatization are above all words of praise (if properly applied, of course, which is not the case with Orthodoxy).
Tony Lawson, also one of the 20 top heterodox economists, on the other hand does not get tired since 17 years of characterizing deductivism as the main culprit of all that went wrong in economics. “In his seminal book Economics and Reality (1997) Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject.” (see L. P. Syll, above)
It would be helpful to learn who of the two top heterodox economists is right on methodology.
We can agree that the axioms of Orthodoxy are uncertain and false. This fully explains its failure. But what about the premises and the formal consistency of Heterodoxy?
The profit theories of Marx, Schumpeter, Keynes, Kalecki, Davidson, Minsky, Keen, all on the list of the 20 top heterodox economists, are demonstrably false (2014; 2011a; 2011c; 2011b; 2013b). Despite the obvious fact that they cannot all be correct at the same time, all are propagated under the banner of pluralism as heterodox alternatives. As it happens, they are all different AND false. Real scientists would feel the need to clear up this internal contradiction and not to hail it as freedom of opinion.
Is the heterodox understanding of economic reality less or just as confused as DSGE or even worse if that is possible at all (2013a)?
By not strictly insisting on material and formal consistency orthodoxy and heterodoxy in effect cooperate on the widely visible crappyfication of economics.
Egmont Kakarot-Handtke
References
Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge,
MA: Cambridge University Press.
Kakarot-Handtke, E. (2011a). Schumpeter and the Essence of Profit. SSRN Working
Paper Series, 1845771: 1–26. URL http://ssrn.com/abstract=1845771.
Kakarot-Handtke, E. (2011b). What is Wrong With Heterodox Economics?
Kalecki’s Profit Theory as an Example. SSRN Working Paper Series, 1845803:
1–9. URL http://ssrn.com/abstract=1845803.
Kakarot-Handtke, E. (2011c). Why Post Keynesianism is Not Yet a Science. SSRN
Working Paper Series, 1966438: 1–15. URL http://ssrn.com/abstract=1966438.
Kakarot-Handtke, E. (2013a). Confused Confusers: How to Stop Thinking Like
an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
2207598: 1–16. URL http://ssrn.com/abstract=2207598.
Kakarot-Handtke, E. (2013b). Debunking Squared. SSRN Working Paper Series,
2357902: 1–5. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2357902.
Kakarot-Handtke, E. (2014). Profit for Marxists. SSRN Working Paper Series,
2414301: 1–25. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2414301.
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford
University Press.
Link to top 20: http://larspsyll.wordpress.com/2014/02/28/
top-20-heterodox-economics-books/
Norman, Egmont: sadly, we’re still at cross purposes, and Norman, I do appreciate what you are saying about active careers. Your remarks on PID and FALSE cut to the quick: I’m actually arguing with E F Schumacher’s “Guide for the Perplexed” that there are four levels of being and with “Small is Beautiful” for adequacy rather than absolutes, be it PID aims and control (“Telos and Technos”?) or Truth/Falsehood. With Arthur M Young’s “The Geometry of Meaning” I am arguing that if you try to go to a fifth level of being you are talking about a new species, much as in the algorithmic form of number, when you count up to 10 (or 2, or 4!) you start reusing the same set of symbols at a higher level of significance. Thus if you add money to “extended family” economics you get a new species (chrematistics) and if you achieve complete PID control of the economy you end up with not PID control of the economy but PID control of money.
In a nutshell, therefore, my argument is attempting to demonstrate, for Egmont, that PID originates as a formal ordering structure that can be used algorithmically to account for everything; and for Norman, that we should NOT go so far as complete PID control of money (which defeats the freedoms of markets), but rather, to separate monetarisation of the PID variables of the real economy (the four phases of the economic function: living, reproducing, distributing, maintaining/developing), so they can be separately controlled, with sufficiently generous access to credit to allow the corresponding “markets” – i.e. local to international – to respectively function intuitively, democratically, judiciously and strategically.
The substantive problem in applying this theoretical structure is the role of money: the issue of credit notes (originally receipts for the value of bank deposits) feeding back information signifying either trustworthiness (historically the Bank of Amsterdam) or distrust (the Bank of England demanding “open to abuse” enforcible barter holding hostages in the forms of deposits, work, mortgaged property or shares). My substantive claim is that sale of derivatives in the stock markets completed the monetary PID structure. My preferred solution is a “credit card” economy with generous credit limits, reproduction determined by sales and experimental production allowed locally to permit judicious licencing within an agreed policy of international cooperation.
Norman, your “Telos and Technos” and my friend’s discussion of Chinese writing have sparked off another line of thought on the huge significance, viz-a-viz empty-headed “Economic Man”, of understanding (a) brain architecture, (b) the Myers-Briggs mapping of it to personality/behavioural differences, (c) Algol68 as a mapping of human languages to information technology (i,e, programming word processing as well as mathematics), and (d) the political-economic history of languages and computational technology.
By this last, what I have in mind is China having around a thousand different phonetic languages but remaining united by having a common pictorial language. The Roman Catholic church likewise remained united (until recently) by using Latin as a common language, with Latin printed down one side of its pages and the local language down the other. Given the logical adequacy and explicitness designed into Algol68 I have been seeing that similarly as an appropriate common reference language. Isn’t such an artificial language itself an advanced form of information technology?
Before arabic numerals replaced alphabetic number form and money replaced fingers, commerce had been made feasible by the abacus; before that by hexadecimal calculators in the form of a rotating slide rule, afterwards by logarithmic slide rules able to simplify complex calculations involving percentage growths, profits and interests. Descartes did not invent the linear slide rule, he showed how to decompose rotational angles into angular and linear and measures, as may be seen by comparing “latitude and longitude” cartography (mapping “them” complementing “us”) with the ancient Mappa Mundi here in Hereford Cathedral, in which positions radiate (“self-centred” on “us”). Now: produce, transport, information technology and complex number systems are so more than ample that one doesn’t need to reduce the economy to a monetary analogue, for one can process product information, local user needs and prices simultaneously. In a credit card economy money from the cash machine still has its uses, standing in for unspecified purchase until these are actually made and thereby accounted for.
So, back to hypocrisy and active careers. I’m lucky, having had a modest but adequate pension and being now probably too old to be worth shooting; but the hypocrites crucified Christ, before that shot even the messengers carrying good news; and since then Lincoln, the inventor of greenbacks, Kennedy, about to end the Vietnam war, and lots of others like Martin Luther King, Pope John Paul II, Chilean President Allendes and Irish civil rights attorney Pat Finucane, to say nothing of very unexpected British deaths like those of outspoken economists Josiah Stamp and Archbishop Temple, Labour leader John Smith, Iraq weapons inspector David Kelly, and many others. Vast numbers of civilians as well as soldiers have been deemed expendible in profit-seeking wars or, like Christ, sacrificed themselves for the well-being of the innocent. In America just now, even a child playing in a park with a toy gun has been deemed expendable by a brainwashed militarised policemen fighting a guerilla war against terrorism rebounding from his own goverment’s militarised terrorism. But are we not right now in a profit-seeking war, and where are the economists willing to change sides and risk sacrificing their officer’s pay and even lives in defence of the viability of our planet and the survival of human generosity, civilisation, and justice?
As I see it, we have a choice between terrible piracy and insane crusades generating enemies and retribution, and taking the risk of proclaiming a true understanding in hope of converting – if not the liars – at least a working majority of the militarised and misled. Either we change our paradigm from “I’m all right, Jack” to “It takes two to tango and four pairs to quadrille”, or – as happened in the French and Russian Revolutions – self-satisfied, cake-eating leaders will continue reducing their own foot-soldiers to eating grass and shooting their own officers (the innocent along with the guilty). Unfortunately, self-admiring, self proclaiming victors have rapidly turned into another generation of Orwellian pigs, so self-knowledge and humility (via e.g. the brain architecture/Myers-Briggs explanation of “equality in diversity” or St Paul’s primitive anticipation of it) need to replace elitism in education curricula from an early age.
The new economics intuition:
• Orthodoxy is a failure.
• Heterodoxy is a failure.
• There is no alternative to the Structural Axiomatic Paradigm.
• Stop talking, start thinking.
Egmont Kakarot-Handtke
As you are not defining your terms, Egmont, this can be either a misrepresentation, your own new (so not yet informed) intuition, a mistaken summary, or a challenge. Assuming the latter, what you are seeing as “Stop talking, start thinking”, I see as “I am thinking, and starting doing”, i.e. trying to articulate, share and put on record what I am thinking about visually.
As what one sees is so much more information rich than what one hears, the length of its verbal transcription here is the price one has to pay for my not being able to illustrate what I am seeing. Anyway, it takes a lot less effort to “see” what someone is saying than it takes to find, try out and order words appropriate to both one’s audience and what one is “seeing”.
As a result of your challenge, I looked at what type of circuit had equations with the same structure as your axioms, and ended up seeing how to translate my circuit equations into your structural equations (as in your SSRN paper on “The Pure Logic of Value, Profit, Interest”). Conversely, applied to electric circuits the structure of your equations is that of a generator with internal resistance feeding distribution circuits, the power output being supply (as against generated) voltage times the current and the electricity bills being unit price times units used. This first-order view highlights wages being seen as an internal resistance to profitability (or symmetrically – from the viewpoint of wage-earners – profits being an internal resistance to having decent wages) but not that the point of diminishing returns is given by the maximum power transfer theorem: that this occurs when the load resistance is equal to the internal resistance (equivalent to total profit distribution equalling total wage distribution). Beyond this point, trying to maximise power (profits) by increasing voltage or current (prices or output) will cause the other to fall further, due to losses in the internal resistance. Hence the folly of wage reductions (which RAISES internal resistance), and Mrs Thatcher’s vision of de-industrialised societies trying to live off distributed profits. However, producers can and do try to increase profits by cutting wage bills, usually to maintain or increase output by investing in machinery. This creates a second-order stream of money from undistributed profits or indebtedness which only serves to increase indebtedness and losses if the machinery isn’t used isn’t enough, hence the capitalist tendencies to overproduction (waste) and bankruptcy, competitive third-order investment in design and fourth-order investment in production or renting of money (both the latter representing flows of information rather than physical power). These flows your power distribution circuit axioms don’t directly represent, while my Wheatstone Bridge circuit does. Significantly, where today’s economists acquire doctorates in twiddling knobs without beginning to understand the economy as a whole, quite ordinary technicians grasp circuit theoretical relationships in their first year of training, largely because they can see what they do.
We started with Tony Lawson’s “Economics and Reality” and “Reorienting Economics”.
What you are talking about is Economics, i.e. (seriously joking), hearsay, largely reduced to arbitrary generalizations misrepresented as abstract mathematics. What I’m doing is trying to articulate in words and dynamic logic the Economic Reality and dynamic logics I have seen and thought about for sixty years, Reoriented towards an information systems perspective and thereby to a catholic (for everybody) Christian perspective. At 78 I’ve no need to make a name for myself and “I can’t take this with me” so I’m giving it away!
Interestingly, the elderly Pope, who has also seen the real economy first hand, presented my Christian perspective at the EU parliament in Strasburg a couple of days ago (25th November 2014) – but without mentioning money, never mind information! See http://en.radiovaticana.va/news/2014/11/25/pope_francis_address_to_european_parliament/1112318;
http://en.radiovaticana.va/news/2014/11/25/pope_francis_address_to_the_council_of_europe/1112328.
The so-called Orthodox [representation of] macro-economics is not a failure, it is an evidently deliberate misrepresentation of Keynesian macroeconomics, which was anything but a failure (though as a pioneering theory involving a new information paradigm, as under-developed as Stevenson’s Rocket was as a steam engine). Same again with its representation of micro-economics: misrepresented as being about the wealth of nations but actually self-fulfilling prophecy about normalising immorality so as to allow the rich to enrich themselves at the expense of the poor: at which it has succeeded, if not admirably.
The so-called Heterodox recognised by the Orthodox have by Orthodox criteria failed to be Orthodox, but judged by their own varied aims (usually critical/historical analysis of Orthodox methods and outcomes, e.g Veblen on “Conspicuous consumption”, Galbraith on “The New Industrial State”, Boulding on images, organisation and “Spaceship Earth”, Mirowski on “More Heat than Light”), many have been far from failures. However, there is also a group the Orthodox keep quiet about on the principle “Least said, soonest mended”, largely because they involve ethical alternatives which worked until corrupted: the pre-Reformation Christian monastic and feudal systems (improvements on war and slavery); Ruskin’s “Unto This Last” anticipating Citizen’s Incomes (also George’s “Progress and Poverty” and Douglas’s “Social Credit on funding the same); Chesterton’s post-WWI subsidiarist Catholic Distributism; post WWII in the UK, Temple’s Anglo-Catholic school of Christian Socialism, and in Continental Europe, the Catholic-inspired Schumann/Adenauer EEC committed to deliberated international solidarity rather than fickle market choices; Catholic Schumacher on Buddhist intermediate technology, Quaker Boulding on images, organisation and “Spaceship earth”, with a sort of Ecology Defence League building around the likes of Herman Daly and Wendell Berry; Huber and Robertson on “Creating New Money” [Shhh! That sounds dangerous]! With the characters of Keynes and Marx safely assassinated, the Orthodox are busy writing them out of history. Not me, nor many others here.
I’ve said what I was going to say about Structural Axioms.
Stop talking? I was “thinking out loud” for my own clarification and the archive! But unless anyone has further questions or objections, perhaps it is time to draw this “Socratic dialogue” to a close.
Economics is different from psychology/sociology/philosophy
Comment on Dave Taylor
You say: “… perhaps it is time to draw this “Socratic dialogue” to a close.”
It seems that you have lost your way. This blog is about theoretical economics, not about philosophy. Because the philosopher’s last resort is the great solidarity of ignoramuses (I know that I know nothing), economists have to gain the widest possible distance to the morass of philosophical confusion. Scientists and philosophers have parted company long ago.
A scientific discourse (the very opposite of the filibuster of the so-called social sciences, see Feynman about cargo cult science in Wikipedia) always leads to concrete results. And here they are:
• Orthodoxy is a failure.
• Heterodoxy is a failure.
• Psychology/sociology/philosophy are out of science.
• There never was and there never can be a ‘Socratic dialogue’ in theoretical economics.
Egmont Kakarot-Handtke
Egmont: “Economics is different from psychology/sociology/philosophy”?
Yes, because the form of an economy is the outcome of a psychology adopting a philosophy congenial to it which determines the content of the economy’s sociology. The economy we have is the outcome of “Doubting Thomas” David Hume choosing not to believe what he couldn’t see, leaving economics, sociology, naive evolutionists and even mathematical physicists with a scientific method paradoxically denying causality and brains and systematically substituting mathematical points for unobservable events and static patterns in imaginary chaos for dynamic causal systems.
Had Hume been a scientist rather than a fortune-seeker, he would have been “taking things to bits to see how they worked” in the then already 125-year-old encyclopedic tradition of Baconian philosophy, accepting political ignominy as the price of dispelling ignorance “for the glory of God and the relief of man’s estate”. Likewise, Keynes’ work for the unemployed as against Malthus accepting pre-human methods of birth control and Ricardo and Jevons making names for themselves justifying the stock market scam and industrial slavery.
Asad elsewhere here is inquiring what Keynes really said. Chapter 18 of the General Theory summarizes his caring Baconian argument in terms which are clearly more about human psychology than Jevonian forces of monetary hot air. In Chapter 17 Section VI he explains why he changed his mind a few years on from his “Treatise on Money”:
“I had overlooked the fact that in any given society there is, on [the previous] definition, a DIFFERENT natural rate of interest for each hypothetical level of employment. … I had not then understood the system could be in equilibrium with less than full employment. .. It is merely the rate of interests that will reserve the status quo, and in general, we have no predominant interest in thwe status quo as such”.
Egmont says: “It seems you have lost your way. This blog is about theoretical economics, not philosophy”.
Egmont, my reference to Socratic dialogue was not to content but to a method of conducting a discussion between an experienced old fellow and young know-it-alls. The latter, like Chesterton and Shaw being paradoxical and you not defining your terms, gave Socrates the occasion to articulate his own reflections. A lesson I learned as a young man, from a kindly neighbour for whom one could do nothing for in return, was that sometimes the biggest gift one can give people is the opportunity to be themselves. For that and many thought-provoking disagreements I thank you.
For me a blog is about comment, which can be either supportive/enriching and/or challenging. This blog (i.e. the RWER blog) is about the challenge to economists: both Humean academic theorists intuiting their axioms without reference to real experience and practitioners applying academic recipes without understanding of and therefore concern about human rights and wrongs. If by ‘blog’ you mean what I refer to as ‘thread’, then this particular blog has been about unreal academic theory distorting economic reality; about real causal systems rather than overlapping academic disciplinary divisions; about Kuhnian paradigm change as seen by Lakatos rather than Popper, and science as seen by Bacon and Bhaskar rather than Humean Logical Positivists (even as logically inverted by Popper); about paradigm change in economics in the direction of human harmonisation rather than automation, of information systems rather than enforcement.
Egmont says “Because the philosopher’s last resort is the great solidarity of ignoramuses (I know that I know nothing), economists have to gain the widest possible distance to the morass of philosophical confusion”.
On the contrary, they need to pay much closer attention to the history of how science detached itself from philosophy, and the difference here between Descartes’ eye-catching phrase and the scientific method it referred to: what we would now call complete abstraction (as in mathematics) as against arbitrary generalisation. That “philosopher”‘s scientific achievements at such an early time were even more astonishing than those of Jevon’s mathematician Maxwell.
Looking back through this correspondence with Egmont for our many points of agreement as well as disagreement, his “eye-catching” quote of Georgescu-Roegen achieves both.
Egmont emphasises the first bit, changing the second word to axiomatisation: “Whenever arithmetization can be worked out, its merits are above all words of praise”.
I go with Georgescu-Roegen: “My point is that wholesale arithmetization is impossible, that there is valid knowledge even without arithmetization, and that mock arithmetization is dangerous if peddled as genuine”.
Hence Egmont’s axioms are arithmetical equations, mine Cartesian differentiations.
Dave Taylor
References [to original dates and my copies].
Bacon, F. (1604, 1906). The Advancement of Learning [and The New Atlantis]. Oxford University Press [The World’s Classics series].
Descartes: Philosophical Writings (c.1640, ed. Anscombe, Geach and Koyré 1970). London: Nelson [University Paperbacks for the Open University].
Hume, D. (1739/40, 1962/72). A Treatise of Human Nature: Book 1 (Of the Understanding), Book 2 (Of the Passions), Book 3 (Of Morals). London: Collins [Fontana Philosophy Classics].
Keynes, J. M. (1936, 1949). The General Theory of Employment, Interest and Money. London: Macmillan.
Popper, K.R. (1937, 1977). The Logic of Scientific Discovery. London: Hutchkinson.
Kuhn, T.S. (1962, 1970/96). The Structure of Scientific Revolutions. Chicago, London: The University of Chicago Press).
Lakatos, I. and Musgrave, A. eds. (1970). Criticism and the Growth of Knowledge. London, New York: Cambridge University Press.
Science is about facts
There is economic reality, which is not directly observable in its totality, and there is economics as a mental reconstruction of the real thing. With regard to the latter the fact of the matter is:
• Orthodoxy is a failure.
• Heterodoxy is a failure.
There is no economics and from this fact all thinking has to start.
Egmont Kakarot-Handtke
If orthodoxy and heterodoxy are failures then why should intelligent people look to economists at all to learn about how economies function. Look somewhere else.
Economics — an intelligence test?
You ask … “why should intelligent people look to economists at all to learn about how economies function?”
I have no idea what intelligent people should or should not do. What is well known, however, is that people with some generally accepted scientific qualification have looked at economics for enlightenment. And this is what they came up with:
“Economics is a perplexing subject. Though I have spent the better part of my academic career thinking about its aims and methods, I have never been confident that I or anyone else for that matter really understand its cognitive status. … Without assurance about the cognitive status of the theory, there is no basis of confidence in it.” (Rosenberg, 1994, p. 216)
“The physicists were shocked at the assumptions the economists were making — that the test was not a match against reality, but whether the assumptions were the common currency of the field. I can just see Phil Anderson, laid back with a smile on his face, saying, ‘You guys really believe that?’“ (Waldrop, 1993, p. 142)
Of course, we could go on for a while in this vein (see 2014; 2014; 2013).
People come to economics because they want to learn how the economy works (hopefully — but then we may second-guess until we are blue in the face). In any case, what they realize is that economists have no true theory whatever. The intelligent observer invariably arrives at:
• Orthodoxy is a failure;
• Heterodoxy is a failure.
Egmont Kakarot-Handtke
NB: Some contibutors to this blog are driven to more emotional appeals like “Sack the Economists and Disband Their Departments” seehttps://rwer.wordpress.com/2013/12/07/sack-the-economists/
References
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like
an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
2207598: 1–16. URL http://ssrn.com/abstract=2207598.
Kakarot-Handtke, E. (2014a). Economics for Economists. SSRN Working Paper
Series, 2511741: 1–29. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=
2517242.
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics:
Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2489792.
Rosenberg, A. (1994). What is the Cognitive Status of Economic Theory? In R. E.
Backhouse (Ed.), New Directions in Economic Methodology, pages 216–235.
London, New York, NY: Routledge.
Waldrop, M. M. (1993). Complexity. London: Viking.
Polemical economics: a breath of fresh air in a closed room. Thank you.
A history of double entry assessments in a world with two sets of books. Differentially stratified markets demonstrate that poverty is created astonishingly faster than any wealth creation yet economics has so politicized itself that it has no interest in preserving that massive data on humanity. Inequality is not the depth of the question, the profound depth of the inquiry should be the inhumanity of economic equivocations that make it all seem and appear so real and provable.
Regards to you Egmont Kakarot-Handtke,
Bruce
Any true ECONOMICS would be measuring the degree and progression of failure not the fallacy of growth and virtual reality of velocity over voracity.
Bruce, does that include the ground-rent for the occupation of land? It should do, even if the same number appears on both sides of the balance sheet.
This re Egmont’s reply before Robert’s, and echoing Bruce, regards to all three of you.
Yes, Science is about facts, i.e. things made as in a factory, whether or not they are what we need.
It is a fact that MANufacturing involves (a) resources (b) a pattern or plan (c) adequate tools (d) our using all three correctly.
So why is it a fact that “mainstream-macroeconomics-distorts-our-understanding-of-economic-reality”?
Is it because
(a) a God other than ourselves, a universe outside Humean heads, doesn’t exist?
(b) the patterns of main-stream macroeconomics we have made are distorted, so distorting the economies we are making?
(c) the tools we are using (like eyes unaided by telescopes and microscopes and flexible communication channels) are adequate for constructing only micro-economic patterns?
(d) so either
(i) “There is no economics and from this fact all thinking has to start”, and
(ii) Economists are still seeing and constructing patterns of flat earth economies with unchangeable events rotating in the heavens above them: indeed with vision so blinkered by the course of their own lives and the streets of the cities they have created with money made of nothing, that they cannot see their impact on an ecology recycling the resources upon which they depend, only imagine there is no economy so it doesn’t matter; or
(iii) There is a need to accept the need for macro tools like telescopes which reveal the macro problem of where to look, and microscopes which have enabled us to take the world to bits to see how it works and evolves, and communication channels (directable but flexible) through which to see and along which to act, and complex algorithmic (evolutionary) number and linguistic forms, whose orthogonal coordinates enable us to not only measure and represent main-street micro-economies but to encompass the spherical earth and its macro-economy in four topological loops; which (in summary) suffice to bound, locate in space-time, order, differentiate and represent (by repetitive use) any of an infinity of detail in memorably few symbols.
In scientific terms, “Keep things simple – but not too simple”.
Re: Egmont’s citation of Rosenberg, there has to be a first …
In biblical terms: “The stone which the builders rejected has become the corner stone”; i.e. (updating the technology a little) the keystone of the arch, the switch closing the circuit.
And again (re: Bruce’s comment, thinking of children who tell you what they think you want to hear):
“Love is always patient and kind …When I was a child I used to talk like a child, and see things as a child does, and think like a child … Now we see only reflections in a mirror, mere riddles … As it is, these remain: faith, hope and love; and the greatest of them is love”.
Kindly Roy Bhaskar is being buried Friday 5th. May he rest in peace.
@davetaylor1
Compliments to you Dave !
I am not often moved to spiritual analogies as a rule, but in this case i could not help but think that if this living earth is indeed our Temple, than economics is the care of that Temple.
In that regard I am reminded of the Cleansing of the Temple where Jesus expels the money changers from the Temple, accusing them of turning the Temple into a den of thieves through their commercial activities. While Economics may not be sacred ecology, it does ring true that we are faced with just such a circumstance and just such a mission; the only thing Economics is actually lacking…is the vision and the conviction!
Happy Holidays to you Dave!
Bruce
Peter Abelard [not Eloise] is supposed to have said in the Middle Ages”
“Doubt is the beginning of wisdom”.
…I really doubt that!
In the world of engineering, where the attempted transformation of theory into a reality consistent with our sensual characterization of it is most successful, a fundamental rule of thumb dominates decision making. It is commonly referred to as KISS — or, “Keep it Simple Stupid.” Although this article touches on some important points, the accompanying comments spin off into a complexity that quickly becomes prohibitive to all but the self absorbed. This leaves problem solvers with little to nothing to go on at a point in time when answers have become absolutely necessary. I refer to a world on the verge of self-destructing. See: http://edenorg.com/edp-001b.htm. After a consideration of this material, it should be evident that if an idea is unable to meaningfully contribute to the problems at hand, pursuing it amounts to little more than an exercise in self gratification.
Having said that, let’s try to drill down to the fundamentals inherent to our ability to propose idea. Since the term “ontology” serves a starting point for this article, it constitutes as good of a place to start as any other. Like all other terms, the term ‘ontology’ is paradoxically contrived. The Oxford/English Dictionary describes it as: “The science or study of being; 2) that department of metaphysics which relates to the being or essence of things, 3) to being in the abstract.” To begin with, “being” and the “being of things” are in no way directly relatable to one another in any meaningful way. Without the prior existence of ‘being,’ the differentiation it attributes to the world it encounters would not exist. The same applies to any ‘abstract’ reference that might be conceivable. To try and make sense out of this attempted merge of “temporally separated difference” it is necessary to look at the Mechanics of Reason.
We are shielded from the real world by way of our senses (sight, smell, taste, touch and hearing) as they react and thereby impact upon the cohesive unity of potential that we have come to call the self. Our interpretation of the result is always latent to the reality it is attempting to characterize. In other words, we are inherently late to our process of discovery. Thus, it is fair to say that all interpretation of reality suffers from “quantitative latency.” And, it is this fact that lies at the very root of human understanding, thereby providing us with the only key we have by which to make sense out of the contrasting differences that comprise the world around us — inclusive of the injustices we are obliged to suffer.
As best we can tell (or the only way that we can maintain the continuity of Its difference within the field of idea) “total power” imbibes Its possibility with an inherent diametric, so that it is cannot be obstructive to either itself or its source. Were it to be otherwise, ‘total power’ could not be differentiated from its manifestation and would thereby undergo reduction. This unique difference (total power) materializes for us as a duality which is at once instantaneous and yet simultaneous. The instantaneous aspect necessarily constrains everything to an indecipherable singularity that is unknowable. As such, It is universally alluded to as Deity, or the ordered Unknowable. Its counterpart (simultaneity) is what provides for multiplicity to mimic foundational singularity via the successful convergence of plurality in the form of unity. It is this faux form of singularity which is endlessly divisible. As such, it is the world in which we live. A world of unending process that never achieves the possibility deemed to be inherent within it.
Reflection is the foundational function of consciousness — or, the means by which the self assumes to awareness. As such, it possesses the ability to attribute primacy to either aspect of ‘total power’ as it finds form in possibility (the ‘instantaneous’ nature of space or its ‘simultaneous’ counterpart we know as time). Unable to conceptualize the absolute nature of either ‘space’ or ‘time,’ (of and by themselves) consciousness does this via their conjoined forms within the “place” of itself. It is here where they assume to relevance as space/time and/or time/space. By successively alternating the prioritization that demarcates their difference (space and time) reflection creates a (duration) within its function that is foreign to both constructs. It is here where consciousness comes to be for itself, totally dependent upon the repetitious duality of proposal, or process. As such, all differentiations are fated to be inherently incomplete and wholly subjective in nature to the entertaining consciousness.
So, what’s the bottom line here? The bottom line is that all ideas are necessarily proposed with a dichotomous component that allows for an infinity of potential relevance to any and all subjectively compromised consciousness whose potential to divine has been significantly diminished by the scars of life. In other words, no idea is capable of being proposed without giving its opposing (contrasting) idea credibility. And, in the process, subjectively compromised relevance. For every up there is a down, for every good there is an evil, etc. And yes, economic principle suffers from the same impediment.
Since much of this thinking will be foreign to you, let me summarize it. If you first consider ‘space/time’ and then ‘time/space,’ there exists between the two, a duration which continues to compound sequentially, every time the flip-flop occurs within consciousness. This duration we known as “time;” and, it is incorrectly characterized as an objective difference that is somehow separate from the successive conjoining of opposites from which it springs. Every time we flip-flop these proposals (space/time to time/space and vise versa) the duration that separates them is seen to increase. This phenomena has caused its origin to become lost to the process by which this difference arises. This has allowed disassociation to supplant association thereby allowing the premise of “objective” time to assume to prominence. Given that all consciousness comes to be in the same identical way, this misnomer has found general acceptance.
Throughout history, man has been reduced to a search for “certainty” — in order to try and fix possibility by way of a static foundation. For without this capability, the meaning and purpose of life, or the responsibilities inherent in self awareness, cannot be known. The problem here is that ‘certainty’ has proved elusive to all attempts to elucidate it, due to quantitative latency. For a consideration of ‘certainty’ you can go to: http://www.edenorg.com/edp-001.htm and peruse the “Theoretical ” branch of the schematic you will find there.
Now, getting back to economics — As everyone should be aware, the idea of economics initially pertained to the income and expenditures of the individual and/or family unit. From there it grew to pertain to larger and larger social grouping, eventually encompassing national and now global parameters. With each transition, the ability to determine specificity relative to a desired objective grew more difficult to understand and implement. Nonetheless, ideas were conceived and employed with varying degrees of success, depending upon the objectives being sought. And, in this activity, the variance inherent to dichotomy was seen to be playing itself out. Today however, as Bruce remarked, resource availability, for an ever burgeoning population, is imposing outside constraints on questionable economic practices that previously proved to be viable. Hence, a pursuit that initially was contained by expectation of advantage is now at risk of dismantling its own objective as the availability of commodities and services are externally curtailed by situation.
In other words, the object of manipulation (earth, its peoples and its resources) are now in the process of turning the table on those who previously were quite successful in manipulating them for personal advantage. Today, existing economic practices are impoverishing greater and greater portions of the population, instilling in them a basic anger that is pushing them towards revolution. Perhaps the fall of the French and Russian monarchies is about to repeat itself. Elite beware! The fly in the ointment this time around however, is that there now exists the technical capability of destroying all sentient life on earth. This in turn causes all facets of this impending upheaval to become infinitely more immediate. In this regard, I am particularly interested in seeing what your readership proposes; since, debt and development and the economic practices needed to make the equitable transition that is necessary to quell this growing anger between people and nations, remains to be fleshed out.
This particular reader proposes two things:
1. Teaching about how our social system works, so that more people are better aware of what is going on in national government regarding privilege and social injustice. It is also so that with this awareness the associated legal activity will proceed to better govern us.
2. Introduce a national ethical policy of not causing offense, starting with the abandonment of privilege due to land ownership, with the returning to society what this opportunity-holding is taking away (Land Value Taxation).
The implications of these changes are huge and should be discussed in detail once the need for change is accepted.
How might this be realistically done in the type of time frame being demanded by global dynamics? And, how might it go about effecting the larger picture? The world in which we live. We in the Western World are no longer alone here. And, as the capability for global destruction spreads to more and more elemental societies through the acceleration of communication, or exposure increases exponentially.
The scientist and the minister: an intelligent answer to a silly question
Comment on Donald Sagar
“At one point in that 100 years, Lord Ernest Rutherford was visited by a minister of the Queen. He proudly and busily demonstrated what he had learned about radio. The minister said, that’s all very good, but what is it good for. Lord Rutherford replied that he did not know, but he guaranteed that at some point the government would tax it.” (http://www.philsoc.org/2007Fall/2225minutes.html)
It is obvious from the story that Rutherford did his research without some practical purpose in mind; and that he was very satisfied that he had solved a problem that was no problem at all for anybody else.
Rutherford did not claim that he had done anything useful like saving humanity, or pulling the world back from the verge of self-destruction, or making the world a better place, or promoting the pursuit of happiness, or maximizing overall utility.
“True science is distinctively the study of useless things. For the useful things will get studied without the aid of scientific men. To employ these rare minds on such work is like running a steam engine by burning diamonds.” (Peirce, 1931, 1.76)
If economists could produce a little piece of scientific truth this would be a wonderful thing and perfectly sufficient. Alternatively they could leave science behind and change the world. For this no economic theory is needed. It is the intermixture of science and politics that is unacceptable.
To start an argument with telling the audience that the world is on the verge of self-destruction is perfectly legitimate in a political debate but counterproductive in a discussion about macroeconomic theory.
Agenda pushers of all colors, stop attempting to hijack scientific discussions! Theoretical economics is politically useless.
Egmont Kakarot-Handtke
References
Peirce, C. S. (1931). Collected Papers of Charles Sanders Peirce,
volume I. Cambridge, MA: Harvard University Press. URL
http://ssmith.no-ip.org/ebooks/_staging/pdf/Charles%20Pierce%20-%
20Collected%20Papers%20Vol.%201.pdf.
Compartmentalism is a prevailing myth that seems to have it roots in the advanced stages of quantification. In one sense it seems justifiable; since, the sheer volume of information associated with any discipline now exceeds the capability of all who would attempt to make sense out of it. Hence, in order to display at least some degree of proficiency in any given area, it is necessary to allocate unequal attention to it. What goes missing in this exercise is the inherent vulnerability within us that causes us to want to do this to the exclusion of all else. Our university systems are quite adept at utilizing this vulnerability — or, prepackaging unconscious need into the promise of recognition/acceptance and the money it serves to command.
In psychological terms, this predisposition is characterized as addictive/compulsive behavior. For some it manifests physically. This element experiences an uncontrollable compulsion to eat, drink. use drugs, or abuse time in some other way. For the more heady among us, they find recourse in immersing themselves in “content” — placing unnatural emphasis upon the necessity to somehow lay order to it. All singularly exclusive pursuits though inherently suffer from the same underlying fault. They demean the potential of those who practice them. The reason is because quantitative order is not forthcoming from a premise that necessarily presents as a dichotomy in order to gain access to temporal relevance. Hence fixation causes the individual to bifurcate, thereby separating him/her self from the true potential inherent within them — the unity (singularity) of self and the wisdom that exemplifies it.
In short, it is a falsehood to believe that one’s life and avocations do not overlap with that of all others. In some way they inevitably affect the public good, whether one chooses to acknowledge it or not. And, it is hard to believe that anyone contributing to this blog is not taking advantage of the amenities that society offers. Food, shelter, protection from those who would do you harm are but a few, all of which are essential to one’s survival — even though they are often taken for granted. So, regardless of how self important one might think they are, “No man/woman is an island unto themselves. Everyone is a part of the community of man. And, like it or not, there is an inherent responsibility that comes with that distinction. At the moment “survival itself” is being driven to the fore. For anyone to admit that they are throwing their time away in the pursuit of an objective that has no realistic import — when they could be using their talent to contribute to the greater good — is simply unconscionable. As such, it is hard to take them seriously.
I have to say that Donald Sagar, president and architect of an Eden Org which is “a cooperative venture between the not-for-profit sector and the World’s business community, … geared to provide enormous economic potential for all who choose to partner with it”, (http://www.edenorg.com/images/flyer(f).pdf ) sounds ironic when he says “the accompanying comments spin off into a complexity that quickly becomes prohibitive to all but the self absorbed”.
“Since much of [his] thinking will be foreign to [us] …”, the converse is true: much of [our] thinking will be foreign to [him]. What I at any rate have been saying is no more difficult than what he is saying. It is just that it IS in what to most people is foreign language, and requires thinking about imaginatively if one is to understand it, and that takes time which most people are loathe or too busy to give.
What he is talking about in long words I think of in terms of life being about “swings and roundabouts”, or (being trained and experienced in electronic theory and practice) the order rather than timing of events in the four-fold architecture of brains and computers, and how consciousness physically works so one can understand what distorts it; i.e. seeing what one has been taught to expect to see and not seeing where one hasn’t learned how to see. I can see how that works, but as I try to describe sequentially what I see simultaneously, already the meaning of my verbal message will be becoming distorted by our decoding processes (even my own) failing to keep up with the flow of information.
So I have a choice between following Donald Sagar, telling me I am wasting my time trying, or agreeing totally with Egmont’s response to him. Donald’s concern about the urgency of all this is valid, but mankind cannot do something it doesn’t know how to. Trying to say “What’s Wrong with the World” in words the public of 1911 might understand, G K Chesterton said “It is wrong to fiddle while Rome is burning; but it is quite right to study the theory of hydraulics while Rome is burning”. Am I being irresponsible because Donald-cum-lately cannot see this dialogue as a phase in the articulation and visualization of a multi-level understanding of both the underlying communication problem and feasible solutions, and the scientist’s reality of having to timeshare between theorising and joining in practice?
When John Locke, philosophical Father of the American Constitution, wondered in his
“Essay Concerning Human Understanding” (1690) why the native Americans, despite being obviously fit and intelligent, lived in such a primitive way, he pointed to their inability to quantify. They could count up to twenty, he said, but thereafter it was “as many as the hairs on their head”. That the feasibility of modern economics hinges on the ability of the arabic number system to express any quantity in terms of a memorably few symbols (in the digital age, even as few as two) is so embedded in practice that we rarely reflect on the theory of it.
Where my own work led me was to a similar “algorithmic” understanding of computing language, in which it turns out one needs four symbols for logical quantification – four levels of language – to account in principle for everything. I first saw this in diagram form; without diagrams the dialogue here has pushed me towards articulating the stages of evolution in tabular form. The relevance of this is that it applies to human thinking (which has to grow up) and to the economics we have thought up (which has evolved to a new state in which it is no longer economics but enslavement to the accumulation of money), and to the PID form of control in terms of which the goal of accumulation can be replaced by control of monetary distribution (“citizen’s incomes”) and the orchestration of timesharing. If Donald thinks that understanding that vision has “no realistic import”, let him try persuading the self-satisfied rich to walk rather than fly, as they may well need to.
A simple question
This is a thread about macroeconomics. The fundamental equations of macroeconomics have been formulated by Keynes in two lines:
Income = value of output = consumption + investment. Saving = income – consumption. Therefore saving = investment. (Keynes, 1973, p. 63)
Question to psychologists, sociologists, philosophers, soothsayers, econophysicists, engineers, political and theoretical economists of all camps: Is Keynes’s elementary syllogism true or false?
Egmont Kakarot-Handtke
You are making a ,mockery of Keynes intent to encourage savings. Here you are using this as a prop to validate terminology that has no intrinsic meaning. Income and output are only relative to the peg that controls their extrinsic value in exchanges and transactions that are not within this equations and are anticipated and external to the logic. The pretense that this is a syllogism of truth is a fiction in reality. it amounts to bounded rationality http://en.wikipedia.org/wiki/Bounded_rationality and its validity can not be proved or disproved beyond the language it constructs. It is valid only as applied to specific contingent circumstances and has no universal truth to it. If you are stating that this is a definition of macroeconomics than perhaps you are confusing mercantilism with middle class reinforcement to social stability through earnings and full employment.
The great danger of creating equations out of terms is that a sequence can be chopped into parts and made to appear as independent classes, when in fact they are merely demarcations. Such terms can appear further as more intricate equations that merely equivocate those terms to fit a teleological context, content and intent. Your equation is tantamount to stating that income = outcome. As such it is circular reasoning and http://en.wikipedia.org/wiki/Begging_the_question an informal fallacy.
Correct me if I am wrong.
Mistake in the first sentence: Keynes’s intent never was to encourage saving. To the contrary.
“One of the more shocking aspects of Keynesian doctrine is Keynes’ approach to personal thrift, as a drag on the economy because of the reduction in aggregate demand for produced goods and services.” (Beker, 2012, p. 111)
References
Beker, V. A. (2012). Rethinking Macroeconomics in the Light of the U.S. Financial Crisis. real-world economics review, 60: 120–138. URL http://www.paecon.net/PAEReview/issue60/Beker60.pdf.
I thought the 2 fundamental equations of economics (both macro and micro, we like to keep things simple) were conservation laws—–
say’s law: supply = demand
and bentham-jevons law : bliss=happiness=net income = benefits – costs;
you can combine these in one line: input=output or in prose ‘what goes in goes out’.
(just as the 2 equations of quantum mechanics written in Bohm-Nelson hydrodynamics form can be put in one line in Schrodinger notation—though in all cases you need one more—born’s law (and try to explain that—i dont think anyone can, though it may turn out to be intuitive common sense since it mostly says someone or something had to write the equations so you have to include that.).
(This conservation law is also called the curie-prigogine principle in nonequilibrium statistical mechanics; in math logic the same idea is seen in that all proofs are tautologies—your theorem is just a rearrangement of your axioms; godel’s proof may be the most explicit and accessible example).
Because the system is conservative, you can write it in symplectic form, and get a Hamiltonian. Many people (eg davidson) dont like this because it implies ergodicity thats not true ; many of these are only ‘piecewise ergodic’ (cosma shalizi mentions this on his blog. or see KAM theory kolmogorov-mosely-arnold) (eg sometimes you have a caterpillar whose movements may be a bit like a random walk, though you may have to include a levy walk or ballistic diffusion—when the caterpillar falls off a tree; so you can use a canoncial ensemble) but then (because a miracle happens) it turns into a butterfly; so you have to use a different ensemble. Connecting the dots is the problem, which is why you need ‘critical exponents’ and phase transition theory. (Unfortunately critical exponents and scaling laws in my view or expertise are nonintuitive and uninformative, just like the gini coefficient (which can derived from the exponents).
One problem economics has is it leaves out ‘internal degrees of freedom’ such as psychological or subjective factors (though i guess behavioral economics is trying to cure it, though that field already is commonly being applied to help people shop until they drop).
You can get the Hamiltonian formalism of say’s and bentham’s laws straight out of the original SMD theorem paper (the details are in the appendix, which i never really understood but looks similar to papers by S Smale on polynomials).Sonnenchein interwestingly also became president of U Chicago. I wonder if Milton Friedman was turning in his grave (at least he didn’t believe in government handouts, though also collected his social security, always in/consistant).
Ink-blot associations:
“The currently prevailing pattern of economic theorizing exhibits the following three characteristics: (1) a syncopated style of argument fluctuating back and forth between literary and symbolic modes of expression, (2) naive translation, or the loose paraphrasing of formulae into sentences, and (3) loose verbal reasoning for certain aspects of theoretical argumentation where explicit symbolic formulation is lacking.” (Dennis, 1982, p. 698)
References
Dennis, K. (1982). Economic Theory and the Problem of Translation (I). Journal of Economic Issues, 16(3): 691–712. URL http://www.jstor.org/stable/4225211.
This is a thread about distortion by mainstream macroeconomics. Despite what Egmont keeps insinuating, this syllogism by Keynes was a summary not of his own views but of pre-macro mainstream economics, and the point of his book about it was to reveal how it was distorted. Also, the question here is loaded by being addressed to users rather than students of logic.
To answer it anyway. The logic of a syllogism is true, but the conclusion of a syllogism is true only if its premises are true. Here the premises aren’t true, due to those with income surplus to consumption not wanting to invest it all, and those with an income deficit not able to consume all they need, so neither compensates for the other. On both counts consumption + investment < potential value of output, yet without differentiating the incomes (and timescales) of the rich and the poor, the invalidity of the original equation is not apparent. But it is invalid. Ergo the [conclusion of the] syllogism is false.
So KISS – but don't be so stupid as to throw the baby out with the bath water.
Mistake in the second sentence: Keynes’s two-liner was not a summary of pre-macro mainstream economics.
“What a tricky business this all is! In his Treatise on Money, Mr. Keynes told the world that savings and investment are only equal in conditions of equilibrium; that an excess of investment over saving means rising prices, and vice versa. In his General Theory, he told us that saving and investment are always equal, and that this is a mere identity or truism, without significance for the determination of prices.” (Hicks, 1939, p. 184)
References
Hicks, J. R. (1939). Value and Capital. Oxford: Clarendon Press, 2nd edition.
So Hicks couldn’t (or didn’t want to) understand English syntax either! I didn’t make a mistake. I deliberately distinguished pre-Keynesian micro-founded economics (in which what we now call macro-economics was implied as an arithmetical monetary summation), from Keynesian macroeconomics in which the logical ‘all’ is a human rather than monetary boundary condition, from the distorted macro-economics concocted since Keynes which is what this thread has been all about. It cherry-picked Keynes’s ideas but reimposed the inflatable money micro-foundations that have been enabling bubble-blowing con men to enrich the astute rich and impoverish the disregarded poor for more than 200 years.
As an avowed agnostic I say, God save us from a world without philosophers.
I’m glad to see someone who appreciates philosophy.
It took me awhile to find BFWR and you already said most of what I had on my mind reading through all this to get here. thanks
You are more than welcome Garrett. I’m just trying to get everyone on the same page. And, if the threat of human extinction can’t do it, it spell little hope for everyone, especially the innocent and those we love. So, for no other reason, we must continue on.
@Egmont Kakarot-Handtke:
What does seems clear from your reductive equations of how “macro-economics” is “formulated” is that the business / corporate model is the template for all relations. A market can be considered an open system but it is constructed from closed systems that provide the input (private property, for example, is definitively a closed system). Aggregate finance and market assets establish a trading and transaction models that transcend or at least establishes phase changes from the micro-economic intricacies and intimacies of economic reality, creating alternative levels of measures for components of scale and scope. Ultimately however, these levels interact but the proportions are competitively determined. The amalgamated composition of these components in transition and transactions create what I would assess as authentic macro-economic dimensions. The reality of such arrangements are seriously guarded by political and military reinforcements that are quite distinctive from internal policing and coercive domestic determination of contract and business statutes under law.
At the same time, Lumber industries exhaust their own resources, rain forest and climate depletion is rampid; Big Oil steps on everyone’s toes as it paradoxically supplies them with their “open system” under peak oil concerns that are open only for the next 50 years to come. We have the global community attempting to curtail Iceland from its livelihood for massive fishing markets;The contamination of the oceans and resources are market related http://topdocumentaryfilms.com/cove/ while the Japanese refusing to curtail Whaling; all examples of macroeconomic scope and scale. Mutually exclusive path dependencies appear between Indigenous groups forced into market redundancy all over the world and so called “developed” economies that turn “investments” into capital flight that renders entire continents subject to failure;
[excerpted]:
Capital flight is a critical challenge to economic development in African countries. While Africa receives a substantial amount of capital inflows in the form of official development assistance, external borrowing and foreign direct investment, it also suffers a heavy financial hemorrhage through capital flight.
S. Ibi Ajayi (University of Ibadan) and Léonce Ndikumana (Director of PERI’s Africa Policy Program) have edited a new collection of analysis of capital flight from Africa with Oxford University Press. The book will be available in January 2015. Select chapters are available now as PERI Working Papers. Read them here:
>>“Capital Flight and Monetary Policy in African Countries,” by Hippolyte Fofack and Léonce Ndikumana
>>“Capital Flight: Measurement and Drivers,” by Léonce Ndikumana, James K. Boyce and Ameth Saloum Ndiyae
>>“Governance and Illicit Financial Flows,” by Melvin D. Ayogu and Folarin Gbadebo-Smith
>>“Illicit Financial Flows and Stolen Assets Value Recovery,” by Melvin D. Ayogu and Julius Arbor
>>“Capital Flight and Poverty Reduction in Africa,” by Janvier D. Nkurunziza
>>“Strategies for Addressing Capital Flight,” by James K. Boyce and Léonce Ndikumana
So the corporate model of mainstream macroeconomics is a sick & sad joke, and my impression of what this thread is all about was that we are all here interested in trying to fix it.
see:
When I first began as a representative for the Association for World Education to the United Nations, problem solving required the enlistment of all Nation States directly involved in dispute. When I left this post some 5 years later, problem solving had shifted its focus to the enlistment of those corporations that had the most influence in areas under dispute. So much for government of and by the people. Money managed to co-opt power completely. That was 20 years ago. Since then the power dynamic has continued to erode in favor of an ever narrowing few. Currently, just 1 percent of the world’s population controls nearly half of the planet’s wealth, according to a new study published by Oxfam ahead of the World Economic Forum’s annual meeting. The study says this tiny slice of humanity controls $110 trillion, or 65 times the total wealth of the poorest 3.5 billion people. And, it is quite evident that they are willing to anything that is necessary to keep and improve upon their holdings. This is greed at its worst. How do you factor this into an economic model?
Let me start by saying that I don’t know what you were attempting to insinuate in the first paragraph of your response to me David. A contradiction in ideal perhaps. As you should be well aware, nothing progresses in the real world unless all contributing parties serve to gain from the endeavor. The fact that this is possible with regard to the Eden project, in no way detracts from the idealistic intent that is foundational to this proposal. So, you need to dig deeper.
Reading the comments that preceded my (Johnny come lately) contribution to this site caused me to hearken back to time spent in academia where the focus of education lay wholly upon elucidating the past and what it supposedly allowed us to know (or not know) about the future. That mentality is obviously still alive and well among academics as attested to here. The problem with fixing the parameters of a box by way of the past, and forcing impressionable minds to stay within it, is that it seriously cripples them from being able to think outside of that box for the rest of their lives. Hence, this who said what and how it was interpreted by whom lays the ground for a quagmire from which there is no escape. The reason is because transition between difference is infinitely possible.
I believe that Lars Syll and Bruce Woych correctly summed up the problem with economic theory at the very beginning of this exchange. In short, its focus is ill placed. Egmont seemed to initially agree with them by posting a litany of failures regarding the inability of the “giants” of economic theory to come up with anything concrete by which to encompass and otherwise predict a cohesive theory capable of encompassing all the variables in this equation. From there though, I sensed a subtle shift in tone that was apparently meant to give intellectual cover for the continuing effort of some to try and re-engineer the impossible. In other words, an attempt to provide them with a legitimate “pass” that allowed them to continue to play in their respective sand boxes without guilt.
If all was well in the World and technology never provided us with the capability to self destruct; and, if that capability had not fallen into the hands of imbeciles who still lay in an emotional stupor at the base of the tree from which they fell, I would be the last to complain about spending time contemplating the theoretical. For, I know that there is obviously a great deal of satisfaction that comes with each hypothetical breakthrough in the construction of an overarching principle, regardless of whether it has real world implications or not. But, times have changed and time is no longer on our side. Instead, we are now teetering on the edge of self extinction, and either we address this problem head on or forfeit any future possibility of courting the theoretical. This is a problem that is not going to go away, so the head in the sand trick is not going to work here. In fact, the expediency with which destruction can onset is improving on a daily basis. So, one needs to ask themselves why they remain reluctant to engage?
The reason seems to be tied up with out inability, as a species, to understand the actual reality of our situation. Hence, it bears further illumination. To begin with, each individual is but one person among the estimated 7.3 billion people that now inhabit this earth. Some estimates suggest that the earth’s population could reach 12 billion by the year 2100. Whatever the case, it seems pretty evident that we have already exceeded acceptable sustainability levels in many quarters. If you have not visited http://www.edenorg.com/edp-001b.htm, this would be a good time to do so. Hence, over population spells real problems for everyone. In other words, life is rapidly becoming a crap shoot with regard to what we will be subjected to in the near future — due to mankind’s inability to control its lust. As shortages occur, “greed” finds justification under the canopy of necessity. As such, it is totally unpredictable. That is why a coherent theory of economics is and will forever remain an impossibility. The volatility of “greed” prevents it.
On top of this, we have somehow come to be on a small chunk of rock that is part of an infinite number of rocks comprising the universe — a universe that also has an infinite number of stars as well as solar systems as best we can tell. Compounding infinity seems to be a contradiction, but it is the best that our number system can come up with in this case. With regard to the place of the earth in space? Well, that’s pretty much impossible to say. What we do believe we know is that the earth has 9 separate movements each of which imparts its own velocity to us. Together, it is estimated that we are traveling somewhere between 500 and 1500 miles per second. To where? Well, nobody knows. For the sake of differentiation its called the “Great Attractor.” For a more in-depth look at all this, you can go to: http://www.edenorg.com/edp-001c.htm.
So, with regard to placement (location) alone, we have good cause to feel insecure. Yet, that’s not the end of it. For those who have had to face debilitating sickness or life threatening situations, you know how disconcerting the thought of total dependency or death can be. It obscures one’s ability to focus upon anything else. So, again, the vulnerability associated with physicality further adds to our feeling of insecurity. In spite of all this, we place great emphasis upon the fact that we are. And, by way of this realization, we have come to believe that we are able to take an active role in the charting of our destiny. But, how valid is that conclusion?
From the standpoint of what we know about consciousness, only the following is self evident. There is no way that “you” can understand the you that preceded your awareness of you. This is a shortfall of the linear thought process. Similarly, there is no way that ‘you’ can understand the you that precedes the effect of you upon yourself, due to your ongoing activity which is constantly changing you. Thus, the present too is indiscernibly clouded for us. Finally, there is no way that ‘you’ can understand the you that may or may not succeed the current state of you, once your ability to maintain the continuity you characterize as you, can no longer be supported by the physicality through which it now finds form or awareness. That causes the future to be a real bust too. Hence, you are not just dealing with whatever ‘you’ may or may not think you know, but you are dealing with a missing foundation upon which ‘you’ might posit it. This is the eternal paradox that necessarily reduces everything to relativity or latent immediacy.
What we should learn from combining what we can know with what we cannot know is that the greatest demonstration of permanence or reality (for us) lies in situation. And, it is there, by addressing it, that we stand to gain the greatest insight into who and what we are. Does that mean that we are capable of changing the indelible momentum evident in every generation of man? No! Of course not. But, we can set about this task for the purpose of qualifying our own intent, the only thing that is not given to us. And, for that reason alone, it constitutes a fundamental worth to the Potential by which we have come to be that is quite literally irreplaceable. It is in this way that we finally confirm the importance of our existence in the greater scheme of things. Everything else we may or may not do pales in comparison to this. But, in order to raise intent to the level of a universal, we must accept ourselves as being an integral aspect of the society of man now. And currently, everything about the society of man has to do with trying to prevent its demise. Hence, there should be no question here, the president is already set.
While this is profound thinking, I do think it is relevant and significant in a discussion about meta- and macro- economics since these speak to the survival of global demographics. Don has simply taken this to its logical level of globalization and the feasibility (if not inevitability) of some levels called extinction.
This is Not a 15th Century derived process of inter-regional expansion, but a 21st Century one in which a financial corporation of a handful of people on Wall Street (so to speak) can literally decide the fate of the global food supply and its distribution, while think tanks plan for the inevitable clash of interests at National levels. And then of course there is the 50 year planning process and an American Century that is already contending with continent by continent supremacy and “containment. And where is Economics in all this? Plotting the course, of course. Does anyone see the property rights of containment? Economics writ small minded, I think, is what Don Sagar seems to be disgusted with seeing first hand!
I think you have encapsulated my concern perfectly Bruce. We do not live in our father’s time any more. That changed when atomic energy found form within a weapon of Mass Destruction. Oppenheimer knew that and said as much. Since then, weapons of mass destruction have proliferated, becoming more and more efficient and available, until they are now capable of actually extinguishing all meaningful life on earth as we know it. To combat this threat it is necessary to change the way we think. Previously, there was time for incremental change to find its way into the disciplines we learned to treasure. Today however, that is no longer case. Today, we need every bit of time we have left to understand and implement an approach to block this madness perpetrated by that aspect of science that has been hi-jacked by insecure fanatics, seeking an external cure to an internal malady. In effect, we need an actual (tangible) project that can yield a real result capable of moderating (via leveraging) existing madness. And, to that, we should all see the need to contribute.
Donald, you insinuated that only you had something worth saying. I insinuated “buyer beware” when what’s being sold is partnership with a World business community that enriches itself by short-changing and even enslaving its partners.
Actually, you sound like a politician: never has so little been said in so many words, and most of what little you have said I would contest if I thought it worth it. What I will ask, is what gives you the right to assume my referring to historical evidence and quoting people who have said relevant things better than I can is an attempt to brainwash the young and refuse to face up to armament and population issues that have been on my mind for sixty years?
“Insinuation” suggest an interpretation that is wholly subjective dependent upon one’s predisposition to conclude. I think you know that, so I don’t understand why you chose to even include such an oxymoron in your response. Additionally, I never said I was the “only one” who had something worth saying; so, I don’t know where you came up with that conclusion either. As far as a partnership with the “World business community” is concerned, you have every right to be “skeptical.” For, in most cases they manage to get exactly what you indicated out of all cooperative agreements, the enriching of themselves. The problem is that IF you are going to mount something that even approximates a global anything, it is necessary to get enough of those who are in a position to squelch it on board. Not all of them mind you, but enough of them with potentially competing interests to drive a wedge between them in which you can operate. Perhaps your experience doesn’t extend to this necessity.
I might sound like a politician to you, but that’s probably because you are NOT processing the information being offered as it is intended to be understood. These short excessively compact statements of meaning that reference rarefied areas of understanding, without proper context, are far more likely to be misinterpreted than my lengthier attempts to try and provide the same.
Let’s get realistic here Dave, you’ve obviously been around the block enough times to know that “if you train up a child in the way that he should go, even when he is old he will not depart from it.” Especially, when an impressionable mind is in search of a good grade. Feed him the history of economic theory and he will have a tendency to quote like a parrot whenever an issue of complexity is raised for which he lacks the creative ability to think otherwise. If nothing else, this blog is full of quotes that are all open to interpretation. Interpretation that is then being used to try and valid one’s own thinking. But, as is evident in these exchanges, this approach quickly degrades into a disagreement over whose interpretation of which “authority” is more correct. In the process of this secondary debate, the original issue is often lost.
Provide new thinking for which there is no historical basis and the chances of getting published in recognized journals are zero. On the other hand, suggest a slight deviation in thought relative to a historical work that fits into the philosophy of a publication and lace it with endless references that seem to suggest that you are one of the “Good Old Boys” and the possibility for publication opens up immeasurably. Its the old academic game. Keep the cards close to your chest and it will force all who want your blessings to come crawling.
If you feel so compelled to invoke the conservation of energy principle with regard to responding to my post, then I will distill all of my concerns down to something you should be able to find time to qualify. After all your posts are among the longest on this site. So, here it is: Do you believe that human extinction is a real and immediate threat, and if so, what are you doing to make a meaningful difference? Gauging from your response that “armament and population issues have been on my mind for sixty years, I would think that you would have come up with a concrete proposal for change by now. If so, could you please steer me to it? There is a big difference between occasionally allotting a portion of your thought to these issues and actually mounting a real effort in the real world to do something about them.
Perhaps our objectives overlap, in which case we could become allies in the attempt to try and make a meaningful difference in the World.
The end is nigh
But the choice is yours:
• psychotherapy with Donald and Dave
• fighting economic and political corruption with Bruce
• philosophizing with ishi
• abandoning land ownership with macrocompassion
• relying on the perhaps nonexisting God with BFWR
• or solving a macroeconomic puzzle?
However, choice theory suggests that taking up maximum credit and making the biggest party ever would be the rational thing to do.
Being an economist means to have the right answer to any question.
Amusingly put, Egmont, though my analysis of brain function and the corresponding Myers-Briggs behavioural mappings are not about psychotherapy so much as helping people understand in principle how brains work and differ. Members of a team doing different jobs need to understand each other’s functions objectively: well enough to avoid getting at cross purposes and into destructive personality clashes.
Again, why not different types of people doing each of the first six, like armies wearing down the enemy by attacking it on several fronts?
On choice theory we’re back on the difference between rational and reasonable: having a party only being rational if one has already made a choice between discounting an unknown future and being ready for it.
I didn’t get round to saying how excellent I thought your first reply to Donald was, especially the quote from C S Pierce. Here the characterisation of an economist is sarcastic enough to emphasise the provocative banter!
But the “choice” is yours: (?????)
• psychotherapy with Donald and Dave
• fighting economic and political corruption with Bruce
• philosophizing with ishi
• abandoning land ownership with macrocompassion
• relying on the perhaps nonexisting God with BFWR
• or solving a macroeconomic puzzle?
However, :choice theory” suggests that taking up maximum credit and making the biggest party ever would be the rational thing to do.
Being an economist means to have the right answer to any question.
==========================================================
There is no better example of selective model building upon reductive terms that provide false choices and then call this rationality to demonstrate the fallacy that establishes theory under bounded rationality and departmentalism. In the end we find ourselves under another umbrella of exclusive thinking that denies reality in exchange for a NY Times crossword puzzle version of game theory economy against the failure to account for the totality of contraindicated systems in a systemic that is literally serving wealth at the cost of sanity in a world that is now at odds with its own means of survival. Let’s not confuse moral, ethical, normative, empirical, substantive, models of what is actually happening with some jigsaw puzzle that obscures terms and gratifies the game player that solves the riddle. We are still left with terms that were constructed to fit the crossword game plan not the encyclopedia of knowledge on economic realities that we can see in the working world of order and disorder in constant transition and transgressions abound.
Being an economist apparently means self indulgent selective reasoning in pursuit of
a claim to having an answer for those dumb enough to accept it form them, And of course, if you are diagnosing what is wrong with you and the world…make sure you see your doctor for the authorized version of why the world of Oz is explainable in puzzle terms.
in the end we end up with MORE of the SAME, but in different terms. Pay the Bill please.
I had hoped for an apology, especially for this in this Critical Realist thread context: “For anyone to admit that they are throwing their time away in the pursuit of an objective that has no realistic import — when they could be using their talent to contribute to the greater good — is simply unconscionable. As such, it is hard to take them seriously”.
No realistic import AS YET. It is difficult enough to work at what needs doing – what Tony Lawson called “underlabouring” – without having people scornfully thrusting it into our face.
That most people are so superficial and what you call “bifurcated” is why they see only the falling house, not that the problem lies in its foundations; not that their four-function brains with its ability to create self-fulfilling prophecies are its foundations: its content having to “grow up” via automatic acquisition of skills by laying down neural pathways programming mastery first of action, then of sense, then of cooperation and belatedly of judgement, whereby habitual mastery of cooperation by means of language can lead to the reality not being looked for and so sound judgement not being acquired.
That brain architecture has changed little on evolutionary timescales means one can legitimately point to the historic stories of the worship of the Golden Calf (money) and the Faustian bargain with the Devil (power through self-worship) as articulations of this problem. So my concrete proposals for change build not on confrontation with the financiers and the military but on working for their “conversion” by importing the concept of “complex truth” into education to formally distinguish appearances from reality, enabling the building of a consensus about what money really is (our own IOU’s – to our benefactors in society, not to banks) and the folly of fighting to acquire indebtness.
What I see as needing to be concretely built is a credit card economy in which individuals, local communities, functional firms and parliamentary governments have earned limits on their potential indebtedness and are responsible for mankind earning its keep by doing what is needed to regenerate what it has consumed, including ourselves and our educations. I envisage on-going learning to do this by timesharing between local maintenance, development, art and competitive striving for quality, and energy-efficient, environmentally confined reproduction, distribution and recycling of what we have consumed. This is not so far from what we already have as to be “without realistic import”.
I keep arguing that the condition of global population control is the self-control of local populations, which requires simple policy agreements and information feedback about local pregnancies and deaths which is not currently being provided.
“Do you believe that human extinction is a real and immediate threat, and if so, what are you doing to make a meaningful difference?” Of course I do, and I do what I can to prevent the immanent extinction of my neighbours by theft of their property, loss of community support and subsequent ignorance, ill-health and starvation. But I was long ago confronted with a choice between being prepared to believe the Christian story of what life is all about and an ignorant “scientific” dismissal of it, and over that “sixty years” I have found more reason to trust the Christian one and live in hope of God’s mercy than than in a self-centred Humean atheist denial of it leading some to paralytic fear of death and to the sort of “enjoy life while you may” escapism portayed in Nevil Shute’s novel “On the Beach”.
So, it seeming that “God has no hands but ours”, I pray that God will put off the inevitable for a little longer yet by doing what an oldie can still do to make that happen, i.e. gratefully pass on what he has learned through living – in my case as a humble yet extraordinarily privileged scientist standing on great men’s shoulders – in the thick of the greatest explosion of scientific understanding – i.e. of information – since the time of Newton.
Listen for your position and mine in the following extract from Dorothy L Sayers’ “Begin Here”, written at the beginning of the Hitler war and a prelude to the 1941 Anglican conference on economics in Malvern, which probably influenced Christian opinion sufficiently to enable election of the UK’s decent Attlee government of 1945-51.
“The end of one civilisation is the beginning of another, and it is the men who are living through the collapse of the first which will decide the nature of the second. When things look dark and difficult, there is a very natural tendency to procrastinate – to push the future away into the future. “We cannot do anything about it now”, we say; “when the war is over it will be time to begin”. That will not do.
“Whatever it is we are fighting for, now is the time to see about getting it. Otherwise, when the war is over, we shall find ourselves unprepared, and the aim we set out to achieve will remain exactly where we put it – far away in the future. …We ask ourselves, “What is the use of making schemes that may never be wanted ?” The answer is that they ARE wanted’ that we want them now, and that if we want a thing badly enough, we can make it happen.
If we let ourselves be discouraged, that is a proof that our wanting was inadequate, and that the future lies in the hands of those who, more energetically, wanted something else”.
I did not expect any indication of sensitivity by you David, given the art of projecting objectivism evident in your previous offerings. I also did not expect the degree of personableness evident in this response. In a word, it is refreshing. I elected to push the issue of actual (tangible) accomplishment, because I sensed to much squirming around in the subterfuge of the complex construction of ideas in evidence on this site — something that is counter productive to addressing the real necessity at hand.
I also want to compliment you on your ability to see that our problems lie in an inability to envisage their foundation. I’ve dropped the plural sense of what you indicated (foundations), because all plurality arises (for us) out of singularity; and, inevitably merges back into singularity in the form of unity. Yes, we are predisposed to see reality as being segmented, because reflection is the means by which difference comes to be for us. Due to that, we tend to affix certitude to successive parts of completeness as though they represent the whole. Something, which impedes our ability to envision the whole properly.
Your proposal for change has undoubtedly had a valid run at achieving the same; but today, there is a new fly in the ointment. Forgive me if I keep repeating this ad-nauseam, but the ability for global destruction has inalterably changed the equation. It has done this by altering the availability of sufficient “time” in which to achieve objectives. It’s good to know what money is, and how new money is generated off the back of indebtedness. But, we need a real (tangible) mechanism that is capable of encouraging the complacent to seek answers to the many issues that are most threatening to human survival, while rewarding them for doing so. This mechanism must likewise provide a global forum where the most applicable thinking can undergo consideration for adoption into main stream dynamics. And, the only way that you are ever going to get sufficient substantive participation to achieve something of this magnitude (global) is to drive home the threat of “mutual annihilation.” In other words, to cause everyone to rightly believe that it doesn’t matter how rich or poor one is, what the color of their skin may or may not be, or which God they elect to worship. When it comes to weapons of mass extinction, they play no favorites.
You say that “your concrete proposals for change do not build on confrontations with the financiers and the military.” Which, is a wise decision. Because, their reaction would be to squash you if they felt you to be a real threat to them. In spite of this reflex action, they still need to be confronted in dialogue if there is ever to be any hope of change. And, that dialogue needs to begin now. The question is how do you get their attention? You say:
“What I see as needing to be concretely built is a credit card economy in which individuals, local communities, functional firms and parliamentary governments have earned limits on their potential indebtedness and are responsible for mankind earning its keep by doing what is needed to regenerate what it has consumed, including ourselves and our education. I envisage ongoing learning to do this by timesharing between local maintenance, development, art and competitive striving for quality, and energy-efficient, environmentally confined reproduction, distribution and recycling of what we have consumed. This is not so far from what we already have as to be “without realistic import”.
Kudos to you for your construction of thought Dave. In an ideal world it undoubtedly offers a practical solution to the instability that economic transience causes. The problem is how to implement it in a world teetering on the verge of self extinction. Obviously, it would have to be done covertly, for existing power structures can not be counted on to allow their spheres of influence to be degraded accordingly. I keep coming back to this theme of a ‘tangible working approach’ that can impact in real time, because without one, mankind might just well bend over and kiss its collective ass good-bye. (As a side note, are you familiar with the work of Ellen Brown)?
China had a policy of population control in place for a number of years that actually provided real results. But then, it didn’t have to contend with the philosophy of religion. If you remember, in 1994 the United Nations coordinated an International Conference on Population and Development in Cairo. The conference received considerable media attention, due to disputes over the right to reproduce. The Holy See and several Islamic nations were staunch critics of any attempt to curb reproduction; and basically, the whole thing went nowhere. The mentality necessary to turn this problem around is still not in evidence, making this issue something that we need to contend with in the short term, as opposed to immediately resolving.
I pushed the point of human extinction as a real threat in order to provoke an admission regarding the obvious. And, you didn’t fail me. It’s not that I believed that you could deny this threat and the imminent responsibility it engenders, because it is obvious that you are an intelligent person. What I was looking for was the scope of your application and you have given it to me — unabashedly. For that I thank you.
The core of Christian theology and the responsibility it promotes is rightly contained in the idea of “do unto others as you would have them do unto you.” This theme also pervades most other religions. Unfortunately, its meaning has somehow got corrupted in translation. In many quarters, it has come to mean “do unto others whatever you can, so you can better provide for those you love.” As situation would have it, in the eyes of the ignorant the “self” has come to top the list of those one loves. In doing so, it successfully defeats the initial premise. So, even in religion there is the need to extend one’s understanding of its foundational premises relative to the whole of its purpose, in order to reap the benefit of the hope and faith it might provide.
Whether Deity will intervene and when is obviously up for grabs. Given the atrocities already visited upon the earth, you have to wonder why It has not done so already. Regardless of the reason, we still have a moral/ethical responsibility to do what we can to make things better while we are still able. And, elevating science to the stature of savior is not a good bet. For everything positive that it is capable of providing, a negative application sits waiting in the wings. So one needs to ask one’s self if this “explosion” of questionable information is really our friend or our eventual undoing?
The quotes you provided by MS Sayers undoubtedly had application when it was mouthed, but her generation was not facing total annihilation like ours. For them, “time” still had the promise of playing itself out via succeeding generations. We live in a totally different ‘time’ that is not relevant to the ‘time’ that preceded it. That’s because the manifestation of potential in evidence has caused a fundamental disassociation in its process. I understand the tendency to look back on the past as a means to establish some kind of relevance in the present, but we cannot afford to continue to cling to outdated concepts in ‘time’ that cannot address the immediacy of our current situation.
I believe that you are correct in thinking that “If we let ourselves be discouraged, that it is a proof that our wanting was inadequate.” However, let’s not deceive ourselves into believing that the first part of this statement validates the conclusion “that the future lies in the hands of those who, more energetically, wanted something else”. This follows only if sufficient ‘time’ can be guaranteed to exist in the greater equation. When the future itself is the very thing at risk, that is no longer the case.
Well, yes, but. What exactly are you expecting me to do at 78? What I would like to do is to encourage financiers and/or the military to invent for themselves a “multi-level, no interest, repay when you can by doing what needs doing” credit card economy, but to motivate them, the truth of money representing negative rather than positive value (i.e. debt rather than wealth) needs to go viral, which is not yet the case, c.f. the campaign for positive money. Until it does I can’t see the financiers and military listening. So, what I am doing at 78 is to keep planting acorns.
The best (and most Christian) rationale I can think of is the credit card, with our balance starting well below zero to account for the credit given us by God, Lovelock’s “Gaia”, our parents and society in order to get us to the point of being able to earn our keep. Then the objectives become to repay and minimise our debts to society and earn respect for our reliable generosity, not to wage wars to/or acquire or retain wealth. I’ve previously called this a “hitch-hiker” economy, in which imitation is the sincerest form of gratitude.
Incidentally, sure lots of Christians haven’t grown up either, but the Holy See has for along time not been against birth control as such, only against contraception as a hedonistic alternative to responsible learning of self control and harmonisation with fertility rhythms.
Yeah, it makes sense
Comment on ‘Mainstream macroeconomics distorts our understanding of economic reality’
There is theoretical and political economics. Confusion is the natural habitat of political economists. Problems are not solved but kicked around until they are overloaded or muddled up beyond recognition.
This is the paradigmatic case:“What a tricky business this all is! In his Treatise on Money, Mr. Keynes told the world that savings and investment are only equal in conditions of equilibrium; that an excess of investment over saving means rising prices, and vice versa. In his General Theory, he told us that saving and investment are always equal, and that this is a mere identity or truism, without significance for the determination of prices. As far as I can make out, there are relevant and important senses in which all these statements are each of them right and each of them wrong. (Hicks, 1939, p. 184)
An economist makes sense of anything.
Let us call the drive to nudge any question to the point of inconclusiveness, overload, or peaceful cohabitation of manifest contradiction the Hicks-Drive. It is a — spontaneous or conscious — scientific survival strategy because: “… you cannot prove a vague theory wrong.” (Feynman, 1992, p. 158)
Or, as Mirowski put it: “With enough fog emitted, almost anything becomes possible.” (2013, p. 344)
Keynes recommended evasion:
“Another danger is that you may ‘precise everything away’ and be left with only a comparative poverty of meaning. … Such a problem was avoided, said Keynes, by Marshall who used loose definitions but allowed the reader to infer his meaning from ‘the richness of context’.” (Coates, 2007, p. 87)
And Walrasians practiced it:
“Trying to pin down down the essential ideas is sometimes difficult because neoclassical economics always seems to be a moving target.” (Boland, 1992, p. 213)
And, while it is of course true that formalization, too, can be abused and misapplied, with this paradox Keynes inadvertently became the patron saint of all muddle heads:
“Formalization of even a part of what goes into our common sense understanding of society would be, as he [Keynes] said “prolix and complicated to the point of obscurity.” Theories constructed with vague concepts paradoxically can maximize precision and economy.” (Coates, 2007, p. 8)
The Hicks-Drive includes preemptive vanitization:
“There is no objective truth in economics. Nobody understands the whole picture. Everybody gets a piece of it.” (Roosevelt http://larspsyll.wordpress.com/?s=Understanding+capitalism)
To flesh out the futility of thinking, economists often invoke Heisenberg’s Uncertainty Principle, the Duhem–Quine Thesis, Goedel’s Proof or other kinds of impossibility theorems. After all, when an economist cannot solve a problem, nobody can.
With this economics became – what sounds like an oxymoron — a pluralistic science.
“Within the whole of his [the economist’s] science, or what he insists on calling science, no generally recognised result is to be found, as is also the case for theology and for roughly the same reasons; there is no single doctrine taken to be a scientific truth without the diametrically opposed view being similarly upheld by authors of high repute.” (Wicksell, quoted in Deane, 1983, p. 8)
All this makes teaching easy, and the next generation, again, is not much bothered with unpractical concepts like scientific truth.
“This dynamic adjustment story may or may not be true; in its simple form, it is believed by only only a few economists. We taught it nonetheless because, given the assumptions, it is a logically consistent story, and for most students, it meets the ‘Yeah, it makes sense’ criterion.” (Colander, 1995, pp. 169-170)
An economist makes sense of anything — except reality.
Egmont Kakarot-Handtke
References
Boland, L. A. (1992). The Principles of Economics. Some Lies my Teacher Told Me.
London, New York, NY: Routledge.
Coates, J. (2007). The Claims of Common Sense. Moore, Wittgenstein, Keynes and
the Social Sciences. Cambridge, New York, NY, etc.: Cambridge University Press.
Colander, D. (1995). The Stories We Tell: A Reconstruction of AS/AD Analysis.
Journal of Economic Perspectives, 9(3): 169–188. URL http://www.jstor.org/
stable/2138432.
Deane, P. (1983). The Scope and Method of Economic Science. Economic Journal,
93(369): 1–12. URL http://www.jstor.org/stable/2232161.
Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hicks, J. R. (1939). Value and Capital. Oxford: Clarendon Press, 2nd edition.
Mirowski, P. (2013). Never Let a Serious Crisis Go to Waste. London, New York,
NY: Verso.
Some nice references: I must get hold of this new Mirowski book. Thanks for the delicious repartee here and for keeping the discussion going.
Going beyond error and distortion
Comment on ‘Mainstream macroeconomics distorts our understanding of economic reality’
The economy is a complex system. That is not much more than a truism. Because it is impossible to directly observe the actual economy in its totality, the first task is to create a simplified mental representation. As a matter of fact, what is needed for good methodological reasons is the simplest possible description of an economy. And since very much has to be left aside, this description is not in the trivial sense realistic. Just the contrary, it is highly abstract.
“There can be no doubt whatsoever that a problem which has not yet been solved in all its aspects under its simplest conditions will be still more difficult to tackle if other, “more realistic” assumptions are being made.” (Morgenstern, 1941, p. 373)
All depends on whether the abstraction succeeds. Keynes bore the challenge and dealt with the very first task of macroeconomics. He gave the following elementary formal description of the economy:
Income = value of output = consumption + investment. Saving = income – consumption. Therefore saving = investment. (Keynes, 1973, p. 63)
Since theories have an architectonic structure it is clear that if there is a fault in the formal foundations the whole superstructure of the theory is vulnerable. Actually, the fault in Keynes’s two-liner is in the premise income = value of output. This equality holds — see the formal proof in (2011) — only in the limiting case of zero profit in both the consumption and investment good industry.
Profit does not appear in Keynes’s elementary formalism. That is, he in effect talks about capitalism without profit. Note well that Walras’s economy was also a zero profit economy. Obviously, neither approach provides an acceptable description of the market economy.
As a matter of fact, Keynes’s conceptual problems started with profit:“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson und Bezemer, 2010, p. 12)
This failure kicked off the chain reaction of errors/mistakes because when profit is not correctly defined, income is not correctly defined, and then saving is not correctly defined. By consequence, all I=S models, including the long-lived workhorse IS-LM, are logically defective (2014). Since the days when Keynes wrote down his faulty syllogism, the representative economist realized nothing.
Keynes’s economy is still not simple enough. First of all, the two sectors have to be reduced to the pure consumption economy. This alters the foundational formalism. The most elementary economic configuration, i.e. the pure consumption economy, is defined by:
(i) Yw=WL wage income Yw is equal to wage rate W times working hours L, (ii) O=RL output O is equal to productivity R times working hours L, (iii) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
For the graphical representation see:
At any given level of employment L, the wage income that is generated in the consolidated business sector follows by multiplication with the wage rate. On the real side output follows by multiplication with the productivity. Finally, the price follows as the dependent variable under the conditions of budget balancing, i.e. C=Yw and market clearing, i.e. X=O. Note that the ray in the southeastern quadrant is not a linear production function; the ray tracks ANY underlying production function. Note also that it is methodologically inadmissible to take the assumption of decreasing returns into the premises. This dilettantism is known since antiquity as petitio principii.
If the wage rate W is lowered, the market clearing price P falls. If the number of working hours L is increased the price remains constant, provided productivity R does not change. If productivity decreases the price rises. If productivity increases the price falls. In any case, labor gets the whole product, the real wage is invariably equal to the productivity, and profit for the business sector as a whole is zero. All changes in the system are reflected in the market clearing price.
In the next period, the households save. The result is shown here:
Consumption expenditure C falls below Yw and with it the market clearing price P. With perfect price flexibility there are NO unsold quantities and NO change of inventory. The product market is always cleared and there is no such thing as an inventory investment. So we have household sector saving but no business sector investment, that is, saving which is given by S=Yw-C is NOT equal to investment I=0.
The crucial conclusion is that the business sector makes a loss which is exactly equal to the household sector’s saving, i.e. S=-Qm. Therefore, loss (and NOT investment) is the exact counterpart of saving; by consequence, profit is the exact counterpart of dissaving.
And this is why all stories that economists tell about the functioning of the market system and the price mechanism are false. Household sector saving has never been equal and will never be equal to business sector investment.
The general relationship between monetary profit, distributed profit, investment and saving is given by:
https://commons.wikimedia.org/wiki/File:AXEC09.png.
How could economists get the basics so badly wrong? This is the question for future historians of economic thought.
The fact of the matter is:Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor Econophysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit (cf. Desai, 2008). Hence, ‘they fail to capture the essence of a capitalist market economy’ (Obrinsky, 1981, p. 495).
Because he cannot tell the difference between profit and income the representative economist has a distorted understanding of economic reality. Economics is a science without scientists.
Egmont Kakarot-Handtke
References
Desai, M. (2008). Profit and Profit Theory. In S. N. Durlauf, and L. E. Blume
(Eds.), The New Palgrave Dictionary of Economics Online, pages 1–11. Palgrave
Macmillan, 2nd edition. URL http://www.dictionaryofeconomics.com/article?id=
pde2008_P000213.
Kakarot-Handtke, E. (2011). Keynes’s Missing Axioms. SSRN Working Paper
Series, 1841408: 1–33. URL http://ssrn.com/abstract=1841408.
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of
Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2392856.
Keynes, J. M. (1973). The General Theory of Employment Interest and Money.
The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke:
Macmillan. (1936).
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political
Economy, 49(3): 361–393. URL http://www.jstor.org/stable/1824735.
Obrinsky, M. (1981). The Profit Prophets. Journal of Post Keynesian Economics,
3(4): 491–502. URL http://www.jstor.org/stable/4537615.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and
Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34.
URL http://mpra.ub.uni-muenchen.de/20557/.
“Because he cannot tell the difference between profit and income the representative economist has a distorted understanding of economic reality. Economics is a science without scientists.”
====================
The problem with reduction in model building is always in the measure and definition of its terms. I think your insight here is extremely valuable, but you seem to ignore its evidence as being a product of the artificial construct of theory itself and you fail to take this to its vigorously applied implications and conclusion. The question I raise to you is whether you are confusing “economy” with the economics of capitalism in Western business-related terms and market instruments while ignoring the greater universal question of what “ECONOMY” substantively and universally entails over and above the business model? Polanyi and Keynes both read the real world first and then used explanatory descritptive terms that had tangible (asset based) terms. You stand as a critical thinker in epistemological suit of reform, but seem to accept the armchair ivy league protocol of conditional theories as the foundation that simply needs a new cover story to improve its validity but fail to define the perverse distortion at the foundation itself.
Your exchanges have been challenging and the links are interesting, but are you out to inform the entire scope or reform the acceptable scale of its terms?
Think faster
Comment on Bruce E. Woych
You write: “Polanyi and Keynes both read the real world first and then used explanatory descriptive terms that had tangible (asset based) terms.”
Being social scientists, Polanyi and Keynes looked at the world and then gave a description. This is what most people understand as realism: it is commonsensical and convincing. Unfortunately, this kind of realism leads straight to flat-earth theories.
J. S. Mill, still the greatest methodologist among economists, said about the real-world-readers:
“People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, … , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.” (Mill, 2006, p. 783)
Marx, too, looked at the world and then gave a description. His description of the dynamics of the capitalist system is far superior to General Equilibrium Theory. However, Marx was quite explicit that science goes beyond description:
“That in their appearances things are often presented in an inverted way is something fairly familiar in every science, apart from political economy.” (Marx, 1990, p. 677)
Mill and Marx knew what science is all about: seeing through the appearances. Keynes, too, tried but did not succeed.
Bruce E. Woych as outspoken ‘bigot of common sense’ has some way to go until he can contribute something useful to a discussion about the “greater universal question of what “ECONOMY” substantively and universally entails over and above the business model”.
The greater universal question entails in any case that the representative economist can tell the difference between profit and income. Economists are late by more than two hundred years.
Egmont Kakarot-Handtke
References
Marx, K. (1990). Capital, volume I. London: Penguin Classics.
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation,
volume 8 of Collected Works of John Stuart Mill. Indianapolis, IN: Liberty Fund.
Switching bases is another trick of obfuscating via terms that attempt to alter the foundation of an argument. Realism, can be many things. Extensions infered are not necessarily all within the same domain except as you link them to the wide open class and then presume a guilt by association within that class. When you critique Polanyi and Keynes by refering to the empiricism of other individuals you do no one justice. Polanyi and Keynes addressed reality and did it with observation, measures and applications of terms they concluded on the basis of those measures. They observed and theroized and tested. They did not theorize and then frame their perspectives with their theories with confirmation bias and selective sampling.
Realism, the way you have presented falls into the latter category.
It is not science; it fails at the foundation to discover anything truthful or useful except to do what we are discussing here: a macroeconomic distortion of reality using theroetical terms that are unreliable at best.
Corroboration and falsification
Comment on Bruce E. Woych
You write: “Realism, can be many things.”
So, how many realities are there? I cannot remember that Lawson’s ontology includes the claim that everybody is entitled to his own reality. Welcome to the Hicks-Drive-Club.
“Let us call the drive to nudge any question to the point of inconclusiveness, overload, or peaceful cohabitation of manifest contradictions the Hicks-Drive. It is a — spontaneous or conscious — scientific survival strategy because: “… you cannot prove a vague theory wrong.” (Feynman)
And:
“By not strictly insisting on material and formal consistency Orthodoxy and Heterodoxy in effect cooperate on the widely visible crappyfication of economics.”
Above, I have quoted the relationship between monetary profit, distributed profit, investment and saving. Each variable is measurable, thus the equation is testable in principle with the accuracy of two decimal places against Keynes’s I=S.
That is scientific realism; and it has a unique answer; and the answer is that Keynes is falsified.
What next?
“In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941, pp. 369-370)
Time for Orthodoxy and Heterodoxy to leave the scientific Neanderthal.
Egmont Kakarot-Handtke
References
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL http://www.jstor.org/stable/1824735.
Having “run out of puff” in my last response to Donald Sagar, I hope he’s still around for me to basically agree with him and applaud his efforts, subject to what I said to Egmont about not one approach or another, but all of them, each according to its own capability.
What I didn’t get round to mentioning, after reporting Roy Bhaskar’s death on this Tony Lawson-inspired thread, was news of an excellent obituary. My correspondent was “delighted the Guardian thought he was important enough to include in the emailed ‘Guardian today – US edition’ list of top stories”. It mentions most of his books apart from the difficult ‘Dialectic’.
http://www.theguardian.com/world/2014/dec/04/roy-bhaskar.
Another issue Donald needs to address beside the possibility of nuclear conflagration is the nuclear debris still pouring into the Sea of Japan, which (unlike with Chernobyl) it is seemingly no longer possible to contain. It is easy to blame the people who built it by the sea, but when it was built, tsunamis were not on the agenda, and perhaps that one was an act of God? With that and environmental destabilization arguably due to high-flying aircraft (for greenhouse gases sink due to being heavier than air), perhaps it is already too late? In any case, a certain amount of resignation to the inevitable may be more appropriate than anxiety: along with more conscious readiness to help others, living in hope they will help us.
Reviewing this thread in light of Lars’ title, I am seeing “one world Tories” not seeing that we are not all like them, and so the illegitimacy of lumping the wealth of nations into one GDP pot, and by contrast, Keynes at least drawing attention to the difference between the haves and the have nots. As Donald praised me for seeing the problem with economics is in the foundations, let me briefly explain how the things we commonly see were recognised as derivative as recently as the late 1920’s, in Whitehead’s philosophy of process. In the foundations of the information we exchange in order to discuss reality, the need to distinguish not only types of thing and their particular names, but also also types of process and their particular forms, was realised only c.1968 (i.e. in Algol68, when constructing the language I worked with). Likewise quantitative mathematics does not suffice. One can count things, but processes are directional and require two-dimensional, four-phase complex numbers to account for them. The prices 19th century economics focused on do not exist on their own; they are always prices of something, and these days we can account directly for the numbers of each type of something and refer to the accounts directly if we have need, leaving macroeconomics as being about the process and not the particular things it is doing. That anyway is the foundation of macroeconomics I’ve been coming from, summarily labelled “Complex Truth”. Not true premises and unchanging conclusions, but a true logic of types of thing and a falsehood-eliminating logic of types of process,
It would have been nice if Lars, who flew this kite, would respond at least enough to confirm he has been following its gyrations, and better still if he would like to tell us what he is making of them! Still better Tony Lawson, Edward Fullbrook and Peter Radford as well. Thanks anyway to all those who have contributed. With 91 responses and counting, we’ve given it a good go. If we’ve not been exploring a new paradigm, why not?
I didn’t respond sooner David, because I was drug with a hook in my nose into the world of materialism yesterday (by my significant other) using the rational that it was Xmas and my contribution to gift giving was an inherent responsibility that stretched beyond anything financial. I could have objected, but at this point in my life I know better.
To begin with, I am also a septuagenarian. And, let me continue by saying that I hope that your physical health is reflected by your intellectual capability. If it is, you should be with us for a long time to come. What years of experience bring to the human equation is a hard earned form of wisdom that those who have lived less lack. They try to make up for this difference in the proposal of an all encompassing theory, but the history of economics, philosophy, theology, psychology and the rest of the disciplines attest to the fact that it can’t be done. Time has shown that they have all been reduced to presenting theory that is fundamentally dichotomous — or, at odds with itself.
To answer your first question, it is consul that is the most important thing that you or anyone else of substance has to offer. However, it can’t do any “realistic” good unless it is attached to a tangible BASE that already has a verifiable possibility. I offered such a base for consideration (www.edenorg.com) but, no one initiated any questions by which to open a dialogue whereby their consul could bear fruit — or, improve upon the objectives being sought. Instead, in predictable fashion, this offering was ignored or reduced to a difference of linguists and/or foundational understanding by which the continued advancement of one’s own thinking might find justification.
That would be fine IF anything realistic (capable of making the needed difference) might be forthcoming from the field of idea at this most precarious point in “time.” But, that is no longer the case. Situation now preempts intellectualism. How can that be? Because, “sufficient” time is necessary to construct an actual project and gain credible confirmation of its validity from needed authority, before it has any chance of accomplishing anything. The Eden project has been in the process of formulation for more than 20 years now. And, the base of validity it currently enjoys (endorsements) is the result of many thousands of direct appeals to divergent authority over many years — all by way of snail mail I would add. And yet, it has not found implementation, which means it still has a way to go yet.
So, in lieu of any intellectual miracle capable of imposing itself upon an every growing field of dichotomy advancing towards total confusion, this theoretical banter is reducible to just that, banter. A means for ego to grandstand. For, the possibility of it ever bearing any fruit that can impact directly upon current situation is now literally nonexistent. I don’t mean to sound mean spirited here, but you have to call a spade a spade in order to get one’s attention focused upon the “real” problem. If you don’t, whatever insight they might have been able to contribute to finalizing anything, capable of making a real difference in the real world, is lost from the equation. The threat now facing all of mankind concerns the continuation of physicality. If we lose this fight everything else would be necessarily lost — including thought.
With the gift or curse of reflection there undoubtedly comes responsibility as you indicate. It is indelibly impressed upon us by the vulnerability of physicality and the dependency it causes us to have upon a number of factors for its continuance. They are commonly classified as Deity, family, friends, society, culture and the earth itself (Gaia). How much emphasis who places upon what constitutes our difference. How we repay our indebtedness has always been up for grabs. After all, we didn’t ask to be in this place where we find ourselves. We also didn’t ask for the dependency that physicality imposes upon us. Had we been consulted ahead of time, its reasonable to believe that we would have given ourselves at least some clear advantage while being forced to muck our way through this ordeal. But, no one saw fit to consult us, so we find ourselves with but two options — commit suicide or commit to constructing a best attempt by which to try and make sense out of it all. The latter splits into a pulling and tugging between self and those that are other than self — both loved and unloved. It is this tug of “war” that plays itself out in the real world.
What is important to be remembered here is that once blessed with a vision, its value is lost if it cannot find form in the real world. Huston Smith drove that point home to me as we ate lunch at Syracuse University where he was teaching comparative religion at the time. To his credit, he showed far more intelligence than Chomsky when I met with him. I never forgot Huston’s advice. It would be best if the rest of us never forgot it either. I say that, for the threat that we now face is a tangible one. And, the only chance we stand in this struggle is to mount a tangible defense by which to neutralize it. The problem is that we don’t have a lot of time left in which to do so.
No choice
Comment on ‘Mainstream macroeconomics distorts our understanding of economic reality’
There is almost universal consent that orthodox economics is a failure. This leaves anyone with the option to ignore or to replace it. To filibuster about it is not a real option.
It is pretty obvious that the failure of theoretical economics is neither the only nor the worst problem of humankind. Under the broader perspective, the problem whether the earth is blown up by human wickedness/stupidity, a natural cataclysm, or by an unknown extraterrestrial entity is the ultimate problem.
However, being economists, we have to admit that — at the moment at least — we cannot solve the existential problem of humanity. As a matter of fact, we have not yet answered the question of how the economy works. And this, certainly, was not due to a lack of good will. Science is a trial and error process and so far the trials were not successful.
Since Orthodoxy is a failure and Heterodoxy has not yet come up with a better paradigm the actual option is either to establish a more balanced pluralism of false theories or to promote the required paradigm shift.
By definition, the one and only thing economists owe the world and humankind is the true economic theory.
Egmont Kakarot-Handtke
Well you’ve put your finger directly on the actual problem when you say that economics and economic theory need a paradigm shift. After all of the erudition and prestidigitation of economic theorizing it actually comes down to confronting three things:
1) the fact that the rate of flow of costs/prices always tends to exceed the rate of flow of individual, emphasis individual incomes simultaneously produced and
2) the obvious domination of the system by Finance and
3) the logical effects of innovation and artificial intelligence wed to the obviously superior allocation of resources in profit making systems.
Put those three together and the policies that will effect the paradigm change required become obvious:
a directly distributed supplement to incomes earned (or not earned) to everyone 18 and over and a general discount to prices to consumers (after the merchant has discovered his price and so it is not actually heavy handed price controls, but rather mathematically derived and equilibrating price adjustment) all of which is rebated back to merchants.
These policies hit all of the actual systemic problems and deal with the systemic monopoly by Finance. Any further rational regulation of more peripheral problems is fine….after the transformation of the system is made by the above policies.
In rereading this thread, I realized that I had missed this comment by you. In considering your suggestion of “supplements to income” it took me back to the 1972 campaign of George McGovern for president. Senator, McGovern had previously sponsored a bill, submitted by the National Welfare Rights Organization, for $6,500 guaranteed minimum income per year to families, based on need. There definitely needs to be some way to level the playing field, but how to implement it still remains the outstanding challenge.
Donald, thank you for these reflections. Briefly, I see more than the two options you offer (suicide or science, the latter “a pulling and tugging between self and those that are other than self …a tug of war”). I see also the option of listening to someone who has already made sense of it, and trying to see what it means when reinterpreted in light of modern science. Whether or not Christ rose from the dead amounts in scientific terms to a critical experiment: either you are prepared to believe the evidence for it or you are not, though the evidence for the Big Bang points to the same conclusion. Either way, St Paul’s model of the Mystical Body of Christ exists. In this our apparent independence is in modern terms like that of cells in a human body, in which cancer cells fight for resources but healthy ones sense and harmonise their demands to the needs of others in trying to achieve objectives worthy of the whole. Forms of physicality are secondary in the communication between them and those conducting Christ’s or cancerous music.
Your good wishes for my health are appreciated. The reality has been that I’ve been like a cat with nine lives (e.g. during the Hitler war period alone I survived pneumonia, post-operative haemorrhage and diphtheria). Since then I’ve survived a couple of road accidents, stress-related hypertension, cancer and another haemorrage. (One more to go)! The net effect has been to limit my endurance, and I was invalided out of National Service and work in our post-Thatcher civil service as a result of exceeding it. I’ve been left concluding there must have been some reason I survived (the post-Thatcher need being in economics) and that if Christ only lasted 33 years, anything longer is a bonus.
Yes, you can
Comment on Dave Taylor
I wonder whether you have heard of the signal-to-noise ratio? Wikipedia gives the following definition:
“Signal-to-noise ratio is sometimes used informally to refer to the ratio of useful information to false or irrelevant data in a conversation or exchange. For example, in online discussion forums and other online communities, off-topic posts and spam are regarded as “noise” that interferes with the “signal” of appropriate discussion.”
https://en.wikipedia.org/wiki/Signal-to-noise_ratio
I prefer to praise your comments but somehow you overlooked that the signal-to-noise ratio of your latest post is zero.
We are all obliged to do our best in order to promote the cause of Heterodoxy: “This blog is renowned for its high level of comment discussion.” High level refers without doubt to the signal-to-noise ratio.
Egmont Kakarot-Handtke
I sense that this is a sidewards slap at me as well Egmont; so, I feel compelled to respond. I realize that you are losing patience with those of us approaching senility, who unlike yourself are prone to deviate from the rules of banter every so often. Rules, that the less insightful like to employ in order to maintain sufficient rigidity by which to stay engaged. But fear not, you’ll get to where we are someday. And, when you do, you will be faced with trying to make an even more hurried youth slow down enough to see the person between the ideas as being equally as important as the ideas they promote. I googled you, but found little to nothing in that respect. At any rate, it would be nice to know with whom I am conversing. This anonymity thing that is too often promoted on the Internet only serves to further muddy the water, making it impossible to properly envision one’s personal agenda as it is artfully contained within their offerings. Perhaps, if you indulged in micro economics more, your appreciation of the toll that attempting to understand macro economics eventually takes upon even the most well intentioned. I would therefore respectfully ask that you cut us older guys a little slack every once in a while. That said, I promise my next post will take you to places where you have never been.
Okay Egmont, let’s enjoy the joke, but seriously, I disagree with you. Even in my second paragraph above, which was a humorous response to Donald’s urging me to I’m not sure what, understanding and debating the context and point of view of a contributor is part of understanding the “signal”. The first para had involved a serious comment on one having to make philosophical choices which affect one’s view of what one is prepared to admit as evidence, and if one excludes what one can’t see (e.g. as when one asserts there is no God and there are no communication channels between people in economies), and if one uses either/or logic (so religious teachings and information science have nothing to say about economics), then of course one will think what I said is irrelevant. With my philosophical choices it was pointedly relevant.
This discussion of signal to noise ratio is also far from irrelevant. Let me remind you (as an information scientist arguing an information-based heterodox paradigm for economics that so far doesn’t seem to have been understood by anyone here, never mind tried and found wanting), that Shannon’s definitions of information and signal-to-noise ratio occurred in the context of communications engineering, where ever-changing speech and video signals may be so chopped up or digitised or interwoven as to be indistinguishable from noise: this being the assumption justifying the concept of the signal to noise ratio at the end of his paper. In such cases the message reconstruction process is analogous to that of decoding messages which Shannon and Turing had worked on during the war: until you have the right key you don’t see the message. In these terms I’m not trying to describe the “micro” workings of an undefined economy, I’m trying to explain how to look at it so you can distinguish the signal from the noise, and in Tony Lawson’s ontological terms, what the economy is as against what it is not.
I’ve studied your papers, Egmont; it is about time you studied Shannon first hand, and thought for yourself about how to characterise the gradual evolution of atomic chemistry from Priestley to Soddy, instead of relying on wikipedia and Popper. Yes, as you said earlier, “Science is a trial and error process”; but it is rarely about success and failure, it is usually about successive approximation to the truth, where Keynes (who keeps coming up in this thread) at least started off again in a more human and interpretive direction.
In Donald’s previous message there was not a lot I wanted to disagree with, but I had actually intended to come back on his “coming back to this theme of a ‘tangible working approach’ that can impact in real time, because without one, mankind might just well bend over and kiss its collective ass good-bye”. I think it is fair to say that only an information processes can be broadcast and therefore have a widespread tangible impact in real time. Also, I am arguing that we start with what we so tangibly have now, and proceed not by changing things but by “not doing” what demonstrably results from reacting to noise rather than signal. This emphasis on activity in the economic system ties in with Stuart Birks’ new argument against static analysis, and on “not doing” with the comment in Asad Zaman’s “thank you” for Steve Keen’s lectures: “most flaws of conventional economics arise from complete omission of the moral dimension”. Indeed, one can argue that the economy, interpreted as a PID control servo, is a “moral mechanism”: an organised way of not producing more of (or less than) than we need, when we need it.
Donald, in your latest, I think you need to appreciate that Egmont’s banter has enabled us to keep this discussion going, so that the worms have time to crawl out of the woodwork. By the way, I’ve heard of Ellen Brown, but must look for more. Have you read Kenneth Boulding’s fairly early works on organisation?
Dave
Reference:
Shannon, C.E.: “A Mathematical Theory of Communication”, The Bell System Technical Journal, Vol. XXVII No. 3 (July, 1948), pp.379-423, (October, 1948), pp.623-656.
Click to access shannon1948.pdf
No clue
Comment on Dave Taylor
I still cannot understand how prolonged banter, i.e., the unsolicited exhibition of intellectual incontinence on an economics blog, can save humankind from self extinction.
Please, do not explain it.
Egmont Kakarot-Handtke
Egmont. I am extremely tolerant of people who are wrong because most people unavoidably are, but I am nor tolerant of people who want to treat others with whom they disagree with arrogance and disdain. As an historian I have never thought you had a clue about how the adoption of ideas takes place in history. But I have held my tongue, until now, when you attack a person whom I once rated as the most intelligent commentator on the blog. This blog is not about theoretical economics, which is what you seem to believe. It is about economic behavior, which economics as you conceive of it cannot deal with. I have never learned a thing from theoretical economics about economic behavior in which I took an interest. If you set yourself up as gatekeeper about what is discussed on this blog I never will.
Update
Comment on Robert R Locke
• Economics is not about human behavior but about the behavior of the economic system (Hudík, 2011), see also (2014a).
• “[That is why Descartes said that] history was not a science – because there were no general laws which could be applied to history.” (Berlin, 2002, p. 76)
• While history is storytelling, economics is a science (2014b).
• Applause and boo among participants is a no-go. A macroeconomics blog is not a sitcom.
Egmont Kakarot-Handtke
References
Berlin, I. (2002). Freedom and Its Betrayal. London: Chatto Windus.
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
Kakarot-Handtke, E. (2014a). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2418851.
Kakarot-Handtke, E. (2014b). The Synthesis of Economic Law, Evolution, and History. SSRN Working Paper Series, 2500696: 1–22. URL http://papers.ssrn.
com/sol3/papers.cfm?abstract_id=2500696.
http://mpra.ub.uni-muenchen.de/59659/ @Egmont Kakarot-Handtke
Your paper is a mix of insightful thinking and misrepresentations. Apparently you do believe in the history of ideas, so your rhetorical affront as storytelling is a folktale of your own intolerant narrow mindedness. The axiomatic method you praise in your paper depends entirely on constructs of theory that are authentic representations of reality. I get a kick out of your statement made that there are “…different kinds of unrealism (p.3). You then boldly state that individual perceptions of complex economies are conceptually impossible because only an abstract fragment is realized by any individual experience; yet you arrogantly speak of personally representing ECONOMY as if you alone had a handle on and experience what the entire universal system as a scientific realm of personal navigation. A careful reading, of course, reveals that you are only speaking of a monetary system in which you loosely utilized undefined terms to establish “axioms” for a methodology that inter alia becomes a science of circular quantification…and therefore is ordained as science.
You are the perfect example of how macro economics (by any name) becomes distorted, and how behavior creates economic theories that define economy in its own image!
Your Midas touch is fools gold!
Methodology
Comment on Bruce E. Woych
Regarding your prior incoherent comments, it does not come as a surprise that you are again beside the point.
“The often heard rule that concepts are to be defined before they are used in a discussion is much too simple minded pre-Hilbertian. The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen, 2009, p. 344), see also (2013).
However, this observation is correct:
“A careful reading, of course, reveals that you are only speaking of a monetary system …”
Yes, because that is the actual reality, as Keynes already realized:
“In 1933, Keynes wrote a short contribution to a Festschrift for the German economist Arthur Spiethoff. He there attacked classical economists for not providing an adequate monetary theory. He then embarked upon the development of what he termed a monetary theory of production, a theory in which the interdependence of money and uncertainty, and their effects on economic behavior, could be properly investigated: …” (Fontana, 2000, p. 40)
And what economy are you talking about?
Egmont Kakarot-Handtke
References
Fontana, G. (2000). Post Keynesians and Circuitists on Money and Uncertainty: An Attempt at Generality. Journal of Post Keynesian Economics, 23(1): 27–48. URL
http://www.jstor.org/stable/4538713.
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
2207598: 1–16. URL http://ssrn.com/abstract=2207598.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition.
Dear Egmont, I had excused your arrogance as banter, being grateful for the opportunity to discuss the principle that economics is about people and only secondarily about money. It seems I was mistaken.
As you are about Keynes, who in 1933, because economists were describing the economy as if money had no significant effects in it, was discussing ” a monetary theory of production”. This was neither his causal “General Theory of Employment, Interest and Money”, nor “orthodox” (i.e. self-righteous) descriptions of fictional macroeconomic metrics, i.e. the ones being mendaciously used to distort our understanding of both the economy and what Keynes said. Your mistake is excusable if you don’t understand the difference between an explanatory theory (what Lawson’s “Economics and Reality” – as illustrated – is about) and a descriptive model (which is all Hume left future generations of academics persuaded by his denial of causality).
Explanatory theories, like family relationships over many generations with wide variations in appearances, either apply or they don’t; family relationships either exist or they don’t. Descriptive models are derived from the metrics of what we have, and may fail to reproduce what that does not only because of distorted metrics but by failing to account for OR TO ELIMINATE unseen causal relationships in what we have.
It is a philosophical decision as to whether or not to call both these scientific. Accepting both, they are commonly distinguished as pure and applied science. Accepting only the second, the label “science” is usurped by it and the lessons to be learned from causal applications discounted as [mere] technology. Such is the philosophy of “economics” in the mendaciously so-mislabelled mainstream schools of money-making [properly called chrematistics]. But of course budding economists are supposed to study economics, not philosophy, aren’t they?
Thanks for the kind words, Robert, but perhaps more to the point is Aesop’s story of how the tortoise beat the hare.
Donald, Ellen Brown is impressive: you should see what Gary North has to say about her! We’ve been endorsing here a similar line of argument to her “Web of Debt” in a video called “The Money Masters”, likewise Paul Grignon’s animated arguments, but Ellen’s campaigning for public banks and getting involved with state government to argue the case from the inside is great. I tried to do that once, but it became obvious politics is all talk and that is something I’m very poor at: presenting “by far the best information in by far the worst manner”, said the judge in a public speaking contest! So, one does what one can.
Summary
of ‘Mainstream macroeconomics distorts our understanding of economic reality’
My argument has been:
• Orthodoxy is a failure.
• Heterodoxy is a failure.
• There is no alternative to the Structural Axiomatic Paradigm.
As far as orthodox and heterodox approaches are formalized they imply I=S. The Structural Axiomatic Paradigm implies Q=Yd+I-S, i.e.
https://commons.wikimedia.org/wiki/File:AXEC09.png.
All variables are measurable, all premises have been made explicit, all relevant points have been discussed, now economic reality has the last word. Let the test speak.
Egmont Kakarot-Handtke
“… There is no alternative = TINA (Thatcher’s ruling).
Before you dictate undefined terms again, you are simply playing game theory with a very subjective interpretation of monetary accounting parameters and calling it scientific economics. This is neither scientific method nor Economics; it is teleological “Axiomatrics or Accountametrics”
….Perhaps you should start a new discipline?
Axiomatization
Comment on Bruce E. Woych
• Orthodoxy has presented behavioral axioms.
• I have presented structural axioms.
• You have presented nothing.
You are obliged to put forward at least one testable proposition that follows deductively from your Meta-Macro axioms. Then, let the tests decide.
Here is the benchmark:
“The basic concepts and laws which are not logically further reducible constitute the indispensable and not rationally deducible part of the theory. It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.” (Einstein, 1934, p. 165)
Egmont Kakarot-Handtke
I agree with woych; having glanced again at EK’s papers again (alot of them on ssrn, though they appear to overlap alot), I don’t really see any clear definitions nor what I consider an ‘axiomatic’ formulation. ( I read many of the classic set theory papers which develop math axiomatically, and quite a few of them are actually very clear and relatively simple. I have been trying to do this as a hobby for other sciences—e.g. I have an axiomatic, very intuitive and simple derivation of nonrelativistic quantum mechanics in 3 lines. A hobby for some people is to try to create the simplest and shortest proof; I sort of have one of Godel’s theorem also in 3 lines plus some definitions).
I would like a clear definition of a ‘structural axiom’. (I imagine this is not say, post-structural in the sense of philosophy (Kristeva, Derrida, possibly ad nauseum). I also am suspicious of the various equations presented—half appear to be basic well known accounting identities, and then some appear to be subsitutions and rearrangements of them, and then defining new variably for some of them. I’ve read many papers that do this kind of thing, and sometimes its for a reason, but other times it appears to be done so people can get pages of mathematical equations which look profound and hence are publishable (so for example Journals have something to sell to libraries) though most people never read them.
I also think, somewhat like Marx and Frederick Celine (author, fascist) that science is actually heavily infused with ideology, so people are proving in part that their opinions should be taken as social policy (my way or the highway, cuz i said it, i believe it, and i proved it). Generally these opinions (and agendas) derive from their personal life experiences. (When I read papers, especially in social or behavioral sciences, though equally well in physics and biology, i first look at the abstract, and then at the references (to see their influences, as well as to see who they may be friends with —eg Hirsch index—and what they left out—their competitors or ideological opponents (in music we always see who does and doesn’t get gigs or played on the radio), and also if it appears they basically lifted (or ‘stole’) the entire set of references from some other papers), as well as where the person works and who funds the research. Half the time the rest of the paper can be ignored, except as a refresher or for entertainment.)
I could be wrong of course; I didn’t see much in the way of testable predictions in the papers as well.
If they exist, they should be put in the abstract. (I am open to the possibilities that a) the person is not a native english speaker so i dont get it, and b) people do vary in style (in set theory and logic, saunders mcclane, lawvere, jerome keisler i found somewhat impenetrable, I never learned the ‘turing machine formalism ‘ (tapes and stuff) nor Hao Wang’s/Roger Pnerose’s tiling formulation (though that one is probably neccesary). Nowadays, there are so many formulations around, some axiomatic, I can’t tell if they are worth learning (one computer scientist who also does some economics (Cockshott, a communist type) wanted me to learn bigraphs—which i looked at (like the person from petri nets (pearl, whose son was killed in pakistan) , the guy who did that got a big prize; but to me it looked like they were reinventing the wheel). (Axiomatic set theory already has the basic part, though nowadays its gotten so complex and seemingly factionalized its hard to know which new axioms and formalism is worth learning). Amazingly, science in general still can put a rocket on a comet, so some people can design and predict things (though perhaps not random violenece and terrorism (except in the sense of chaos theory and statistics, which gives approximations (eg cliometrics); i don’t know about say, the fate of russia or the price of oil—-though its conceivable that topic may actually be somewhat understood).
Axiomatization and testing
Comment on ishi
All my papers are on SSRN. Please click here http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1210665
The papers start with the structural axioms. This is the formally correct way to do economics. For an instant view of the axiom set click here https://commons.wikimedia.org/wiki/File:AXEC04.png
You are mistaken to think that axiomatization has automatically something to do with set theory:
“Thus not all axiomatic theories need to be phrased in terms of set theory but much more conveniently and intelligibly rather in terms of some advanced mathematical structures.” (Schmiechen, 2009, p. 367)
For a clear definition of the structural axiom set see my recent papers (2014b; 2014a) or any earlier paper.
You write: “I could be wrong of course; I didn’t see much in the way of testable predictions in the papers as well.” You are wrong, as you might even know for sure. All structural axiomatic theorems are testable and if it does not stress you too much you could go back to my post of December 12, were I explicitly invited testing https://rwer.wordpress.com/2014/11/11/mainstream-macroeconomics-distorts-our-understanding-of-economic-reality/#comment-84619.
If you — as a rare exception — plan to read first what you are going to filibuster about next I recommend my paper Confused Confusers (2013). You are one of a crowd.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2013). Confused Confusers: How to Stop Thinking Like
an Economist and Start Thinking Like a Scientist. SSRN Working Paper Series,
2207598: 1–16. URL http://ssrn.com/abstract=2207598.
Kakarot-Handtke, E. (2014a). Objective Principles of Economics. SSRN Working
Paper Series, 2418851: 1–19. URL http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2418851.
Kakarot-Handtke, E. (2014b). The Three Fatal Mistakes of Yesterday Economics:
Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2489792.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition.
I’m becoming latent to this blog because of responsibilities. But, the stimulation it offers is unmatchable. So, thanks to everyone for contributing.
These comments are NOT a reflection on your belief David, for I respect and appreciate your sharing of thought on this matter. However, like economics, religion is a bag of worms; and, I say that as a believer in something which I feel want to go into here. Why? In Christianity alone, there are 6 major ecclesiastico-cultural blocs, divided into 300 major ecclesiastical traditions, composed of over 33,000 distinct denominations in 238 countries of the World. That constitutes more difference than I am able to comprehend, let alone decipher intelligently. Add to that 18 other major world religions which are subdivided into a total of 270 large religious groups (along with many smaller ones) and the problem with finding agreement in this area should be obvious. Next, there is the fact that all religions promote the existence of a “divine awareness” that can only be approached through aspects of mystery. To accept that mystery there is the need for “faith” to bridge the gap between reason and what it knows it can’t comprehend, yet still understands a need for. As a result, the impossibility of deciphering certainty via religious thought quickly rises to the fore. You must also add to this the problems surrounding the interpretation of “Divinely inspired texts” by which most claim to affirm their truth. And of course, most religions lay claim to different texts. For these reasons, I shy away from discussions on religion. That doesn’t mean that I don’t have a personal belief, because I do. My father was a minister and I grew up totally immersed in theological thought.
The quagmire that plagues religious belief, kind of reminds me of the quagmire that plagues theoretical economists in their attempt to ground idea in scientific methodology as if finds form in the rigors of mathematics. The problem with trying to do this is that mathematics is wholly dependent upon the acceptance of approximation as certainty; something without which it could not resolve difference into sameness through their proposed relevance in the form of an equation. And, like it or not, this is all that mathematics is capable of doing. Refining approximation. Hence, nobody knows, nor can they validate the certainty of anything from one instant to the next. And it doesn’t matter what we are talking about in the real world; because, everything is in a constant state of flux — from the subatomic level up to the global one. Arbitrary constants find functionality for us strictly by way of convention and convention alone. An inch demarcates a credible difference only because everyone is willing to accept the generality that this designation constitutes. Hence, from the very get-go, the well intentioned (regardless of what disciplines they use) are at a serious disadvantage when they attempt to isolate anything that even resembles an absolute — or, that which constitutes an overarching theory that supposedly does.
A lot has been said on this link. And, after contemplating it long and hard, during a much needed walk on what turned out to be a beautiful day, I found the necessity to drill down (for my own reification) to the basic fundamentals that have preoccupied everyone on this blog. What I determined from doing so, is that economics is really all about “money” and nothing else. Of course, the “individual” cannot be extracted from this equation, since the idea of ‘money’ rests upon the individual’s ability to delineate its difference and ascribe relevant meaning to it.
You can complicate this picture of economics as Wikipedia has done, by defining it as: “the social science that studies economic activity to gain an understanding of the processes that govern the production, distribution and consumption of goods and services in an economy.” But, all that really means is that economics is constituted by: the study of the creation, valuing, and distribution of “money” as it leverages access to goods and services for “individuals” and the many social groupings wherein they manage to establish an identity.
Once we get through all the misdirection that the idea of “society” constitutes — as if it were an end in and of itself — and recognize that the “individual” sits at the center of everything, the picture of what is going on becomes infinitely clearer. What it tells us is that there can be no difference between the “dynamics” that constitute micro and macro economics. I say this, since by nature of their source they are necessarily one, differentiated by nothing more than smoke and mirrors. Undoubtedly, those who find solace in linguistically nuance, as a means to affirm their station in life, are going to feel short changed by this reductionism. But, the fact of the matter is that without acknowledging the ‘individual’ as the root of all else, denial itself is necessarily invalidated. So, skeptics are going to have to live with this conclusion, because society is a maniacal fabrication incapable of denying or affirming anything.
There has been a growing myth promoted by education for far too long that needs to be exposed. It concerns the idea that “society” preempts the ‘individual’ in importance. Consistent with this mentality, education has assumed the role of structuring the potential inherent in the ‘individual’ in order to ensure that he/she becomes a productive member (servant) of society. To achieve this end, there has been a systematic stripping of all reference and practice associated with ultimacy (either religious or philosophical) from college curriculums. This has been coupled with a corporate invasion of campuses, which has accelerated the conscription of the “best and brightest from among us” to economically warped causes. Although this momentum can be effectively defended in the short term, it is now responsible for the dilemma we are currently facing — human annihilation as the penultimate expression of personal greed hidden in the facelessness of groups which employ incorporation as a means to escape from the consequences of their actions.
How did we get to this point in human history? Is the cause of this result wholly foreign to who and what we are or is it not; and if so, where did it come from? Apparently, it is not altogether foreign to us, or we could not be dissuaded to forsake the divinity of our difference. So, there must be an inherent vulnerability within our potential that allowed for it. And, sure enough there is. In effect, this vulnerability exists because self awareness is the product of a continuum called reflection. As such, the only thing that can provide the necessary affirmation that the self requires, in order to allow it to continue to believe in its own difference, is causal repetitiveness. This in turn leads to the elevation of society over the individual as a more efficient means to insure continued survival essential to the realization of self as a potential unfolding. Were there constraints upon the thought process by which this conclusion surfaced, it could be controlled to yield the desired result. But there isn’t. Linearity possesses an inherent potential that always exceeds the capability of whoever or whatever winds up using it. Hence, it was only a matter of time before it yielded a result that we were incapable of controlling. Presently, it is self annihilation.
To truly understand the dilemma in which we find ourselves, we must go beyond the attempt to correlate conclusion. That’s because all conclusions are inherently dichotomous, thus successfully preventing any definitive interpretation regarding what constitutes priority for singularity (the self). The only way around this conundrum is to focus upon the structure of thought itself as opposed to the objects of relevance it illuminates (and otherwise prioritizes) relative to the immediacy of circumstance. For an in-depth look at the structure of knowing go to: http://www.edenorg.com/edp-001c.htm.
As I previously said, and it bears continued repeating: “Situation now preempts intellectualism.” I think everyone on this site basically agrees that absolutes in the form of over arching theories are NOT discernible for the temporally limited potential by which we are constituted. None the less, there is still good cause to question the means by which that conclusion is able to arise to the stature of being self evident. To do this we must finally come face to face with the issue of what “time” is, and how our ideas become skewed during our defining of it by way of the interruption of our steady state by outside stimuli.
How does all this apply to economics? It is central to how we interpret all attempts to construct overarching theories, including economic ones. In short, they can be nothing more than “time dependent constructs” with varying degrees of relevance to the body of understanding that exists at the point at which they are proposed. The idea that the earth was flat persisted for several thousand years that we know of, and during that time directly effected commerce and hence the economic theories of that period. This truism continues to this day.
Beyond the speculation that attends all attempts to construct absolutes, it remains essential that I try and urge everyone back to the immediacy at hand — human annihilation and the continuous progression of expediency with which it appears destined to fulfill its potential — IF, we don’t find some way to stop it. I said this before, but it bears repeating. Sufficient ‘time’ is necessary to construct a tangible anything by which to overcome the immediate and growing threat to our collective survival. Unlike the construction of idea which spews from human intellect at warp speed, the creation of anything tangible takes real time. And, that is something, we are quickly running out of. So, I would sincerely ask all of you to please rethink the Eden project and voice whatever concerns that result. If it is to have any hope of making a real difference in the World, it needs to be as good as we (collectively) can possibility make it.
Finally, I agree with you when you say David — “I think it is fair to say that only an information process can be broadcast and therefore have a widespread tangible impact in real time. Also, I am arguing that we start with what we so tangibly have now.” I do NOT agree that the needed effect can come from “proceed(ing) not by changing things but by “not doing” what demonstrably results from reacting to noise rather than signal.” No disrespect intended, but the definition of insanity is “continuing to do the same thing over and over and expecting a different result.”
However we got here, we are locked into a linear thought process that is actively utilizing our very capability to effect a result that exceeds and thereby inadvertently obsoletes us. It is accomplishing the insidious by encouraging us to collect into groups whereby we can extend the capability previously limited to the individual. And, if that weren’t enough, now computers have entered into the process. With there assistance, we are now capable of envisioning conclusions that exceed the capability of anyone or any group(s) to divine the implications in them. Yet, these conclusions are being accepted as if they were gospel. This amounts to a dependency relationship from which there is little hope of escape. Fortunately, there is a way to significantly impede this process; but, it requires doing things differently. That is what I am offering. I can’t make anyone give this effort serious consideration, all I can do is ask that they do so. Whatever questions regarding specificity one might have, I would be glad to try and answer them.
PS – For all who might be interested, Ellen Brown’s most recent book is:
“The Public Bank Solution: From Austerity to Prosperity.”
Her latest article can be viewed at:
http://www.opednews.com/articles/The-Global-Bankers-Coup–by-Ellen-Brown-Bail-in_Derivatives_Financial-Meltdown_Oil-141213-917.html
I’m sorry, Donald, but I disagree with you fundamentally. For a start I deliberately avoided discussing religion except to point out that it involved a philosophical decision, and that thought-provoking economic models in the idiom of the Bible should not be discounted because they are religious (grateful), in defiance of Doubting Thomas and an 18th century atheist philosopher (Hume) whose solipsistic epistemology you seem to have imbued. An example is inducing a way of thinking; it doesn’t have to be factual.
You say, “everything is in a constant state of flux — from the subatomic level up to the global one”, and I disagree: that is pure Hume. The oldest light we can see may appear chaotic, but individual photons of light are not chaotic. Models of what we can see give us good reason to be prepared to believe that out of dark energy came coherent waves, and out of their breaking up into turbulence at the [then] end of time came sub-atomic particles held together by [end] surface tension much like spray from the ocean’s waves, and so on in perfectly coherent localised cycling of energy (I once worked with superconducting ciircuits) in permanent but increasingly fragile atomic, molecular and biological structures which we have been able to infer and increasingly to see: what 18th century Hume could not.
But I’m virtually repeating myself, as you are with your concern about an all too likely end of the world: more a shocking waste than an unpredicted shock.
You say: ” I do NOT agree that the needed effect can come from “proceed(ing) not by changing things but by “not doing” what demonstrably results from reacting to noise rather than signal.” I agree I could have been clearer! What I had in mind was going from a monetary system based on the “noise” of illusary fool’s gold – which generates theft, distrust and charging for securitizing, insurance, taxes, rents and interest – to not needing these actions when simply authorising people running households, firms and governments to use the credit they need to do their jobs and earn the trust which is being placed in them.
@ davetaylor1 (SEASONS’ GREETINGS TO YOU!)
If you haven’t looked at R.H. Tawney’s Religion and the Rise of Capitalism (1926) I think you might get a sense of the “Old Time Religion” pious attitudes and moral intentions that existed prior to the business, industry and market domination of capital in society. Much of the conceptual language is clearly from another century but it captures the fact that economics is a social language of conceptualization & exchanges as much it is a system of material accommodations for subsistence and socially constructed survival.
I have difficulty with your first paragraph David. To begin with, I don’t make associations between anyone’s thinking and that of another; since, it requires two interpretations of substance as opposed to one. This obviously increases the margin of error — something that we already have too much of. I also don’t include conclusions that admittedly arise from the mysterious (i.e. credulity/faith) into my definition of what is philosophical. For me to be able to accept idea, I must be able to understand its relevance to me by way of the process that allows me to come to know of myself without threatening my continuance of me for me.
I understand the drive to try isolate and characterize the “relative” form of an absolute by which to then characterize everything else. Hypothetically, it appears to be reasonable. Practicably, it hasn’t proven to be anything but. The problem with all this, is that whatever is isolated must pass though the filter of limitation called the self in the process of finding relevance to the self. Since the individual is unable to establish his place in either space or time, just as he is unable to understand the implications of who and what he is, all attempts to fix “certainty” with regard to that which lies outside of the self is inherently futile.
You say that… “the oldest light we can see may appear chaotic, but individual photons of light are not chaotic.” This provokes a fundamental question for me. According to who and/or what? And that’s the real key here. Who or what fixes the limitation to the methodology that might lead one to this conclusion? Additionally, how can one speak with certainty regarding anything about light when we are unable to determine its constituent makeup. Is it composed of waves or particles? If particles (photons), then do these photons have a particular size or can they only be measured by way of their effect upon something else? The problem of ‘something else’ poses another problem in itself; since, it obviously digresses sequentially the idea of foundation forever; or, at least until it gets back to man. And rightfully so. Since, it is man that conceives the limitations by which all experimentation and its apparatus takes form; and likewise, it is man that then attempts to interpret the answer by way of his own limitations. Hence, there is an inherent subjective bias in every attempt that attempts to determine anything about anything, like it or not. Consistent with this problem, theoretical physicists are all over the board on what constitutes the fundamental nature of light, just like theoretical economists are all over the board with regard to identifying an absolute (fixed) anything.
You say “Models of what we can see give us good reason to be prepared to believe that out of dark energy came coherent waves…” You once suggested that I sounded like a “politician.” This phrasing of conclusion kinda put you in the same category. What in God’s name does that statement even mean David? Even Hawkings was forced to admit that whatever preceded the coming into existence of what we now characterize as the universe is “unknowable;” since, the noise to which we are restricted, or that which attends our slightly latent conceptualization of the universe (our present) makes it impossible to say anything about what might have preceded it.
The only thing that is blatantly evident from all this dissection of possibility into its opposing dichotomous form (irrespective of the discipline) is that we don’t know squat. And, it is high time for everyone to admit to it. For without doing so, and coming together to face immediacy, the only things it spells is extinction.
Donald, whether you realise it or not you are regurgitating the arguments of Hume, and repeating his philosophical error of excluding from your philosophy anything you find mysterious (which in common parlance means something you don’t yet understand). Here’s an answer to your comment on two views increasing the possibility of error: “[The ordinary man [has not sought certainty but] permitted the twilight. His spiritual sight is stereoscopic, like his physical sight: he sees two different pictures at once and yet sees all the better for that”. [G K Chesterton, following up earlier comments on triangulation in surveying]. And as for the limitations of self, “No man is an island”. [John Donne].
I had been going to appreciate the paper you linked to in another thread, but you need to appreciate that here you are preaching to the converted, and that the never-ending human problem is people being born children, each generation needing to be taught afresh but also to become critical of its parents in order to detach itself and become able to learn for itself. There is thus plenty of justification for your non-parental argument, and I wish you well with it, but here you are at cross-purposes with the discussion.
https://rwer.wordpress.com/2013/02/12/ergodicity-the-biggest-mistake-ever-made-in-economics/ from Lars Syll February 12, 2013
Ergodicity – the biggest mistake ever made in economics
Lars Syll states:
“Paul Samuelson claimed that the “ergodic hypothesis” is essential for advancing economics from the realm of history to the realm of science.
But is it really tenable to assume – as Samuelson and most other neoclassical economists – that ergodicity is essential to economics?
The answer can only be – as I have argued here, here, here, here and here – NO WAY!”
https://rwer.wordpress.com/2013/02/12/ergodicity-the-biggest-mistake-ever-made-in-economics/ (Go to comments)
http://en.wikipedia.org/wiki/The_Great_Transformation_%28book%29 “Polanyi did not see economics as a subject closed off from other fields of enquiry, indeed he saw economic and social problems as inherently linked. SEE: SUBSTATIVISM/http://en.wikipedia.org/wiki/Substantivism. He ended his work with a prediction of a socialist society, noting, “after a century of blind ‘improvement’, man is restoring his ‘habitation.'”
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http://en.wikipedia.org/wiki/The_Theory_of_the_Leisure_Class (1899), by Thorstein Veblen.
“Veblen thought that economists of his era were too static and hedonistic in their theories, despite being an economist himself. He argued that instead of focusing solely on theoretical deductions, economists should take larger social and cultural issues into account.[5] Whereas neoclassical economics define human beings as rational, utility-seeking agents who try to maximize their pleasure, Veblen recast people as irrational, economic creatures who pursue social status with little regard to their own happiness.”
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http://en.wikipedia.org/wiki/The_Economic_Consequences_of_the_Peace by John Maynard Keynes; (What would he assess today with our wealth myopia and “quantitative easing/” Apparently the Looting of the Treasury might also be of some concern).
Keynes outlined the causes of high inflation and economic stagnation in post-WWI Europe in The Economic Consequences of the Peace.
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some… Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
Meta-Macro-economics at its finest hours.
Meta-Macro
Comment on Bruce E. Woych
If the political platidudes of Lenin and Keynes — debauch of currency is as old as currency — were the finest hours of Meta-Macro, one trembles to contemplate what the normal hours look like.
Egmont Kakarot-Handtke
• “[That is why Descartes said that] history was not a science – because there were no general laws which could be applied to history.” (Berlin, 2002, p. 76)
My point has always been that economics is not a science because no general laws can be applied to it. All you have is history. Sorry!
@ robert r. locke: (Seasons’ Greetings to You too!):
some interesting alternative perspectives you may find useful:
http://sgo.sagepub.com/content/2/4/2158244012470114
A Critique of the Mainstream Management Control Theory and the Way Forward
Chandana Rathnasiri Hewege
DOI: 10.1177/2158244012470114Published 11 December 2012
“Abstract
This article critiques the mainstream management control theory with a view to highlighting its gaps and to suggesting a direction for its future development. Management control theory has undergone lopsided development due to the dominance of accounting-based approaches to the study of management controls. Thus, management control theory has failed to explain complex issues that are interwoven with deep-rooted, sociocultural context within which these issues emanate. Although the influence of organizational theory, particularly systems theory, cybernetics, and contingency theory, resulted in a marginal outward shift of the boundaries of the mainstream management control theory, the main drawbacks of the theory remained unresolved. Alternative theoretical perspectives rooted in disciplines such as political economy, sociology, and anthropology can enrich the mainstream management control theory. Management control issues emanating from non-Western contexts would remain largely unexplained or poorly explained, unless alternative theoretical perspectives were used.”
http://sgo.sagepub.com/content/2/4/2158244012470114
More for robert r locke of interest:
https://hbr.org/2013/09/plantations-practiced-modern-management
Plantations Practiced Modern Management
Caitlin Rosenthal From the September 2013 Issue Harvard Business Review: Accounting
[excerpt]
“The finding: Slaveholding plantations of the 19th century used scientific management techniques—and some applied them more extensively than the factories thought to be their originators.
The research: Caitlin Rosenthal pored over hundreds of account books from U.S. and West Indian plantations that operated from 1750 to 1860. She found that their owners employed advanced accounting and management tools, including depreciation and standardized efficiency metrics, to manage their land and their slaves. After comparing their practices with those described in the account books of northern factories, Rosenthal concluded that many plantations took a more scientific approach to management than the factories did.
…Detailed account books from the 1840s through 1860s show that plantation owners, though part of an abhorrent system, were among the first to use modern management science.”
compliments: Bruce
PS: Caitlin Rosenthal is an assistant professor of history at the University of California, Berkeley.
Philosophical consolation
Comment on self-styled heterodox economists
Science deals only with propositions that can in principle be decided by objective means. The rest is opinion, faith, second-guessing, phantasy, hallucination, fairy tale, myth, paranoia, ink-blot association, philosophy, storytelling, etcetera. The realm of science is small, the realm of balderdash is infinite.
Above, I have submitted one testable proposition. Until now you could not refute it. The chances that you will refute it are almost identical zero.
Let us settle the matter with Wittgenstein:
– The world is everything that is the case.
– The logical picture of the facts is the thought.
– Heterodox economcis lacks thought.
– Whereof one cannot speak, thereof one must be silent.
Egmont Kakarot-Handtke
http://www.jpe.ro/?id=revista&p=366 “An academic controversy cannot continue for long unless the disputants assign different meanings to the major terms employed in the debate.”
FROM: Behavioural controversy concerning homo economicus: a Humean perspective (Khandakar ELAHI) THE JOURNAL OF PHILOSOPHICAL ECONOMICS. Volume VII Issue 2 (Spring 2014)
Growth theory after Keynes, part II: 75 years of obstruction by the mainstream economics culture (Hendrik VAN DEN BERG)
” Part I of this essay explained the sequence of events that enabled the neoclassical paradigm to regain its dominant position in mainstream economics following serious challenges by ‘Keynesian’ economists. This second essay seeks to answer the question of why the economics profession was so willing to sustain the neoclassical paradigm in the face of the reality-based challenges by ‘Keynesian’ economists like Harrod and Domar”
[AND]:
“Financial and business interests clearly understood the power of culture and they used their accumulated wealth to support the neoliberal doxa and neoclassical habitus that would induce economists to willingly provide intellectual cover for policies that benefitted those financial and business interests.”
OPEN ACCESS: http://www.jpe.ro/?id=revista&p=366 THE JOURNAL OF PHILOSOPHICAL ECONOMICS
Egmont, the point you make about heterodox economics is the point that can be made about orthodox economics; the thought does not pass critical examination. Why do you always cite authorities (Wittenstein, Decartes, I. Berlin.) to prove your case when you know that their views do not pass muster. the greatest disappointed of the past hundred years has been social science; there is no science in it. Anybody who has been paying attention in his/her reading knows that. Don’t be an intellectual fascist and throw all the books you do not like on the bonfire.
Update 2
Comment on Robert R Locke
• You write: “…the point you make about heterodox economics is the point that can be made about orthodox economics.” True. In fact, I have made the point multiple times above.
• I cite whoever has expressed my argument better than I could. This has nothing to do with authority.
• You write: “… the greatest disappointment of the past hundred years has been social science; there is no science in it.” True. I have cited Feynman multiple times characterizing the social sciences as cargo cult sciences. See also my post of November 29: “Psychology/sociology/philosophy are out of science.” I should have added history.
• From this follows that economics has to get as far away as possible from the social sciences. In Update 1 I stated explicitly: “Economics is not about human behavior but about the behavior of the economic system.”
• From this follows in turn that a paradigm shift is necessary. The shift consists in replacing the behavioral axioms of Orthodoxy by structural axioms. There is no way around this.
• It is not the sole task of Heterodoxy to kick the dead horse (Ergodicity — the biggest mistake ever made in economics). The main task is to develop the NEW paradigm (without ergodicity, without closure, without a well-behaved production function, without utility maximization, without supply-demand-equilibrium, without determinism, and so on).
• The biggest mistake in economics is that the profit theory is false since Adam Smith.
• From the fact that historians are no scientists does not logically follow that economists cannot be scientists.
• There are laws in economics, e.g. the Profit Law https://commons.wikimedia.org/wiki/File:AXEC08.png.
• Reading my paper “The Synthesis of Economic Law, Evolution, and History http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2500696” could help you to avoid argumentative mistakes.
Egmont Kakarot-Handtke
https://rwer.wordpress.com/2014/12/15/why-growth/ December 15, 2014 Editor
“… the instability of developed economies is evident. It is important to understand why and to consider likely developments as other critical factors increasingly impact. My own search has been guided by experiences in scientific research, in particular by success in understanding non-linear instabilities…”
[and]
“…In each case the system becomes unstable when a defined parameter passes a critical value…”
[and]
“…(depending on a number of other physical parameters) those patterns become more complex, eventually becoming turbulent. Each process can be followed, and understood, with the aid of simplified models that identify the key factor defining when the system is unstable, and the further factors that determine the subsequent behaviour. There is nothing random about these processes; there is a reason for the instability and for the resultant pattern, which in each case follows the laws of physics. These principles hold also in economics.”
Why growth?
What economics is all about
It is important to distinguish first between political and theoretical economics. The main differences are:
• The goal of political economics is to push an agenda, the goal of theoretical economics is to explain how the actual economy works.
• In political economics anything goes; in theoretical economics scientific standards are observed.
Political economics is legitimate, however, it becomes illegitimate as soon as it tries to exploit theoretical economics for its respective agenda. It is a matter of indifference what the agenda is.
Theoretical economics has to be judged according to the criteria true/false and nothing else. Theoretical economics serves no political or social purpose whatever. Utility is not a scientific criterion, because it only makes sense with regard to specific groups/individuals.
To make the world a better place is the task of the legitimate government, not of economics. Institutional failures cannot be repaired by economics, only by political means.
Theoretical economics deals only with propositions that can in principle be decided by objective means. Political economics deals with all the rest, that is, opinion, faith, second-guessing, phantasy, hallucination, myth, paranoia, metaphor/analogy, green cheese assumptions, philosophy, storytelling, etcetera.
Political economics is scientifically worthless.
The main charge against current theoretical economics is: The profit theory is false since Adam Smith. Each economic approach that fails to capture the essence of the actual market economy is scientifically worthless.
Both, political defense or political attack of the actual market system has no scientific basis.
The two criteria of theoretical economics are material and formal consistency.
Formal consistency is guaranteed by the axiomatic-deductive method. This method alone, though, does not guarantee the truth of the theory. Material consistency is established by empirical tests.
The main argument against orthodox economics is that it is based on behavioral axioms. The argument against heterodox economics is that it lacks an axiomatic foundation, that is, it does not meet the formal minimum criterion of theoretical economics.
From the fact that actual economics is a failed science follows the necessity of a paradigm shift. The shift is formally executed by replacing the behavioral axioms of the current Orthodoxy.
Heterodoxy has identified numerous flaws of Orthodoxy, however, most heterodox economists do not understand/accept the task before them.
The main task of theoretical economics is to develop a superior economic paradigm.
Egmont Kakarot-Handtke
You speak of economics as though it is an objective something Egmont. Then you further divide it into two more objective somethings (theoretical and political). What you fail to realize is that EVERYTHING that passes through the mind of man is SUBJECTIVE in nature. It cannot help but be otherwise. Unless of course, your admitting to Divine intervention. Without doing so, there is no objective anything anywhere in any pursuit. They all hinge upon the limitations of experience, form and/or perception by which they are divined. As a result, the qualification of any and all conclusions reached rightfully hang upon their utility, because of our fragility. You seem to be confusing convention and/or certitude with certainty. To try and help clarify this: When was the last time you found yourself preoccupied with thoughts of economics while you faced death or the real possibility of permanent debilitation? I’d wager to say never. If economics rose to the stature of an absolute (objective difference) then it might make sense to try and leverage whatever advantage that allegiance to it might offer in both those cases. However, I have never met anyone that ever did. Could the odd guy out be you?
The whole purpose of having scientific logical thoughts is to de-personalise the knowledge of the subject and to be truly objective, so I differ with this previous conjecture as not being sufficiently accurate. As an engineer and scientist I can think objectively although my thoughts are also subject to the way the wind blows too.
Somehow, I don’t think my prior comment was sufficiently processed by you Macro. Therefore, let me repeat it again:
“All conclusion hinges upon the limitations of experience, form and/or perception by which they are divined by us. As a result, the qualification of any and all conclusions reached, rightfully hang upon their utility, due to our FRAGILITY (as temporally limited beings). You seem to be confusing convention and/or certitude with certainty.”
I realize that it is hard to give up on the idea of one’s divinity and accept the fact that we lack the capacity to understand what constitutes anything objective/absolute. But, like it or not, that is how we have been constituted. On the plus side, it is this limitation that affords us the means by which to qualify the only thing that is not given to us — our intent. And, without initializing and prioritizing it (intent), we are quite literally the creators of nothing. So, until we are able and willing to admit that we aren’t Deity and are constituted by way of an underlying fragility that limits our attempt to embrace the possibility within potential, we are forever vulnerable to being misdirected by our own conceit. Which, I might add, is infinitely variable in form. Hence, the ongoing confusion that haunts all disciplines to which we are fallaciously inclined to pay reverence in our youth.
No Robert, I’m not saying that… “because the economists are not dealing with the real world, but playing games, we should get out of their blog and go it alone.” What I am saying is that those who ascribe to this discipline need to be awakened to the facts of reality. If this is why you are here, then kudos to you. If however, you have been inadvertently drawn into this game, by good intent, and have thus become engaged in trying to lay meaning to that which is impossible — by way of yet another approach to the ordering of incomprehensible complexity — then I think you need to rethink your dedication.
You conclude your response to me by asking… “What are you saying? Drop the blog and go fishing.” No, that is not what I am saying. What I am saying is that for anything good to come from all this banter we must first ALL get on the same page. As much as I believed (in the beginning) that Egmont was going to be an obstacle to achieving this, he seems to have eloquently arrived at the very conclusion I was trying to make. What we now have simply does NOT work. Hence, EVERYTHING needs to be rethought.
In doing so, it becomes obvious that we need a wholly different approach to this thing. That begins by admitting that the traditional historical approach to inculcating limitation into succeeding generations (via academia) has NOT provided us with a solution to the current problem of convergence between difference that is occurring at an ever accelerating rate of speed in the real world. In effect, academia is still promoting the horse and buggy in a jet setting world. That needs to be significantly curtailed.
In addition, the balance of power has radically shifted from the many to the few. To be successful at changing anything at this point in time, the many have to raise their voice as one. Hence, whatever we come up with has to achieve that objective. I agree with David to some degree that academia can help elucidate the problem, but he of all people should realize that we now live in a new world with an Internet that spreads countervailing information at close to the speed of light. To be successful therefore, at this point in time, we must find a way to harness its potential. Disseminating complexity that is prohibitive to the audience you are trying to reach is not the way to go about it.
I said before that overly complex constructions of though that are multilayered are an impediment to being understood. This is particularly true for this generation which is preoccupied with high stimulation pursuits (electronic games). Fully 80% of the traffic on the Internet at present is for game playing, which inadvertently desensitizes vulnerable minds to real world problems. So the question now becomes one of — how do you go about getting their attention? And, what does the content capable of doing so look like?
This response is going to seem a little harsh to many, but I don’t know of any other way to wake sleeping giants.
You suggest that I might be at cross purposes to something going on on this site, David. Well, maybe it’s because I didn’t initially understand the game in play. Instead, I gave everyone the benefit of the doubt, by believing that their intent was to identify a methodology that could find “meaningful” application in the real world. Shame on me. What it now looks like, is that I have wandered into a contest to see who can quote more “authority” with greater authority based upon an egotistical belief in one’s ability to correctly render the meaning of ideas whose origins are separate in both time and experience; and hence, wholly contrived (subjectively) from the limited capacity of self. Apparently, the object of winning this game is to garner the most support from those playing it. What a novel idea!
If this is what is going on here, and correct me if I am wrong, then how in God’s name can one morally and ethically substantiate this misuse of time — something that is now at premium? I say that, since there is less chance that any of this thinking will find its way (meaningfully) into the mechanics of the real world, than there is a snowball’s chance of surviving in a hot Hell. And, if anyone disagrees with this assessment, then please explain to me what you believe the effect of this banter is going to be on the real world — in real time I might add. And while doing it, let’s not forget that time is running out on humankind. Once that offering is in hand, then a tangible assessment of its potential can be made regarding the many threats that now plague man. Except for planting more “acorns” of confusion that cannot help but lead to further division within human thought, and hence exposure to conflict and death, I have heard NOTHING. N..O..T..H..I..N..G. Nothing! That in and of itself is amazing, considering the intellectual capacity in evidence here.
Does anyone frequenting this site believe that normal people in the real world might benefit from anything being bantered about here? In case you’ve lost total touch with reality, I can assure you that just the words alone that are used on this site are prohibitive, let alone the effort to try and understand how they are or might be interlinked in some kind of rational way. As a result, I don’t mind admitting that my path to the dictionary is well worn. You guys really need to get a grip on reality here. Esoterists have nothing on you. It’s all that abstruse! Dichotomy carried to an extreme.
I know you don’t like continuing to here this, but the window of time between protagonists with nuclear capability is down to less than 4 minutes. And, that window is continuing to close as new technologies isolate greater forms of efficiency. The threat from genetically modified everything likewise continues to grow exponentially. And this is just the tip of the iceberg.
Are these real time threats something with which you need to concern yourselves? Or, do they just amount to inconveniences that occasionally force a temporary redirect in need of defusing? If so, then my constant return to this theme is probably bothersome as David inferred by alluding to repetitious. It’s time to get real here guys and gals. If you can’t muster the initiative to help save yourselves, I can understand that. For if you’ve never come to experience love beyond the confines of one’s self, then its all about whether you’ve had a successful run at whatever you think was available to you. You know, “he who dies with the most toys or accolades wins” provided that the activity in evidence upon death doesn’t influence the future. And let’s be clear on that, that’s something nobody knows. However, if you’re capable of compassion towards those with whom you cohabit (inclusive of spouse and children) and perhaps even the nameless faceless innocent who share the uncontaminated potential you once had, then this should compel you to utilize your capability to try and make a meaningful difference for them.
You keep associating my thinking to that of Hume, David (whoever that is) as a means to conclude perhaps, that I don’t factor the “mysterious” into my philosophy as a potential answer to anything meaningful. What you should have read into my comments is that I don’t attempt to advance the “mysterious” as a potential catchall by which to deny the “unknowability” of my situation. By believing one is an end in themselves, and in need of nothing greater than one’s self, it amounts to an attempt to usurp the overarching difference without which man cannot qualify his own difference. In other words, it promotes a self defeating premise. In fact, it is the “unknowable” that sits at the very heart of my attempt to understand and unify thought. See: http://www.edenorg.com/abc-09.htm. If you feel so compelled to have a go at disproving this construct, please feel free to do so. It has already been passed before some 700 scholars worldwide without incident. See: http://www.edenorg.com/abc-14.htm) Therefore, I am want to understand the problem with a few more?
I found your reference to dark energy (Einstein’s lambda) quite amusing. I’m not in the habit of quoting chapter and verse, but when it comes to something as abstruse as “dark energy,” I understand my limitations. (see: http://www.nytimes.com/2008/06/03/science/03dark.html?pagewanted=all&_r=0 . Obviously, the term is easy to mouth and point to as a catchall, but beyond that, it is literally impossible to comprehend. Hence, it is better left out of any meaningful discussion.
I’m not sure I understand the implications in your answer regarding my concern over “increasing the possibility of error.” Perhaps that’s because I didn’t make myself clear. History is a compilation of thought and circumstance as seen through the eyes of successive contributors that stand upon one another shoulders — quite loosely I would add. Hence, the idea of referencing the thinking of another, whose thought is (in turn) dependent upon someone else, ad-infinitum, is at best a sticky wicket. In short, it boils down to a form of academic gossip or a “who said he said what” situation. The odd thing about subjective speculation is that it exists without end. Thus, with each new gyration that supposedly hinges upon an old one, the misconception of fact continues to grow. What seems to be missing here is that when one references an “authority” all they are actually managing to do is construe an opinion regarding what that ‘authority’ may or may not have meant. That’s why I don’t engage in name dropping. If you have an idea that you feel is important enough to promote, then expound sufficiently upon it and “own it.” Don’t try and hide behind the skirts of another to validate it. There is enough confusion in the World without purposely adding to it.
If you haven’t managed to get the drift of this post, then let me clarify it. I’m very disappointed in what is going on here. Those of us who have sacrificed our lives to try and understand how to make a real difference in the world have been forced to go it alone, while the rest of you have been content to play in your sand boxes speculating about what is inherently impossible to know. Economists aren’t the only ones doing it, it’s become an academic trend. We need help people. We can’t go it alone any longer. I just hope that you don’t come to this realization after it is to late to turn this thing around. If that winds up being the case, then you are going to have to carry that realization with you into whatever comes next. And, this is not a burden I would want to bear. So, think long and hard on it.
“Those of us who have sacrificed our lives to try and understand how to make a real difference in the world have been forced to go it alone, while the rest of you have been content to play in your sand boxes speculating about what is inherently impossible to know. Economists aren’t the only ones doing it, it’s become an academic trend. We need help people. We can’t go it alone any longer.”
I’m one of those who “have sacrificed” his life to try to understand how to make a real difference in the world. So I identify with this quote very much. But I am not sure what you are advising here. Are you saying, because the economists are not dealing with the real world but playing games, we should get out of their blog and go it alone? But you say we can’t go it alone any longer, and it is the attempt to get others to join in shaping an understanding that got us (me) into this blog in the first place. My own belief is an old French adage, “de la discussion jaillit la lumiere.” So I think that discussion is the only game in town and must be carried on regardless. What are you saying? Drop the blog and go fishing. Keep trying to make economists relevant by engaging in dialogue with them. You’ll have to suffer the insults, like Egmont dishes out, if you do so. But the stakes are too high to give up.
Robert, you have asked the question but in order to provide better science you need to be able to think logically and to write clearly and to the point. As an engineer who is now retired I have had my share in writing research papers on technical matters but these days I have been searching for answers in macroeconomics too. The only way to tackle this job is to start again from scratch and to begin the study by theoretical analysis.
I guess most people would give up under these circumstances or they would simply be so far out from the orthodox stream that they would be completely unacceptable to even people like you whose attitude is more likely to agree with them. However my research has actually been going on for more than the time I left engineering, if I ever did, because naturally I still take an engineering attitude to our society too and I find that macroeconomics in theory is a kind of sociological engineering too!
The results of my work are hopefully to be published soon in a book on this theoretical subject, which has been prepared with the aim of making it possible for students to follow it in a way that is as simple as possible, whilst being as comprehensive as possible. This oxymoron could only be possible by taking a perspective view of the subject which avoids much detail, so that like the gas laws (for example) one does not need to study the individual (molecule) to appreciate the general property.
Such objectivity is rare in macroeconomics and there are so many humanities experts in this subject who are quite incapable of separating themselves from the subject and recognizing that the principle of aggregate idealized quantities in macroeconomics are completely different from what they know and feel in its microeconomics cousin.
If you want a taste of what I have to offer please see the model (as a diagram) that I have used and is to be found in Wikimedia, commons, macroeconomics as: DiagFuncMacroSyst.pdf which is the only one of the many diagrams there which actually follows the Adam Smithian method of separating the production process into its 3 factors and including their resultant returns in the value of the produce, etc.
My reply to you Robert was posted out of sync. For that I apologize. Since it is very important to this discussion I will post it again. Hopefully my senility will not cause a recurrence of this oversight.
“No Robert, I’m not saying that… “because the economists are not dealing with the real world, but playing games, we should get out of their blog and go it alone.” What I am saying is that those who ascribe to this discipline need to be awakened to the facts of reality. If this is why you are here, then kudos to you. If however, you have been inadvertently drawn into this game, by good intent, and have thus become engaged in trying to lay meaning to that which is impossible — by way of yet another approach to the ordering of incomprehensible complexity — then I think you need to rethink your dedication.
You conclude your response to me by asking… “What are you saying? Drop the blog and go fishing.” No, that is not what I am saying. What I am saying is that for anything good to come from all this banter we must first ALL get on the same page. As much as I believed (in the beginning) that Egmont was going to be an obstacle to achieving this, he seems to have eloquently arrived at the very conclusion I was trying to make. What we now have simply does NOT work. Hence, EVERYTHING needs to be rethought.
In doing so, it becomes obvious that we need a wholly different approach to this thing. That begins by admitting that the traditional historical approach to inculcating limitation into succeeding generations (via academia) has NOT provided us with a solution to the current problem of convergence between difference that is occurring at an ever accelerating rate of speed in the real world. In effect, academia is still promoting the horse and buggy in a jet setting world. That needs to be significantly curtailed.
In addition, the balance of power has radically shifted from the many to the few. To be successful at changing anything at this point in time, the many have to raise their voice as one. Hence, whatever we come up with has to achieve that objective. I agree with David to some degree that academia can help elucidate the problem, but he of all people should realize that we now live in a new world with an Internet that spreads countervailing information at close to the speed of light. To be successful therefore, at this point in time, we must find a way to harness its potential. Disseminating complexity that is prohibitive to the audience you are trying to reach is not the way to go about it.
I said before that overly complex constructions of though that are multilayered are an impediment to being understood. This is particularly true for this generation which is preoccupied with high stimulation pursuits (electronic games). Fully 80% of the traffic on the Internet at present is for game playing, which inadvertently desensitizes vulnerable minds to real world problems. So the question now becomes one of — how do you go about getting their attention? And, what does the content capable of doing so look like?
Rethinking Economic Growth Theory From a Biophysical Perspective
Fix, Blair. (2015). New York. (Book; English).
FULL TEXT:http://bnarchives.yorku.ca/426/ (preprint)
“Neoclassical growth theory is the dominant perspective for explaining economic growth. At its core are four implicit assumptions: 1) economic output can become decoupled from energy consumption; 2) economic distribution is unrelated to growth; 3) large institutions are not important for growth; and 4) labor force structure is not important for growth. Drawing on a wide range of data from the economic history of the United States, this book tests the validity of these assumptions and finds no empirical support.”
“…Aspects of biophysical analysis are combined with differential monetary analysis to arrive at a unique empirical methodology for investigating the elements and dependencies of the economic growth process.”
Alternative Locations
http://link.springer.com/book/10.1007%2F978-3-319-12826-9
Wow! Some “below the belt” punching going on here. I want to advance this discussion by pinning Egmont down on some definitions, but let’s sort this first.
Bruce says “Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency”. Egmont responds: “If the political platitudes of Lenin and Keynes — debauch of currency is as old as currency — were the finest hours of Meta-Macro, one trembles to contemplate what the normal hours look like”. Well, Lenin and Keynes [tarring by association?] may have been uttering platitudes, but they became platitudes because they were true and important, if not what empire-building debauchers of currency [c.f. the neo-Nazi New World Order] would have us believe. Bruces’s point?
Robert applied, to economics, Berlin’s argument about history: “[That is why Descartes said that] history was not a science – because there were no general laws which could be applied to history.” I have some sympathy with Egmont’s response: “Science deals only with propositions that can in principle be decided by objective means”, though I would
say “ideally” rather than “in principle”. However, Egmont rather shoots himself in the foot by appealing to Wittgenstein’s “Tractatus”, since Wittgenstein himself rejected this as wrong-headed and went on to write his very different “Philosophical Investigations”.
Robert wrote ““… the greatest disappointment of the past hundred years has been social science; there is no science in it.” Egmont (somewhat at odds with his own and my belief in [groups of] structural axioms) agreed with him, but then threw out psychology, sociology and philosophy too, and history for good measure. I don’t myself agree with either of them, but these assertions and counter-assertions will go no-where unless we can agree on what we mean by science.
The profession of science is only initially about acquiring new knowledge; it also has the responsibility to pass on (i.e. teach) what has already been established. Even the greatest of scientists “stand on great men’s shoulders”, and though (figuratively speaking) there may be no point in re-inventing the wheel, the starting-point for each generation of scientists is getting to know that the wheel has been invented, and how it works. Likewise with science as a profession. Sciences, like scientists, have to grow up, and an immature science is as much a science as a child is human; however, not all children are curious and not all human activity is scientific: motivated by seeking to uncover rather than obscure the truth. I agree with Robert that history is important – I am going so far as to say crucial – for the understanding of science, but not, I think, in a positive sense: more because the order of events establishes what is and what was possible. In the Dark Ages when Greek science (Aristotle’s family tree of nature and logic) had been lost, the Christian Aquinas motivated scientific discovery as revealing the glory of God. In light of destitution after the British reformation, Bacon established that the pursuit of science was not for the glory of scientists but for “the glory of God AND the relief of man’s estate” (i.e. to discover new ways for folk to earn a living). His method was taking things to bits to see how they worked. Descartes invented a different method, of doubting everything but his own and God’s existence, rebuilding scientific knowledge logically on that secure foundation. I think that is where Egmont is coming from, but clearly he doesn’t (as I do) have Bacon’s motivation. My method (“reverse engineering” evolution, then seeing follows logically at each stage of tentative re-engineering it), seems to combine the methods of Aristotle, Bacon and Descartes, and reveals four distinct phases in each level of evolution (e.g. cells, plants, animals and humans) that have been observed but seemingly not remarked on before. From none of these, anyway, does the distortion in mainstream macroeconomics result. After Descartes came the atheist Hume, who, NOT taking the human head to bits to see how it worked, assumed we could know nothing with certainty, hence could not tell the difference between truth and falsehood, and introduced a subjective perversion of Newton’s method based on statistical agreements on points of observation, i.e. today’s econometrics and barefaced Machiavellian political misrepresentation. That, Donald, is what I see you assuming and this Tony Lawson “Critical Realist” thread disputing.
I’m going to have to come back to this. Our car has failed mysteriously just as my wife and I are getting into the thick of Christmas.
Scrap the lot and start again
Towards the new economic paradigm
• Orthodoxy is a failure.
• Heterodoxy is a failure.
Neither orthodox nor heterodox economists have a clear idea of the fundamental concepts income and profit. The profit theory is false since Adam Smith. Because economists fail to capture the essence of the market system they have no valid theory about how the economy works. This is of some consequence for economic policy.
Under an even broader perspective, both political defense and political attack of the actual market system have no scientific basis.
Theories do not consist of a series of statements which describe a certain part of reality, they have an architectonic structure. In purely formal terms they consist of premises and logical conclusions. The well-structured whole has to meet the criteria of material and formal consistency.
Methodologically, therefore, J. S. Mill’s Starting Problem has always to be dealt with first. The crucial question is:
“What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. But to determine what these propositions are, is the opus magnum of the more recondite mental philosophy.”
At present, economics is not built upon a set of acceptable premises or axioms. Orthodoxy is based on behavioral axioms. Heterodoxy lacks a consistent foundation, that is, it does not meet the formal minimum standards of theoretical economics.
From the philosophical viewpoint, a set of axioms is the shortest possible formal summary of an underlying ontology. With all details left aside for the present, axioms say on a high level of abstraction unambiguously what the economy ‘is’. There is virtually no room for interpretation. In marked contrast to theoretical economics, political economics does not rise above the level of chart-supported loose verbal reasoning.
A set of axioms is the formal minimum. All that seems at first missing in the axioms is consistently integrated in the course of further analysis. Thereby, a successively closer approximation to reality is achieved. Axiomatization has nothing to do with reductionism; it is the only way to come to grips with the complexity of the real thing.
Heterodoxy has identified the numerous flaws of Orthodoxy. It is no question that Orthodoxy is beyond repair. However, Heterodoxy has not come forward with a paradigm of its own. What we have as a result is the pluralism of false theories. This situation is unacceptable.
So: “Scrap the lot and start again!” (Joan Robinson). A paradigm shift is inevitable. At present, there is no superior alternative to the structural axiomatic approach in the public domain. Its formal foundation is given by
http://www.axec.org/#!axioms/cy2g
The challenge is, in technical terms, to move from the old axiomatic basis to the new one. That is not an easy task because the whole theoretical superstructure has to be reconstructed. The pioneer’s situation could be initially as follows.
You do not have full support of the academic apparatus, nor financial support from the government or from private sponsors, nor the emotional support of a politically like-minded group. You have, though, the three essentials of the scientist: the irrefutable need for a new paradigm, a consistent set of objective axioms to work with, and your own inventive genius. Thus, you win in any case.
That is what J. S. Mill called the opus magnum.
Egmont Kakarot-Handtke
that is fairly axiomatic. though i dont know what the 3 dots on top of the Z mean (usually that means 3rd derivative, which is actually somewhat controversial—see ‘einstein’s relativity and beyond’–jong-ping hsu (the idea is just as in special relativity, every physical law should be invariant under velocity coordinate transformations—one dot, and in general relativity everything should be invariant under accelerated reference frames (falling in an elevator is same as gravity—2 dots) , this person moves to 3rd derivative (though i dont think it went anywhere—after awhile (see Hilbert’s 10th problem) its all the same. in econ they do all these ‘unit root’ tests and then there’s slutsky. (it seems like nobody got that paper from 1937 econometrica (has alot of words, and a few errors but its one of my religions)—now econometrica is just a mass of equatiosn often done better in other journals, usually physics—-talking loud and saying nothing (james brown, musician).
my view is thats fine but those are just identities (you could even say conservation laws, so you can bring in statistical mechanics, maximum entropy and ergodic hypothesis (see john earman on why it works even if everyone knows its false). the ones i looked at seem to be both common sense and also more or less generic in the field of economics. eg c=px (consumption expenditure = price times quantity. i think we learned this in elementary school; but you need a budget constraint, which means you may have to bring in lagrange multipliers and behavioral issues (ultility) like why you bought whatever your bad decisions made you decide to buy. merry christmas!@!!!).
ps. also c=px doesn’t really work, because we live in a nonconservative universe (though as in game theory, you can always turn a non-zero sum game into a zero-sum one). for example when i was in elementary school, we’d always go and buy these 5 cent candies; what they didn’t know (though later figrued out ) was we also loaded our jackets with all kinds of candy and even porno mags)—we sortuh had a competetion—who could get the most. we also got banned from going in there.
PS to Dec 18, 9.40 am. As a result of our car failing my wife has a had a heart attack, which has left me too very wobbly, so (believing, despite Donald, that broadcast truth matters even more than local pressure) I’m trying to round my contribution off for now.
Trying to follow up discussion subsequent to my last, I totally agree with Macrocompassion at Dec 18, 10:51. (I’m coming from much the same position and accept his analysis as more or less what my systems analysis method [SSADM] would come up with as a starting point analysis of what we have. The point of SSADM, though, is to eliminate the illogicalities in what we’ve got).
I also accept Egmont’s succinct characterisation of the problem (Dec 18, 5.07 pm): “From the philosophical viewpoint, a set of axioms is the shortest possible formal summary of an underlying ontology”. My underlying ontology is the Big Bang, undifferentiated energy ( so undetectable – black – apart from detectable effects), and the evolution of detectable structures culminating in the abilities (a) to detect and (b) to discuss them: manifest, that is, not just physical science but information science. I sympathise with Egmont’s set of equations, but my formal axioms are Cartesian coordinates, which can both reveal and represent in discussion all differences (as in complex number) that are implied in my evolutionary ontology. I also very much appreciate his reference to J S Mill, but he was into deductive method (appropriate for a teaching scientist’s demonstration. The Big Bang (and indeed the Biblical equivalent) did not come out of nothing. Scientists in their knowledge acquisition phase (as I know from personal experience) argue as Peirce, Bhaskar and thus Tony Lawson argued “retroductively”, i.e. back from what we can see we have, to what we would still have if (as information scientist S R Ranganathan put it) we abstracted that content rather than attempted to generalise it. I think this is where Egmont is trying to go with his formal equations.
Going back, then, to Egmont’s previous argument on Dec 17, 12.50 pm: “Theoretical economics deals only with propositions that can in principle be decided by objective means. Political economics deals with all the rest, that is, opinion, faith, second-guessing, phantasy, hallucination, myth, paranoia, metaphor/analogy, green cheese assumptions, philosophy, storytelling, etcetera”.
Basically, I agree with this as a characterisation of “pure” science, but that is useless without the association with reality which occurs in applied science, as when DNA sees the structure guiding the development of cells but researchers then have to see what particular bits of it correspond to observables in real life. Here the words genotype and phenotype representing the difference. The existence (not the detail) of the second can be deductively deduced from the first but – once you are aware of the connection – the first can be retroduced from examples of the second.
From this it follows, e.g. from Shannon’s theorem on sampling, that pure theory is pretty empty. The only things which can be unambiguously decided about a wave form is that there exists a peak, a trough and two zeros in which the up and down motions are in opposite directions, and in practice one has to sample at least eight times to ensure you are not missing shorter waveforms. I can unambiguously distinguish the difference between cells, plants, animals and humans, but not between different types of humans, even though it follows that different types exist.
The point about retroductive arguments is that they can sample a different range of observables and still reach the same formal genotype. In other words, the metaphor and analogy which Egmont here wants to throw out are actual and logically justifiable ways of discovery in the discovery (retroductive) phase of pure science, and even in the academic (teaching) phase of science, for pupils have to discover for themselves that the formula whose logic has been demonstrated to them also have meaning outside experimental settings.
The word “paradigm” means an example, and the point is, should we be looking for an example of how economics works, or of the existence of a paradigm which will reveal how lots of things, including economics, works? Egmont seems to have been after the first. I’m after the second, and can see how electric/electronic circuits and broadband communication systems (e.g. language) linking databases (people/computers) provide examples of types of modelling completely absent from economics and brain analysis. What is more, applying it to economics has led me to an entirely realistic theoretical model of how economics is (c.f. macrocompassion) and various ways in which it more logically and simply could be (c..f. SSADM). The problem is, no-one else here seems to know enough of what I’m talking about to understand its significance, even though it also applies to mathematics (where the paradigm example is still adding apples and pears rather than triangulating positions).
So, I’m left choosing more tangible and therefore familiar analogies in the hope that the principle of seeking to understand the structure of the algebra rather particular algebraic or arithmetical actual examples may finally click. I’m finishing off for now with an example I’d been trying to discuss with Robert.
My “real world” understanding of structure is exemplified by the steel girders around which a skyscraper is built, or the skeleton around which we are built, which channel gravitational forces into the foundations. This is “true” is when the structure is aligned with the gravitational forces. The idea of a wire being a structure through which electromotive forces are channelled is still a bit intangible to those who don’t understand electricity which they can’t see, so let me change the model to a waterway, which can either be a river whose course has evolved, or a man-made canal. I can accept Egmont’s three equations as a way of expressing the minimal three channels (from A to B, B to C, C to A) of a flow circuit, with the “axiom” of what goes in, must come out corresponding to the “law” of supply and demand. The economy thus corresponds to money as the water plus the traffic it conveys, while economics is this mathematical map of the structures, abstracting from the traffic. What it also abstracts from, however, is the physical history and geography of the structure: the fact that gravity causes rivers to flow one way, forming channels but not navigable networks. So, a network has to involve canals as well as canalised rivers (much as, in my information model, information has to be canalised through the brains of people). Also, hills will cause money-water to flow one way even in canals unless locks are provided to maintain water levels locally. To take account of this, Egmont’s mathematical map needs to account for non-traffic “error correction” in the “rain-river-sea” circuit of local feeders and reservoirs. Without this, how can it account for floods and traffic stalling locally because of canals drying up?
Does this help reveal the folly of imposing the euro/dollar on countries/states at different levels, as against the universal use of [was it?] bancors as water? I’m arguing anyway for local as well as international currencies.
i definately do not know u and have some disagreements (i am not a christian or any other religion but i try to live by the golden rule—which is fairly universal) but hope u get over this issue–i’ve known quite a few people who had heart attacks.
I truly wish your wife and yourself the outcome you so undoubtedly desire. I will pray for the two of you. Preoccupation with situation will do neither of you any good however. Stress only makes everything worse. Do all that you can do, and return to us with all haste. If you do not, this thread will be immeasurable diminished by you absence at a point in time when none of us can afford that.
COMPLIMENTS to you ishi: You may be interested here:
homepage: http://www.eth.mpg.de/cms/de/research/d2/economic_anth/index.html
[excerpts from homepage]
“Economic anthropology has languished for decades, a victim of influential paradigms that would deny its right to exist.”
“…Rejecting the reductionism of such approaches,…
(and);
“…Developing a middle ground position, the Department is committed to developing economic anthropology as an intellectual community,…”
(This intellectual community proposal is…);
“…committed to the theories and methods of anthropology, but we encourage engagement with economics, mainstream as well as heterodox, from the perspective of an institutionalist social science.”
(The introduction continues…in stating);
“We question whether the theories and methods developed in Western social science on the basis (mostly) of Western evidence can be generalised to changing economies and societies in other parts of the world.
Our perspective is also firmly historical and comparativist. In moving beyond microstudies, we draw not only on anthropological concepts such as that of “culture area” but also on contributions from historians, sociologists and economists.”
==============================================
also of interest: Economy and Ritual
http://www.eth.mpg.de/cms/de/research/d2/economic_anth/economy_and_ritual.html
All from: Max-Planck Institute fur ethnologische Forschung
Regards to you:
Bruce
Applications: Macro-economics in transaction and transition: REAL TIME
===============================================
http://www.tandfonline.com/doi/abs/10.1080/03085147.2014.898824
The economistic fallacy and forms of integration under and after socialism
“Abstract
The concept of ‘the economistic fallacy’, theorized most elaborately in a posthumous work, is central to the entire oeuvre of Karl Polanyi – and to its endemic ambiguities. While previous discussion has focused on capitalist and pre-capitalist societies, this paper explores the alleged fallacy in a socialist framework. Drawing on field-work in a village on the Great Plain, it is argued that the Hungarian variety of ‘market socialism’ brought about a successful balance between the Polanyian ‘forms of integration’, in a conjuncture which stimulated household accumulation and promoted the interests of the rural population as a whole. Since the demise of socialism, this balance has been lost. A renewed economistic fallacy can be detected in the era of neo-liberal capitalism, but in Hungary the scope for household accumulation has greatly diminished, and the high price paid by the countryside is reflected in reactionary political movements.”
————————————————————-
Keszul a magyar gazdasagi csoda? (Hungarian Edition) by Pongrac Nagy (1991)
(English)
From Command to Market Economy in Hungary Under the Guidance of the IMF Hardcover – June, 2003
by Nagy Pongrac (Author), Pongrac Nagy (Author)
“When Hungary decided to change its system from a command to a market economy, it was persuaded by friendly governments and international organizations, including the International Monetary Fund, that this could be best done under the guidance of the IMF, assisted by the World Bank. Inexperienced and trusting governments believed this and did as they were told. As a consequence, monetarism and neo-liberalism, by virtue of the Washington Consensus, were brought to Hungary and became the ruling ideologies of this transition economy that was totally unsuited to them. The consequences were disastrous. A difficult economic situation was transformed into a crisis situation”
https://rwer.wordpress.com/2013/09/12/peng-chens-challenge-to-the-rwer-blog/ from Robert Locke September 12, 2013 Peng Chen’s challenge to the RWER Blog is directly apropos to this discussion.
” Peng Chen’s description of how he learned economics would not fit the educational profile of most readers of this blog, and it presents a challenge to those thinking about educational reform in economics. ” …Robert Locke
I have read this thread with a good deal of fascination. I have nothing to add, except that I too wish only the best possible outcome for Dave and his family.
Glancing at thise responses back home with family around, I woke up having a dream in which a book containing old magazines included a map of Vicrotian development in which a public nature walk was gratefully entitled Cardinal Newman Way, after the man who “changed sides”, published his book on “The Development of Christian Doctrine” about the time Darwin set off on his travels, and went on to start the education of poor children in the slums of industrial Brimingham (UK) and later to reflect on “The Idea of a University”. The point, Ishy, is that the Latin word “religion” only makes etymological sense as a code word for gratitude, and while many naturally people feel that, for others it is a philosophical decision which rewards one with J S Mill’s happiness and motivates their trying (as you do) to live by the Golden Rule. (C.f. Herb Wiseman above on the effects of that).
My original reason for mentioning Christianity in this discussion was to be open about my own philosophical choice and motivation, but on its historical relevance G K Chesterton, who (long before he “changed sides”), made the point in “Orthodoxy” far more eloquently than I could: “Demoocracy tells us not to neglect a good man’s opinion, even if he is our groom; tradition asks us not to neglect a good man’s opinion, even if he is our father”. [Reading through trying to find this with the pedagogy debate in my mind, I couldn’t help thinking Chesterton’s account of his personal philosophy, like W W Sawyer’s “Prelude ot Mathematics” , ought to be required reading for all students and indeed professors of economics].
What I wanted to say, anyway, is that my wife’s heart attack revealed a problem which none of us knew she had and which NHS doctors equipped with the latest cardiac technology were able to diagnose and fix within half an hour. The roses have come back into her cheeks, for which I am profoundly grateful – to God and to all the many people who have supported me by sharing in my concern.
“Vicrotian”? I think this satisfied me that some of my many typos are not due to me but to a computer stacking what ought to be FIFO! Should read “Victorian”, anyway.
Welcome back David and I am happy that the situation worked out the way it did.
I hope I haven’t torpedoed this blog by asking for a “tangible” manifestation (that can impact in real time) from all the banter that goes on here — or, something that might serve to make a meaningful difference relative to the “immediate” threat we ALL face — an end to the continuation of life on this planet. I say this, because it seems that the substance of my posts is being purposely ignored.
If so, then this silence is nothing more than a clear indication of the impotence evident in theoretical speculation as it pertains to any meaningful application that can be derived from the study of the evolution of economic theory.
Whatever the case, let me suggest a work around to this loggerhead. Instead of licking one’s wounds due to this confrontation, why don’t we find a way to join together and use this intellectual brain trust to actually do something positive for humanity on a day when giving is highlighted as a closest approach to divinity. By one’s own admissions, we have engineers, hardware and software designers, physicists, academics, and a number of other talents that have yet to declare themselves. That’s a significant conglomeration of potential by anyone’s standards.
What I am asking here is not difficult. All it involves is the use of one’s imagination by which to offer constructive suggestions regarding how to we can achieve the desired goal — the prolonging of life on earth. These suggestions can take the form of either questions or considerations. If one can’t at least do that, then they don’t deserve to be qualified as human beings, or even animals for that matter. For even animals fight for the survival of their mates and the offspring they generate.
Here is where we find ourselves in the flow of time. At this point, only the combined influence of a majority can still impact upon the existing dynamics that the elite have perpetrated upon us. So, how do we go about engaging this majority, globally? And, it must be done globally, because the reach of the oligarchs has already become global in nature. The only thing which we have at our disposal, which is still basically uncensored, by which to consolidate the voice of a majority is the Internet. However, before we ever begin anything in real space, we need to identify a specific way to reach and successfully encourage their participation. Beyond that, we also need to know ahead of time what we can realistically ask of them; how we can intelligently field their answers; and then, how we can employ their consolidated form into something that is capable of leveraging the needed change. There are obviously other issues that need to be addressed also, but all in due time.
So, the question I now propose to ALL who frequent and/or participate on this blog is:
WILL YOU HELP?
Yes. Count me in. And here’s my suggestion, now that you have mentioned the internet.
Economic reasoning works well in a specialized realm that lost its bid to hang on to ecology. People seriously discussed whether or not the emerging field of ecology should be part of economics when I was a student, that was long ago. Now we are here and being challenged by Donald Sager.
I say leap frog the blockages instead of attempting to straighten them out.
As an applied economist lost in daily detail, I have along the way discovered that corporatist agriculture is only efficient at associating profits with owners. If we probe too far in this direction we find university endowments involved in land grabs.
I propose that we as economists declare that indigenous agriculture appears to be very much in disarray after centuries of colonialism and war yet it still produces 70% of the food on the planet, corrections could be made via education, including women.
We work at the basics for awhile. Water is a crucial necessity along with food, shelter and the benefits of free social association.
I’ll stop here with today’s project … the design of a petition lay out to avoid state disruption of democracy, which is the ancient organic tool that almost could be the source of the rumored perfect knowledge of the economic person unit. Free press helps.
Global recognition is a panorama for verifications made up of localized doable things. Use economics balanced with the information and communication age. This is applied economics as I see it. Pick one thing and do it.
Here’s me, greenfieldzerowaste.org tell me what you think.
Garrett — I’ve now had the opportunity to look at the website you referenced. I commend you and the people of Greenfield for taking a much needed stance in trying to limit the pollution that daily effects the lives of all involved — knowingly or unknowingly. I also applaud similar efforts that are bearing fruit in other parts of the US as well as around the World. My focus has never been to discourage these well intentioned efforts, but only to point to the more immediate threat that we all now face. Undoubtedly, everyone needs to pick their fight based upon their understanding of particulars; but, at the same time, we all need to come together to protect our ability to make free choices to begin with. For only by raising a unified voice across the whole world, can we hope to slow down the oligarchs that are systematically gaining increased control over the economic sectors upon which societies depend in order to placate their populations. So, what I would encourage, would be an ongoing attempt to envision larger and larger areas of possible effect, all the way up to global ones. If you want to participate in what I have suggested, then ask yourself — how can I create a project that serves to benefit everyone in the world causing them to give serious consideration to participating in that project? Obviously, you can’t wander from house to house with a petition. So, how might it be done? This is the same request that I am asking of everyone else who follows this blog.
The problem with attempting to act globally is that the organization required converts to a standard global org. Stars are born to do the communicating and office staff must be paid commensurate with advanced degrees. Next comes stakeholder status and jobs for needy young students hired to collect money from poor towns.
One never knows where practicing democracy goes. Entering the door to real democracy anywhere on Earth creates instant bonds of solidarity with the Hong Kong struggle and with those without roofs in Brasil.
One does not wander house to house with a petition. One helps a diminutive 85 year-old woman avoid snowdrifts as she struggles from house to house with a petition in the bitter depths of winter. And when a certain critical mass of citizens emerge from winter tending a still growing solidarity with distributed human intelligence, a new late spring to early summer independence day may become standard, for awhile.
Practicing real democracy focuses distributed human intelligence. Pick something doable that does not require a budget. The jump into the flow of real democracy creates a potential energy between information and expanding new information combinations via unrestricted communication. This is a quantum state change for billions of your atoms. Theory cannot help and no one can see where we are going. Real democracy focuses distributed intelligence. Direct practice with real democracy and cosmic powered biology is an experiment as well as being part of the bloom.
I can tell I ruffled your feathers Garrett. That was not my intent. What you are doing is admirable. It follows fundamental Christian thinking. What I was trying to point out to you, in the most gentle of ways, is that there exists an IMMEDIATE threat that is not waiting around for the contagious nature of good deeds to spread sufficiently across the World to hamper its onset. It is manifesting decisively even as you read this. If you believe that Deity is going to step in and make everything right and that all you have to do is manifest an emphatic response to situational circumstances in your immediate environment, then I guess I have said all I might to dissuade you to consider anything further.
You have successfully raised your concern with regard to the construction of any means by which to address the global situation. It pretty well summarizes the transition that follows any actionable approach to making a real difference. The League of Nations, The United nations, The World Bank, The international Monetary Fund, etc. — they have all gone down the road you have outlined. Whether another approach might be able to avoid these pitfalls remains to be seen. Without trying however, we are left with what we now have. And, that doesn’t spell good for anyone, including those at the very top.
What I asked for on this site was cooperative thinking by which to conceptualize a better way to address the greater problem — just in case Deity sought to extend Its vacation for a few more millennia — leaving us children on our own. Regardless of one’s current persuasions, I didn’t feel that I was asking too much. A little excursion into creative thought never hurt anyone. In fact it tends to improve one’s general state of affairs. You are probably aware of the parable regarding the master who left his estate, but not before he gave talents to his servants. Upon returning he asked of each what they had done with the gifts he had given. Needless to say, the one who had accomplished the most received the greatest reward. Creativity is one of our talents. We can use it to satisfy only ourselves, our family, our community, our city, our state, our country, those countries that think as we do, or the whole world. To stop short of utilizing your talent to its greatest extent stands the possibility of creating an indebtedness. Just something to think about.
I hope the seeds sown during the winter bear fruit in the spring and summer of your years. But at the same time, you have need to ask yourself why all those who preceded you never got to realize the fruit from their labors to bring forth the good. Nothing is cut and dried here. It’s all trial and error.
With regard to your final paragraph, I agree with its general thrust, except for the budget part. Things don’t material in the real world without some form of durable sustenance by which services are exchanged. And, anything that is about to change anything in the real world must rely upon cooperation — freely given or purchased. Additionally, I would probably dispense with your use of the word democracy. It leaves a bad taste in the mouth of ¾ of the World’s population. Besides, even Deity promotes theocracy in its place. I also don’t understand your aversion to theory. This is where the more obvious kinks in thought are worked out as ideas are banged back and forth against one another. Hence, my offer still stands.
Okay, Donald, I too am a septuagenerian, one who asks the question you are asking for as long as you have. You didn’t ruffle my feathers and I am possibly christian influenced by living in a place where there are quite a few christian holidays, and I saw the play Jesus Christ Super Star in San Francisco, other than that my thoughts never turn to christianity. Your perspective here is unclear to me.
I read with great hope some of these conversations that seem to ask what you are asking. What can we with varying understandings do to actually turn evolution away from looming specie suicide by humans, which might be sad yet tolerable were it not for perhaps changing Earth to runaway oven heat similar to Venus, our inter planetary next door neighbor. Water will be gone. Even genetically engineered bioplastics will finally breath a last gasp. Yes. We face hell on Earth. Even knowing that that does not make me a christian.
My most christian trait is I don’t attempt to convert them to thermodynamics and quantum potential analysis at the margin, even though I find zero point genesis the more interesting.
Brian Greene is a popular astrophysicist, he places theory among the stars, theory guides each of us as we examine reality. Study the stars, look at them and figure out your theory, and still the reality of it is so huge and strange you will be as as interesting and possibly correct as he, until you discover something super natural.
We agree that the human economy is a subset of the cosmos, no matter where it came from.
You ask what can be done, so start with what we have. Global powers have developed, they are negative parasites on cosmic powered biology. Humans evolved to this point of specie suicide. Now we are faced with the mature specie task, self evolve as a conscious adult specie, quickly.
There is no organization anywhere able to do this. Every organization structure adds to this dooms day collapse you and I wish to avoid. You are an economist, if small scale village level projects are not your vision then write down the economic theory of prosperity in a gradually declining population which is consciously reducing economic intensity at the same time. How else will Earth be spared the life of a lonely desert planet?
We know full commitment to education leads to gentle population decline. We also know that traditional agriculture, even after colonialism and during terrorist wars of resource and land grabbers still produces 70% of human diet. We also know that corporate agriculture uses the dispossessed as systemically necessary semi slaves. We as economists know these things because we study how humanity goes about making a living.
There is no where to look in any book that can fix a system that destroys home, eco. Global organizations are the problem. The people will develop modern democracy or disappear from Earth, something new. Perhaps people will create formats that assist in developing communication within a more rational process. Some economists will help provide parameters of economic economic activity that does no harm to Earth, others will help corporations and governments learn to accept reality rather than create and control it.
http://blogs.lse.ac.uk/impactofsocialsciences/2014/12/28/shorter-better-faster-free/
“Blogging… creates a vastly enlarged foundation for the development of ‘bridging’ academics, with real inter-disciplinary competences, honed by lots of interactions with people in other academic silos. By the 1980s the siloing of science and scholarship in reductionist mode meant that there was a sharply diminished potential for inter-disciplinary understanding. At that low point the bridging role was exploited only by a few ‘public intellectuals’ (on whom excessive attention is still focused). But now this key ‘bridging’ role is once again beginning to become a far wider-scale competency.”
Donald
I’m back considerably worse for wear after four days in hospital myself, but having read your dismissive remarks about “banter” and “theory cannot help”, find myself needing to reply.
This discussion isn’t all banter. My comment was, that even though Egmont hadn’t added much to it, at least his challenging participation had kept going constructive discussion that most people kill by leaving me talking to myself.
If you’d read and understood what I’d been saying earlier you’d see that I’ve already answered you in a couple of lines, which I expand a little here in light of what I’ve written previously: my son this morning emphasising the political aspect.
We need a credit card economy, but the obstacle to achieving it is that people don’t like what they don’t understand, so they first need to understand why. Much as Garrett is saying, unless the truth about money is agreed sufficiently to go viral, political opinion cannot be regrouped to make irreversible constitutional changes which bypass the present monetary systems and the corrupt control of institutions dependent on them.
The major obstacle to the truth about money being bankers printing (or otherwise creating or communicating) IOU’s and renting them out (i.e. charging interest on them) is people’s mindsets: a combination of personality type (http://www.myersbriggs.org/my-mbti-personality-type/mbti-basics/; in the chart I’m an INTJ) and stage of maturity, plus formal and cultural education. What we already know we tend to start using automatically: unthinkingly or even unconsciously. Most people are so busy with the human process of acquiring the wherewithall to live, marry, set up house and raise a family that they use the banking system transparently – even most of those running the system – taking for granted the traditions they see and are taught, viz the paying interest on loans, rents on property, profits on investments and taxes/commissions for public administration. The present arrangements go back in monarchic form to 1545 (that being what Shakespeare’s “The Merchant of Venice” and the English Civil War were about) and in its present plutocratic form to 1694 (the Bank of England; for US see http://www.thrivemovement.com/banking-history-timeline-follow-money).
So, of course I’m with you about the need for rapid political change. You are now asking for ideas on how to make it happen, which is an advance on saying it needs to. Well, I’ve just told you my conclusions, reached after 63 years awareness of and past-to-future informed scientific interest (not speculaation) in the problem.
This “bottom line” won’t tell you very much. To understand the problems to be resolved you need to study the accounts as whole (including the trustworthiness of the accountants), to understand the concepts of logical types and types of system and thereby how to explore them imaginatively and logically to see what doesn’t work and what does, and simulation (Steve Keen style) of the operation of feasible system architectures, in order to make informed decisions about their practical feasibility.
When I’ve mentioned ALGOL68, SSADM and PID servos (i.e. harmonisation of system and sub-system controls in the ecology, economy, Wall Street and the brains of observers), I’m not demanding impossible expertise. I’m asking intelligent readers to make time to look back or look up and think out why these are what they are, and why they are relevant to the truth of what we are saying, and to ask questions about what they cannot see for themselves.
To achieve change we have to change the minds of a majority who simply want to get on with their lives, following leaders they can trust. When on the basis of their record none of their leaders are trustworthy, the policy alternatives need to be intelligible in terms the majority are used to (independence in the cases of Scottish Nationals and UKIP, here the difference between a credit and a debit card). Alternative leaders don’t need to be good looking (cf. Alec Salmond) but to demonstrably understand and be committed to what they are talking about. Listening to each other well enough to achieve that is where we are at now. But isn’t that a more down to earth version of what you are asking for in your last paragraph?
I’m sorry to hear about your excursions in the bowels of Hell David. I have lost every member of my family to the good old medical community and its arcane Westernized practices. You should feel very lucky that you escaped.
Odd you should take umbrage with my use of the word “banter,” since I came out of meditation this morning thinking that I should have used another word — babel. It came from my envisionment of words sitting upon one another loosely held together by ideas serving as mortar in various degrees of decomposition. A present day Tower of Babel if you will. Nonetheless, its purpose seems to be the same — an attempt to reach into the Heavens to usurp whatever man imagines might be there — certainty I think. Currently, English contributes in access of 2 million words to this structure. When you factor all the words from the more than 6,900 languages still in use today (not to mention all that are now extinct) you can see what an ungainly and vulnerable structure we have managed to create. It’s also not hard to understand why it’s about to disintegrate taking us with it.
I don’t mind giving Egmont his fair due. He obviously has a good mind and extraordinary discipline. I’m just concerned that he seems to be predisposed to the necessity for tangibles that are either black or white. And yes, I know what it feels like to believe that you are only talking to yourself here, even though nearly 11,000 people have signed on to this blog. That’s part of the reason why I asked for opinions regarding possible solutions to our current and pressing situation. To encourage these people to come out of the shadows and make their positions known.
I assure you that I did catch the drift of what you were suggesting with regard to a “credit card economy.” The question which I have for you, is how do you go about implementing such a thing in the time we have left, especially in light of the growing paranoia that is beginning to crop up everywhere around the world? Yes, the truth about money must go viral, but it must be done in a way that does not immediately threaten those who have a strangle hold on the generation and movement of this money. If it does, all bets are immediately off. They will squash this effort long before it ever has a chance to make any needed difference.
You also touched very eloquently on the problem with implementing any change. The mindlessness present is literally overwhelming in the world. That is a fact with which any approach must deal. Even when you get someone to admit that there is a necessity for change, they gravitate right back to any and all means of improving their current state by way of existing dynamics, even as they nullify further involvement by claiming impotence. That only leaves those whose minds are still in a formative state, if you are going to find support for any major change.
I have to admit that I have real problems with trying to go back and understand the complicated conclusions of a bevy of thinkers that have yet, to this day, never found a way to agree with one another upon the basics in play. Caught up in complicated words which promote a subtlety of difference ,that must then undergo interpretation by others who are inclined to believe differently, constitutes an insurmountable chaos for me. It is also temporally prohibitive. I don’t have that many more years in my life left to try and figure out what the Hell they are talking about. And, I would also add, that’s all that they ever do — talk. Kinda reminds me of my significant other. There really is no need to answer her, for she continues to talk whether I do or don’t. The only thing I manage to do by answering her is to confuse her with regard to what she was saying. And of course, that irritates here. So I lose all the way around.
What I’m saying here is that the old way of doing business in academia no longer works. The world has progressed to its current state in spite of the best rigorous intervention of intellectuals using historical analysis to prevent it. The adage which says: “Those who forget the past are bound to repeat it” needs to be revised. What it should say is that: “Those who live in the past are bound to be deprived of their future. For those plotting to control the future are doing so based upon the predicable behavior of those living in the past.” We need something new here, something creative, inventive, but we don’t need more of the past. Its analysis is what has got us to where we are. And, it ain’t good.
I’ve spent more good years then I care to remember advancing the cause of computerization. And for this I feel obligated to apologize. Yes, it can serve as a useful tool in the management of some data bases, but the old adage: “garbage in garbage out” is particularly applicable to computers. The faster they become, the more garbage accumulates in the data bases they are geared to run against. Currently, prior databases, with all their faults are folded into each new generation of database in order to get a database of sufficient magnitude to warrantthe processing power currently available.
Also, there is nothing objective about algorithms or the results they yield. They are again approximations of possibilities framed within the biased minds of those who create them. The only places where these machines provide real advantage is where perverted minds establish advantageous objectives irrespective of any search for truth. It’s there that these machines successfully do the bidding of their masters to the unfortunate end of all who get taken advantage of as a result. If Egmont want his black and white, here is where he can find it. There is no doubt among those who control the movement of corporations, that there purpose is advantage at any cost. It doesn’t matter whether we are talking about banks or the military industrial complex. It’s always about advantage and “doing business” justifies the necessary means.
You say: “To achieve change we have to change the minds of a majority who simply want to get on with their lives, following leaders they can trust. When on the basis of their record none of their leaders are trustworthy… the policy alternatives need to be intelligible in terms the majority.”
I agree with you David. However, I don’t think anyone is listening to anyone unless they are impotent in their own right. Instead, they are fighting to gain even more influence with the hope of finally forcing the opposite side to capitulate. The Senate of the US provides a perfect example. Voting preference among the electorate shores this up. Complexity is confusing the majority and low ball campaigning is the prime difference influencing their decisions. Beyond that, there is no intelligent distinctions that can be made between Democrats and Republicans, they are all bought and paid for. It’s a disgrace what humanity has become.
I have what I believe to be an intelligent way to proceed towards a sane objective; but, because it can be misused I am reluctant to just lay it all out. That is why I asked for suggestions. In order to convey it to those who are interested in a meaningful way. If you e-mail me I will share it with you. Eden1 (at) localnet.com.
I too am sorry to hear of medical problems, David. No fair, Donald, tell us just a little more. Do you show us how to prosper with a declining population and intensity of economic activity? How do we do it.
Keep the young in school and training 1en years longer and the elderly on the job ten years longer.
More schooling cannot be the solution when education centered on promoting the importance of “gradualism” in an environment where “immediacy” is of singular importance. All it does is promote “in box” thinking that has got us to where we now are. Any solution to our current dilemma must come from thinking outside of the box.
Send me an email Garrett. I am hesitant to publish details because this approach can easily be misused and thereby undermined. I need to first know that the intentions of those seeking this understanding is good.