Home > New vs. Old Paradigm, students, teaching > We need a new way to teach economics

We need a new way to teach economics

from John Komlos

Remember the walkout of students from their Principles of Economics class at Harvard a couple of years ago in solidarity with the “Occupy” movement?

They thought that the economics they were being taught was doctrinaire, failed to provide a balanced perspective on the real existing economy, and did not show sufficient empathy for the 45 million people living in poverty. No wonder, the economics being taught on blackboards in almost all classrooms makes it appear as though markets descended straight from heaven while maintaining a conspiracy of silence on the Achilles heals of free markets such as not paying sufficient attention to safety, not caring enough about the environment, and being indifferent to the welfare of future generations.

Now John Cassidy reports in the New Yorker that a group of students in 16 countries are pushing back on the arrogance of mainstream economists and are demanding that a more realistic economics be taught with fewer abstractions, less emphasis on mathematical methods of problem solving, and more attention devoted to the plight of the underclass.

In most classrooms free markets become God’s gift to humanity, government is the boogeyman, and taxation is a simple burden on society’s well-being. What nonsense! Taxes are used to finance schools, basic research, and infrastructure and markets go haywire without adequate government backstop as the recent “mother of all financial crisis” so amply demonstrated. But professional economists are immune to such real-world evidence. After all, the models work perfectly well on the blackboard.

But the models are so simplistic that they present a caricature of the real existing economy. Charles Ferguson in his Oscar-winning documentary “Inside Job” demonstrated most vividly the culpability of academic economists. The Federal Reserve in DC has no less than 300 PhD economists working for it, yet they were incapable of seeing the crisis brewing for years. Presumably those who dared to disagree with Greenspan’s ideology that bubbles were nothing to worry about and that markets worked perfectly well without government regulation became outcasts.

That was exactly the way Brooksley Born, who was the single top-ranking government official with sufficient common sense to attempt to regulate derivatives, was bullied until she resigned. And the warnings of economists like Hyman Minsky, who had been warning of the inherent instability of the financial sector, were anathema to people like Ben Bernanke. Ben mentioned him on occasion in uncivil tones which sufficed to banish Minsky from the classrooms and textbooks of this country. Such censorship American style belies the ideal of the university of being open to dissenting viewpoints.

So don’t be surprised that students around the world demand a more colorful palate of perspectives. After all, markets are man-made institutions. So the human element with its emotions and complex psychology should be an integral part of the discipline. These students do not want economics to become a branch of mathematics.

Greenspan’s congressional confession, that he made a mistake and that his ideology was wrong made absolutely no impression on academic economists. They continue to disregard not only Minsky but other major economists who dissent from the mainstream’s depiction of homo oeconomicus, such as John K. Galbraith, Th. Veblen, H. Simon, and–believe it or not–when I took macroeconomics in graduate school from Nobel-prize winning economist Robert Lucas, even the name of J.M. Keynes—arguably the greatest economist of the 20th century–was banned from discussion. So if nonconformists are banned from the classroom how are students going to get a balanced overview to the subject?

This is particularly important for students of Principles of Economics because there are more than a million of them every year and most of them do not take another economics course at all. So all they are exposed to is the mainstream’s view that super rationality reigns in the market inhabited by consumers with sufficient brain power to know every detail of the economy and therefore are not satisfied with anything less than achieving an optimum outcome. They possess perfect understanding of all the nuances in small print and perfect foresight from the beginning to the end of their lives and are not inhibited by the challenges of information overload insofar as information is free, available instantaneously, and a cinch to understand. So the market works perfectly well on the blackboard. What the students are demanding is that it work as well in real life and not only in Fairfax County, VA but also in Harlem, NY.

  1. Herb Wiseman
    June 5, 2014 at 8:38 pm

    The publisher of COMER’s Economic Reform predicted before the turn of the century that we were headed for a huge meltdown. Indeed he has compiled articles to that effect in several books entitled — wait for it — Meltdown. Of course he is NOT an economist so was not heeded. He also noted then that students in schools had been forbidden to discuss certain points of view and students did not study certain economists. He is over 100 years old now. Still publishing. Author of several books. Check it out!

  2. June 5, 2014 at 9:17 pm

    Very clearly stated. Where are you going from here? How do I keep informed about the actions you take. Here’s one I’m helping with http://www.greenfieldzerowaste.org/inicio-6-5-14.html the ordinance is an amalgam from Nantucket 1990 to the latest California progresses.

  3. Fred Zaman
    June 6, 2014 at 11:59 pm

    On Wall Street’s “Newtonian Alchemy”:
    The Economy’s “Golden Hierarchical Chain of Equity”

    Through Phillip Ashley Fanning’s Isaac Newton and the Transmutation of Alchemy: An Alternative View of the Scientific Revolution (2009), we may be able to uncover the possibility of truly developing a new way to teach economics, one in which the current scientism of economics is abandoned altogether in favor of a new approach that is not doctrinaire, provides a balanced perspective on the real existing economy, and shows empathy for the 45 million people living in poverty. This approach arguably can, and will, provide a new model of the economy that makes the human element, including its emotions and complex psychology, an integral part of the discipline.

    Viewed within this framework, the Newtonianesque equations below provide a transmutation of economics backward, away from the current “scientism” of neoclassical economics, into a Newtonian alchemy of “equity”; here broadly understood to include equity that is economic, equity that is political, and equity that is social. Through this backward “Newtonian transmutation” of economics, from today’s supposed “economic science” into a human-oriented “economic alchemy,” we develop a modern, 21st century “alchemy” of finance capitalism that Newton, if he were present today, might call it “The Economy’s Golden Hierarchical Chain of Equity.”

    In the “alchemic equations” of equity below, [e1] and [e2] respectively represent Edward Fullbrook’s “capital-1” and “capital-2” here redefined as group equities -1 and -2. The “equity motive force” (emf) field dynamically coupling capitalism’s dual economies [e1] and [e2], through the dual momenta p[e1] and p[e2] of Eq. (1), will be determined by the given application (at least initially, contact forces can be assumed). These equations establish in principle a qualitative framework in the group dynamics of equity, the historical inequality of which has been described by Thomas Piketty in “Capital” in which the word inequality occurs more than 500 times. The rates “g” and “r” in “Capital” are respectively the velocities v[e1] and v[e2], of equity momenta p[e1] and p[e2] respectively. The “ways and means” by which these rates are maintained, or fail to be maintained, are represented by masses m[e1] and m[e2] of the same, the sources of which are economic, political, and social. And thus through Eq. (1) we can eliminate the conflation of equity-1 and equity-2 that mars the historic account of economic inequality given by Thomas Piketty; the historical dynamics of which produces a slowly-varying “capital/income ratio” β. Eq. (1) perhaps may not, at least not without further elaboration or definition, take into account major “external shocks” to the economy due to technological innovation, environmental disasters, and/or social and political conflict. More detailed “group equity” models, developed within the framework of Eq. (1), in principle can take into account the historical evolution of the equity masses m[e1] and m[e2], including their annihilation and creation. [e1] includes public equity and [e2] includes private equity; both can be interpreted either more broadly or more narrowly regarding their scope and content. What is the historical dynamics of group equity? It is unrelenting warfare waged in economics, waged by “equity-2” of the wealthiest 1% against “equity-1” of the 99%.

    (1a) p[e1]j =
    [{SUM(k=1,n): m[e1]n} *
    {SUM(k=1,n): v[e1]n}]j {j = 1,…, m}
    (1b) p[e2)j =
    [{SUM(k=1,n): m[e2]n} *
    {SUM(k=1,n): v[e2]n}]j {j = 1,…, m}
    (1c) F[e1]j = (d/dt) * p[e2]j {j = 1,…, m}
    (1d) F[e2]j = (d/dt) * p[e1]j {j = 1,…, m}
    (1e) F[e1]j = -F[e2]j {j = 1,…, m}
    (1f) F[e2, g1]j =
    [SUM(k=1,n): {m[e2]n *
    m[e1]n} * {emfn}]j {j = 1,…, m}

    Perhaps in this way we can work toward creating a new way to teach economics, one that is Newtonian in form, but reaches back to recover the insight Isaac Newton had, however confused it may have been in the 17th century, with regard to the deeper “alchemy of the spirit” he believed lay hidden beneath nature’s mechanical superstructure. Could there be anything in economics more important than this? Than the uncovering of spiritual manifestations in human nature (e.g. non-mechanistic phenomena of the economy) operating under the cover of the prevailing mechanistic worldview of modern science? One approach to this uncovering would be a 21st century resurgence of “alchemy” in economic thought, as here described in Newtonian terms non-mechanistically.

  4. Fred Zaman
    June 7, 2014 at 8:13 pm

    Rethinking Alchemy for the 21st Century: An Alternative, Non-scientific View of Economics, Politics, and Social Order

    Eq. (1) is mathematically Newtonian in form, but non-mechanistic in character nevertheless. It providesa a framework for a “rethinking of alchemy” (RA) that is “holistic” rather than “corpuscular,” and “Inergodic” rather than “ergodic.” In RA thus formulated, we obtain a Newtonian transmutation of matter and energy into economic, political, and social “equity.” RA of the 21st century is inclusive of much of what modern science rules out of bounds with regard to human character. RA is a paradigm that, quite unlike “science” as presently understood and accepted, elevates what it is to be human to the first order of business in academic discourse on economics, politics, and society.

    “RA” suggests that lying deep within the metaphysical structure of Newton’s laws of motion may be a higher reality in which causation – as the general theory of relativity (GTR) seemingly implies – is fundamentally holistic in time and space. Eq. (1) thus in a sense brings the ontology of GTR into Newtonian discourse conceived in the terms of the holistic transmutation of matter, energy and nature’s laws into a general dynamics of human existence. Considered more specifically within the framework of economics, RA is about Wall Street’s transmutation of the debt of the 99% into the wealth, power, and privilege of the wealthiest 1%. And this perhaps truly provides a new way to teach economics—one that can provide a strong intellectual storyline for the Occupy Movements of the 99%.

  5. Fred Zaman
    June 8, 2014 at 10:49 pm

    On RWER Renegade Economics:

    The difficulty “renegade economists” on the RWER blog are having in breaking through to a new a new conception of economics involves far more than academic resistance to abandoning the ergodic theory on which neoclassical economic theory is based. The key assumption of natural science, and thus of neoclassical economics as well, is what can be called “rationalized science” (RS): that the mechanistic framework established by the laws of nature in principle eliminate the possibility of free will in biological organisms. In biology this translates into an a priori assumption, effectively hardened into an inviolate law of evolution, that both species and the individuals thereof – in the interest of survival – pursue their “self-interest” above all else. In economic theory this is pursuit by “rational actors” seeking to maximize their income and accumulated wealth; which they must do because, within the explanatory framework of natural science, they have no other choice. To assume otherwise is simply beyond the purview of science and cannot be allowed.

    Eq. (1), however, are Newton’s laws of motion given in a form that can support a very different conclusion here dubbed “rationalized alchemy” (RA). The contrary conclusion of “RA” is that free will indeed may exist, and can be assumed to do so; but it operates within, and thus is limited by, the mechanized framework of nature established by the laws thereof. Considered in this context, scientists are intellectually duplicitous, for they constantly preach the gospel of RS, while as members of society they themselves nevertheless personally believe in RA, and expect other members of society to believe in the same. What Eq. (1) actually do is to open up for inspection the possibility that nature is the mother of free will, the actions and results of which are constrained only by the mechanistic framework of nature established by the laws thereof.

    What RWER’s “renegade economists” thus must do, if they wish to do more than endlessly complain, is work toward overthrowing RS in economic discourse, which will never happen unless and until they have something to replace it with. Once such possible replacement, perhaps the only possible replacement, being RA: a “rationalized alchemy” of free will in nature. A number of Newton’s alchemical musings are readily incorporated into the natural world thus conceptualized. Isaac Newton, as The Last Sorcerer, may yet have something important to say about what lies beneath what can be experimentally observed.

  6. Fred Zaman
    June 9, 2014 at 2:53 am

    Therefore, as currently understood mechanistically (dubbed “RS”), the existence of free will and human responsibility are in principle beyond the purview of natural science. It has no authority whatever over how we are to understand the possible existence of these phenomena; i.e. whether or not they in truth might exist, and under what conditions they might be manifested. Within the diametrically opposed, non-causal, Newtonian framework of “RA” (rationalized alchemy), however, these phenomena can exist in principle; but their existence is necessarily circumscribed both structurally and dynamically by opposed forces: passive forces that support the status quo and active forces for change. In economics therefore, such forces circumscribe free will and human responsibility in particular concerning the transmutation of debt into wealth, power, and privilege; which seemingly is precisely the concern of RWER’s “renegade economists.”

  7. June 9, 2014 at 12:17 pm

    Citizens of Earth recognize the information age is inhabited by conscious, thinking humans who know intelligence and knowledge are distributed, horizontally. Some people are economists, their job is to communicate events, experience and knowledge associated with the commercial aspects of markets; economists are a specific type of journalist, who, accompanied by teachers are among those who supply organized information as fuel for the information age. Other citizens are doctors, farmers and mothers, plus a human myriad of possibilities that together constitute the vessel of distributed human intelligence.

    In addition, Citizens of Earth know that anti democracy corporatists cut themselves off from humanity, and that they employ totalitarian control and direction using unmentionable tactics to instill obedience to secret laws supporting secret backroom plans. All totalitarian dictatorships eventually fail for the same reason; they cut themselves off from cosmic powered biology manifested as distributed human intelligence and thus become too stupid to exist. Many economists know this yet continue professing partisan propaganda because the pay is good and they can feel personally feel their own market powers, hubris then develops and good professors begin explaining their own good fortune using contorted logic which separates themselves from students.

    I took the opportunity to distribute my at that time current economics of cosmic powered biology manuals to those students, it was a cute moment; the police wouldn’t let me in but did send for a student emissary to come retrieve the literature for their table.

  8. Fred Zaman
    June 10, 2014 at 3:24 am

    The momenta of common cause in Eq. (1):

    The momenta of Eq. (1) are of groups whose members de facto work together – whether consciously or not – in “common cause” toward reaching intended objectives. “Group momentum” is the product of a “group mass,” the inertial force of which tends to sustain movement toward intended objectives against external “impressed forces” working to redirect group momentum toward different objectives, and a “group velocity” that is the movement’s direction and rate of change. The major objectives in Eq. (1) are equity-1, which is the common cause of fairness, impartiality, and justice in economics, politics, and society generally; and equity-2, which is the common cause of property rights, the acquisition of wealth, and the power and privilege derived therefrom. The dynamics of which is grounded on free will operating within and limited by the mechanistic framework established by nature’s laws; the free will dynamics of which thus lies completely outside the framework of natural science – in which the existence of free will simply has no place.

  9. Fred Zaman
    June 11, 2014 at 1:42 pm

    Can “rational actors” in economics act as free agents, as actors possessing free will; and act as if they possess such? And if they can, what would they likely do, over and above working in their self-interest to acquire ever more wealth, power, and privilege to the detriment of everyone else? These are fundamental questions in economics that economists wishing to be, or remain being seen by others as, “scientists” will likely never raise; nor respond to if raised by others, because their profession as presently constituted is simply impotent to address. Paul Davidson is welcome to respond, if he dare. Public discourse on this issue indeed is long overdue; so if he and other economists do not, and indeed will not, do so — we shall here proceed toward finding answers without them.

  10. Fred Zaman
    June 12, 2014 at 4:50 am

    A new approach to macroeconomics: “Rational actors” dominate economic policy

    It can be argued that, ultimately, economists must explain the influence “rational actors,” working collectively over the long term both within government and without, have on the macroeconomic policies of governments; in particular the influence these actors have on the policies that effectively determine the fields of play on which the economy of rational actors is played out. A major determinant of which actors includes whether the economic fields of play are level for all players, or are tilted in favor of particular players. One way in which macroeconomics can make a fair and objective assessment of how “rational actors” collectively develop the essential character of their economy slowly over time is outlined by Eq. (1); in which [v] then represents the group policies pursued, [m] is the group economic, political, and social muscle that promotes and sustains the policies [v], the product of which is the group momentum (motive force) [p] subject to change through the group impressed force [F]. In this way economists can show how rational actors, working together over time, do far more that simply promote their own, individual self-interest. They together over time dynamically create the macro-economic system that gives them both the ability and the right to pursue their own, individual self-interest; which system at the same time often effectively denies the same to others.

  11. Fred Zaman
    June 13, 2014 at 2:08 am

    Economic, Political and/or Social Actors Related in Common Cause:
    “Relational Actor Macros”

    Human society can be likened to collectives of “living relational databases” dynamically integrated by human actors related in diverse “common causes” economic, political, and social. Thus interrelated, society’s human actors create “relational actor macros” (RAM) economically, politically, and/or socially dedicated to realizing particular causes of interest. Eq. (1) below are model Newtonian RAM invoking opposing forces F[ram1] and F[ram2] forcing change respectively in RAM momenta p[ram2] and p[ram1] created by the product of RAM masses m[ram2] and m[ram1] with RAM velocities v[ram2] and v[ram1]. Eq. (1) thus is a Newtonian model of humanity’s “living relational databases.”

    (1a) p[ram1]j =
    [{SUM(k=1,n): m[ram1]n} *
    {SUM(k=1,n): v[ram1]n}]j {j = 1,…, m}
    (1b) p[ram2)j =
    [{SUM(k=1,n): m[ram2]n} *
    {SUM(k=1,n): v[ram2]n}]j {j = 1,…, m}
    (1c) F[ram1]j = (d/dt) * p[ram2]j {j = 1,…, m}
    (1d) F[ram2]j = (d/dt) * p[ram1]j {j = 1,…, m}
    (1e) F[ram1]j = -F[ram2]j {j = 1,…, m}
    (1f) F[ram2, ram1]j =
    [SUM(k=1,n): {m[ram2]n *
    m[ram1]n} * {rmfn}]j {j = 1,…, m}

    When F[ram1] and F[ram2] are constant over time, a dynamic “Nash equilibrium” de facto has come into existence. Also, this Newtonian model of relational actor macros in theory supports the ergodic axiom of neoclassical economics when applied to the forces thereof. The consequences of ergodicity in this model are far different than those of neoclassical economics. As the Nash equilibrium thereof is as well.

    • June 13, 2014 at 3:02 am

      These equations are poetic, even beautiful, with intriguing descriptions … but why call them Newtonian? The information age sees a quantum entanglement with consciousness registering information and evolving from there to complexity that could be well over half of big bang. Newton was concerned with predictable and mechanistic material interactions. How can there be no free will when the interplay between physical individuals expressing information is where the mind resides, definitely outside the physical brain, perhaps next door to language, and the expression of that interplay depends on one’s free choice of interest focus, friends and associates? Yes, there is a sort of rational distributed data base carried by the evolving complexity of information within individuals expressing the cosmos seeing itself, but this has nothing at all to do to do with Newtonian physics or maximizing self interest.

      I am pleased to see living society derived by any means. Still, is it not more a sum of waves that sometimes add to the matter of Newton and other times add to an intangible quality that expresses itself as life absorbed with wonder? Even though life must eat to live so that it can continue perceiving and experiencing one life’s choices among infinite vistas, there is no Newtonian law of momentum I can see that it must therefor rationally maximize eating.

  12. davetaylor1
    June 14, 2014 at 7:33 am

    As there seem to be just four correspondents in this very interesting thread addressing a crucial issue, I would like to respond fairly briefly to all of them.

    To John Komlos, I would like to draw attention to Robert Locke’s book “Confronting Managerialism”, my Amazon review of which drew attention to Manchester University students doing just that, managerialism having become a serious problem in universities. I totally agree with you, “particularly for students of Principles of Economics”.

    To Herb Wiseman, of course I am not an “economist” either, so I am not heeded, despite having for a long time had “a new way to teach economics”. Please heed what follows.

    I echo Garrett Connelly’s first comment and move on to the mini-chapters of Fred Zaman’s essay, which Garrett eventually calls “poetic” and I agree, though having been moved to check out the prospect of connections between Newton, alchemy (pre-quantum chemistry) and economics, I think it is misguided.

    Let me give two reasons. (1) Newton’s method was actually Euclidian trigonometrical geometry, which is visual rather than algebraic. If for convenience it is translated into Cartesian coordinate geometry, the algebra is meaningless until translated back, and likewise with logarithms used to simplify arithmetic. (2) I remember crying when, at the age of ten, I encountered simple algebra for the first time in a test paper I was supposed to be able to answer, and had no idea what a = b + c meant. I might well have done so again if as a newcomer to electrical circulation theory I had encountered such an uncouth mathematical notation, so separating specification from application that application structure disappears and painful concentration is required to remember what applies to what. Thankfully, I was presented with V = iR with the battery and resistance circuit in front of my eyes. I have been using modern mathematics for fifty years now, but spent most of that time developing system diagramming and structured programming methods such that front-line maintenance men could see what they were dealing with at a glance and be led by its algorithmic form to the root of any problem.

    Fred, you are beginning to say what I am saying about economics needing to be reconceived as an information system, but you (and it seems even theoretical physicists) don’t seem to have seen the significance of things/systems being localised and motions continuing indefinitely because its paths are circular; and the measures of such paths (e.g. the coordinates of latitude and longitude) have to be circular too (or in time, sinusoidal). In electric circuit theory the first step forward is to recognise the resistance of the wiring, so that the model becomes one of effect production and distribution costs, with the power and information carrier (electricity or money) effectively reused and the battery in the long term recharged (regenerated by solar energy). An early step is to apply Newton’s calculus to show that the maximum power transfer occurs when the resistance to production (demand) becomes as low as that of the distribution (supply) system, which in a well-designed system is largely that of the battery or generator (the unmentioned financial system). If one short-circuits the battery (by eliminating production and distribution costs) it very soon cooks – if it doesn’t blow up.

    Garrett, getting away from blaming ignorant kids for not growing up [the gist of your first comment] and very much with the spirit of your second comment, let us not forget that, besides physics and pre-subatomic chemistry, Newton was first into the wave theory of light with his prismatic rainbow. But you (and it seems even theoretical physicists) don’t seem to have seen the significance of defining information as a detectable difference, and thus [taking us back to Herb Wiseman’s comment] what non-physicist C E Shannon pointed out as long ago as 1938, that both the differing pathways of neural structure and the differing patterns of impulse along them as well as sound and electromagnetic broadcasting are ways of encoding information about structural differences in other things. The mind of God may exist in our interplay but it is our free will which is at issue, and (1) we cannot have impulses in neural pathways which don’t exist or (2) aren’t empowered (chemically, i.e. emotionally, switched on). I suggest the root of free will is our capacity to learn to wait, so that initial childish desire can be allowed to wane and better alternatives catch our attention.

    “Is [living society] not more a sum of waves that sometimes add to the matter of Newton and other times to an intangible quality [of] wonder”? Beautifully put, but I suggest that, photo-wise, these positive impressions are generated by a negative. Our actions and interactions produce habit-forming communication channels (e.g. neurons and roads) in both our brains and our environment. The “momentum” suggested by our continuing to do what we habitually do is effected by short-circuiting our emotions and thereby switching off judgemental rationality. This can happen before we [individuals like bankers or economists] have learned the rationale of the maximum power transfer theorem.

    • June 14, 2014 at 10:30 pm

      Davetaylor1, ” I suggest the root of free will is our capacity to learn to wait, so that initial childish desire can be allowed to wane and better alternatives catch our attention.”

      Maybe, perhaps the root of free will is the ability to create “unintended consequences.”
      Something that even a ‘deity’ could not change for such a change would destroy free will.

      But why would that matter on a “economic” site, for surely there are multiple definitions for : money, wealth, inequality, and on and on.
      It becomes understandable when one understands (As Soddy said ), it is meant to be confusing and misunderstood for that is part of their scheme, so the can continue their deception.

    • davetaylor1
      June 15, 2014 at 11:45 am

      Justaluckyfool, you are preaching to the converted, but missing the point (and the humour), though perhaps it is not so foolish to hide the “fool for Christ” behind an alias.

      Your first question is, whether ‘deity’ created a mechanism with free will ( a contradiction in terms), or a logic [“word”] machine which, because of the way it works, can be programmed to develop free will. I’m saying the latter, because I can see how it works., Without it, one doesn’t have to CREATE “unintended consequences”, they are all unintended, so there is nothing we can do about them. Which is the point. Your second question is well answered by yourself: given we can intend, one can have malign as well as honest intentions. But again, that’s knowing the problem, not seeing hope in the ability and intention to do something about it.

      The “Seer of Science” who in 1904 explained in principle how the brain/mind combination, language and hope work (or as the case may be, don’t), in the same year portrayed its working in a wonderfully humorous book, which gently mocks academic theorists in the following unsurpassed opening:

      “The human race, to which so many of my readers belong, has been playing at children’s games from the beginning, and will probably do it to the end, which is a nuisance for the few people who grow up. And one of the games to which it most attached is called ‘keep tomorrow dark’, and which is also named (by the rustics in Shropshire, no doubt) ‘Cheat the Prophet’. The players listen very carefully and respectfully to all that the clever men have to say about what is to happen in the next generation. The players then wait until all the clever men are dead, and bury them nicely. They then go and do something else. That is all. For a race of simple tastes, however, it is great fun”.

      G K Chesterton’s “Napoleon”, of course (about confronting managerialism), in which the characters are all crazy and I play the humorously serious Napoleon to Chesterton’s seriously humorous King Auberon. But you might see the pattern of it in my explanation of free will.

  13. Fred Zaman
    June 14, 2014 at 10:38 pm

    On the “asymmetric information” processing of living, relational actor databases:

    Eq. (1) provide a dynamic model of “asymmetric information” differentially processed by relational actors in society’s “living” relational databases. The bracketing of p, m, v, and F in these equations represent “relational actor macros” (ram) that process information in ways favorable to the respective causes of Ra1 and Ra2; such that the critical information contained in society’s living relational databases is generally known and processed only asymmetrically. The result of which is that the causes of one, whether of Ra1 or Ra2, are advanced; while the others’ causes simultaneously are retarded. Such information asymmetry can, and probably is intended to, upset any Nash equilibrium that may exist between the forces thereof. Eq. (1) are repeated below with “ram” replaced by “Ra,” in which the brackets now specifically denote the “macros” of Ra.

    (1a) p[Ra1]j =
    [{SUM(k=1,n): m[Ra1]n} *
    {SUM(k=1,n): v[Ra1]n}]j {j = 1,…, m}
    (1b) p[Ra2)j =
    [{SUM(k=1,n): m[Ra2]n} *
    {SUM(k=1,n): v[Ra2]n}]j {j = 1,…, m}
    (1c) F[Ra1]j = (d/dt) * p[Ra2]j {j = 1,…, m}
    (1d) F[Ra2]j = (d/dt) * p[Ra1]j {j = 1,…, m}
    (1e) F[Ra1]j = -F[Ra2]j {j = 1,…, m}
    (1f) F[Ra2, Ra1]j =
    [SUM(k=1,n): {m[Ra2]n *
    m[Ra1]n} * {rmfn}]j {j = 1,…, m}

    “The Janus Face of In-group Altruism” (pp. 110-119) in Kaushik Basu’s Beyond the Invisible Hand: Groundwork for a New Economics” describes the nefarious objectives of asymmetric information processing in the “relational databases” of Eq. (1), by capitalism’s wealthiest, Machiavellian [Ra].

    • davetaylor1
      June 15, 2014 at 8:34 pm

      Fred, having noticed the d/dt in your sequence of “macros”, I can see that we (and is it Kaushik Basu?) are nearer each other than I thought, and why you are calling your framework “Newtonian”.

      For the benefit of those who don’t speak Fred’s language, d/dt means rate of change with time, and Newton’s equations of motion describe motion at any point in four simultaneously true terms: as its position, speed, acceleration and accelerating force (dimensionally tº, t-¹, t-² and t-³), where if the latter changes one is talking about a different situation. But motion is directed, so we have the “which train is starting?” phenomena where the perceived speed may be ours or that of our context. These two options seem to be equivalent to Fred’s Ra1 and Ra2, where Machiavellians in our context may have “nefarious objectives” in pursuading us money is moving to us and not to them. In A M Young’s “The Geometry of Meaning” the t-³ term is called “control”.

      This is taking position as basic, but if the system is dynamic so that motion (change) rather than position (equilibrium) is basic then the dimensional model needs one less differentiation (division by time), achieved by integrating (adding 1 to the power of time), which changes position into distance covered at a given speed in a given time. This then corresponds to the PID control system I keep talking about, in which the I is the integral term, the P the new proportional tº and the D the new differential t-¹. The starting position for this is the new t-² term: the Ra1 accelerating force or cause of anything changing at all.

      This is pure mathematics, so can be applied to the control of anything, but in information systems the control is indirect. It does not enforce the achievement of the objective, but corrects the truth of information, key to its achievement, by information feedbacks correcting Ra2 (context) induced errors in it as they become evident: now (P), as residuals accumulated over the past (I), or becoming evident as the changing future becomes evident (D). These feedback circuits are available as a PID servo, a general purpose microchip, and it can be represented as four points (types of information source) with six lines (communication channels) interconnecting them. With the visual representation one can begin to see that if one point represents the objective then the others represent feedbacks; but which are which, and what happens if we get it wrong?

      There’s lots more needs to be said about this, macros and moral logic, Fred, but for now I’m just delighted that, despite our different languages, persisting in trying to understand each other has led to a real possibility of our substantial agreement.

  14. Fred Zaman
    June 15, 2014 at 3:01 am

    Garrett Connelly’s question of “why call Eq. (1) Newtonian?” is well taken. Giving this more thought, it seems clear that the concept of free will intrinsically embodied therein requires the equations be given a new name. The name that thus seems more appropriate, even though the equations formally are “Newtonian” in structure, is “the hermetic equations of life’s social spontaneous generation and transmutation”; which equations in principle include society’s economic, political, and social organization and structure. These equations therefore, which in short are perhaps best known as society’s “Principia Trimegistus,” are fundamentally incompatible with any science that is in denial concerning the reality of free will. Indeed, it perhaps may be that Newton sensed that some such generalization of the mechanistic worldview was possible, indeed ultimately necessary to explain life; and that his alchemical research was in fact pointed in that direction. Perhaps we should now return to the genius of Newton and consider his alchemical research anew, with eyes not blinkered by the successes of the mechanistic worldview.

  15. davetaylor1
    June 15, 2014 at 9:03 pm

    Fred, I’ll just repeat here what I suggested earlier: that Newton’s alchemical researches have already borne fruit in the sub-atomic physical explanation of chemistry completed by Soddy. The seed of the tree on which Humean academic scientists have left the fruit (communications science) hanging was Newton’s rainbow experiments with light.

  16. June 16, 2014 at 1:29 am

    I now see why I was confused earlier; PID means Physical Inference Device, for me.

    I’m slightly off track?

    • davetaylor1
      June 16, 2014 at 3:06 pm

      Garrett, anyone seeking the truth who is prepared to acknowledge and correct his errors is not likely to be seriously off-track.

  17. Fred Zaman
    June 16, 2014 at 3:26 am

    The methodological assumption of Eq. (1) is “methodological communitarianism”

    The “methodological individualism” of neoclassical economics currently is the de facto assumption of “atomistic behavior” in economics. However, might an alternative assumption of “atomistic behavior” in economics, that of the “methodological communitarianism” of Eq. (1), provide a scientific foundation for economics as well? One that in truth may be much more suited to empirical validation, in which economic behavior generally is more “relational” rather than “rational”; so that individuals engaged in economic endeavors are intrinsically attracted to cooperating “in-group” in common cause, as free agents working together in the ways mathematically described by Eq. (1), and as described by Kaushik Basu rhetorically in “Beyond the Invisible Hand: Groundwork for a New Economics” (ref. “The Janus Face of In-group Altruism,” pp. 110-119). Indeed, it seems that Eq. (1) provides a “strong intellectual storyline” that persuasively supports Basu’s “Groundwork for a New Economics,”); which at the same time also provides a “strategic social narrative” directed against Deepak Lal’s “Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century.” Indeed, both works may be referenced, often, in further postings on the “Principia Trimegistus” of Eq. (1).

  18. davetaylor1
    June 16, 2014 at 4:40 pm

    Fred, let me first remind you that we are looking for “a new way of teaching economics”, and that I’m advocating a visual (iconic) rather than a wordy (symbolic) method, i.e. using [a picture of] a channel or wire to replace a rule or law having the same effect. “Atomistic behaviour” is then like nineteenth century telephony using a separate wire for each conversation, whereas “methodological communitarianism” is like using broadband.
    Logically, what is true of all is true of any one, but not conversely, so economics can be rigorously macro-modelled modelled by even empty broadband channels but not by the characteristics of a necessarily incomplete sample (the future not yet having happened) of individual communications.

    So yes, in my visual methodology I’m agreeing with you: we are communities sharing economic communications channels and not a collection of individuals needing our own landlines rather than just URLs. That is what I was going to say about understanding your lists of “macros” as computer operating systems programmers do: as the creation of user-level computer program components from strings of individual machine-code instructions. That is single-strand sequential programming (like hearing), whereas “broadband” communications and “ensemble” or “object-oriented” programming (like vision) is parallel programming.

    Economic efficiency is achieved in computing by using parallel processing as far as possible, but reliability is achieved by making sure the serial logic directing the processing is error-free before it is used, and supplemented by error-correcting logic whereby parity-checks and the like reveal any errors in the data. That’s where communications science differs from the mechanical paradigm: energy is only available once, whereas information can be broadcast to parallel users without loss and at little resource cost.

  19. Fred Zaman
    June 17, 2014 at 7:45 pm

    What Eq. (1) de facto constitute is an “in-group informatics” here applied to macrosocial communication between the economy’s “haves” and “have nots.”

    • davetaylor1
      June 18, 2014 at 6:17 am

      So yes, Fred. You have six parts to Eq. (1) and I have six paths down which what goes in equals what comes out (bar any temporarily saved on the way, as in some of production being stored in shops for more timely distribution). The pedagogic advantage of the “crossed diamond” presentation is that one can see at a glance how the equations line up, and hang labels on it to show what one is talking about.

  20. Fred Zaman
    June 18, 2014 at 12:22 am

    On capitalism’s elitist “in-group communitarianism”:
    Economists that extol the virtuesof capitalism praise “methodological individualism” as its hand maiden, while behind the scenes the wealthiest 1% live an “in-group communitarianism” that intentionally subverts to the extent possible the far lesser economy (per capita) of the 99%. The artifact of which today is an ever increasing gap in the incomes of the two. The principle function of pubically touting methodological individualism being to block wherever possible any corresponding development of an in-group communitarianism by the 99%, thereby keeping the 99% the out-group, economically.

  21. davetaylor1
    June 18, 2014 at 6:33 am

    Again, yes. Perhaps I am a bit more inclined to personalize this and make allowance for people believing what they are taught. But the story of the Emperor’s New Clothes has been around for around 140 years now. The fact that grown up people still believe it is astonishing. Far from being an arrogant know-all who dares to disagree with them, I feel like child (in perhaps my second no longer face-saving childhood) who doesn’t see what’s wrong in saying what he can see: that not only the Emperor but all his fashionable Courtiers have no clothes on. No wonder perhaps they are embarrassed to admit it.

  22. Garrett Connelly
    June 18, 2014 at 1:43 pm

    There is about story Carlos and the Bostonian economist on vacation. How the baskets made by Carlos did not end up in the trash of Boston.

    The begins with a chance encounter; Carlos is just passing the edge of town after his weekly free market day when the economist notices several brightly dyed baskets strapped to a slow plodding cargo mule.

    “Those baskets look new,” the economist gambits.

    “Yes,” replies Carlos. “These are the baskets I did not sell at market today.”

    “What is the price?” Asks the economist with seemingly disinterested but polite conversation.

    “50¢, take your pick, says Carlos, who stops his mule with a gentle tug. The baskets represent little more than something slightly fragile to carry home after market day.

    The economist carefully examines each of the half dozen beautiful baskets. “How much for all of them?” 45¢ is the answer. The economist buys them all. “How much for ten baskets in the market?” He asks, oh so casually. 75¢ each is the conclusion. And for one hundred? Carlos quickly calculates in his head, “One dollar each.” What about one thousand baskets? $1.65 each is the slightly hesitant answer.

    The economist is a little surprised but persists and asks for a price on ten thousand baskets. Carlos frowns. “I’ll need to think about that,” he says. “Meet me here next week and I’ll tell you.

    The economist makes a quick trip to Boston with his beautifully made and brightly dyed baskets. He tells another economist about his plan to fill baskets with candy for mother’s day. “These baskets are almost art!” Exclaims the new partner, “I’m in.” A week later the first economist returns to the same spot at the edge of town and waits for Carlos, at the end of market day. The same routine happens again, this time sells four extra baskets, 65¢ each.

    “So how much for ten thousand?” The economist asks. “Ten dollars each,” Carlos answers, quickly.

    “What?” The economist exclaims, “Prices are supposed to drop with increasing quantity.

    Carlos explains how he spends his days working the farm and gathering materials to make baskets in the evening, he cannot afford a TV so his evening family hours are filled instead with fun, conversation and basket making.

    “If I make ten thousand baskets, I will need to hire someone to work on my farm and others to collect materials and take care of the children …” Carlos presented a long list of carefully itemized expenses, including a few unpleasant externalities from dye making.

    And that’s how the almost art of Carlos avoided the trash heaps of Boston. And how Carlos unintentionally proved to the economist that there is no such thing as economies of scale.

  23. Fred Zaman
    June 19, 2014 at 3:14 am

    Economists need a new way to teach economics? One way to do this can be simply stated: Toss out the “methodological,” de facto “competitive,” individualism of economics presently hegemonic in academic discourse, and replace it with the quite different paradigm of “in-group communitarianism.” Eq. (1) provides a paradigm through which this transmutation in macroeconomic thinking could be pursued. However, in the pursuit of such, a more socially relevant interpretation of Eq. (1) might best serve this objective: to wit an “ethnological maieutics” the concern of which in economics would be long term conflict between groups with opposing viewpoints about economic issues (Ra1 vs. Ra2), who engage in “oppositional discussion in which the defense of one [economic] point of view is pitted against the defense of another” (Wikipedia, “Maieutics”). The opposing economic viewpoints of the wealthiest 1% and the 99% being of primary concern here. Eq. (1) in its “ethnological maieutics” interpretation provides a dynamic framework for a social anthropological perspective of macroeconomic development that, if embraced by a sufficient number of “Real-World” economists, might provide a “strong intellectual storyline” for the 99% Movement.

  24. Fred Zaman
    June 19, 2014 at 9:15 pm

    Today this date June 19th, the “Junteenth” (holiday) of slave emancipation in the U. S., is very much the day of my own emancipation, from the intellectual shackles that currently bind commentators on the RWER blog. For I now realize, today for the first time, the reason why RWER bloggers have refused to engage my postings on economic theorizing. It is simply because everything I have posted is de facto a developing socioeconomic anthropology of capitalism. Respectable economists, i.e. those wishing or claiming to have scientific status, of course, simply WILL NOT engage anthropological notions of economics. Such is simply beneath them. Seeing this for the first time, I can now in theory “anthropologically” recast the “rational actors” of economic theory, in particular those on the RWER blog, as engaging in “maieutic” discourse; which of course is exactly what RWER bloggers are doing.

    • Garrett Connelly
      June 19, 2014 at 11:11 pm

      Me, too?

      • Fred Zaman
        June 20, 2014 at 9:33 pm

        Sorry Grarrett, not you.

      • Garrett Connelly
        June 21, 2014 at 1:04 am

        We are honing in on an edge of reality. There is theoretical economics and there is applied economics, in other areas of academic study this is an understandable divide. I believe theoretical musings involving application of differential analysis of any sort to cosmic powered biology manifest as human is pointless. The differential, dx, looks it an infinitely small representation of a continuum described by some function. Yet in the case of a human, 1 of 7 billion with infinity minus 2 or 3 different possible brain connections forgotten in the rush to be born, we find the infinitesimal individual to be, essentially, infinitely variable. If we can somehow agree the human being is mathematically nonsensical and still derive the need for health care and free education, students will love us for it.

      • davetaylor1
        June 21, 2014 at 9:30 pm

        Garrett, I answered this more fully unintentionally in the comment box, and lost it by a system failure just as I sent it! I sympathise with what you are saying, but as I say below to Fred, “[his equations], like my diagram, are a mere mathematical framework: his quantitatively algebraic, mine topologically ordered”. The dx’s of quantitative algebra applied to sine waves produces the same wave shifted by a right angle, translating in the cyclic mathematics of communications into the operator i. This differentiates not an infinity of differences but just four distinct phases, e.g. from peak to zero to negative peak to ascending zero, an order which is unchanged in “rubber” topology even when the waveform is not symmetrical. I hope we can agree that humans, who in different phases of thinking use more or less of four different parts of their brain or computer, are only in quantitative mathematics nonsensical, and that humans just as much as computers need their batteries charging, break down and have to be taught capabilities to earn their keep.

      • Garrett Connelly
        June 21, 2014 at 11:56 pm

        Yes, we agree, “humans … are only in quantitative mathematics nonsensical, and that humans just as much as computers need their batteries charging, break down and have to be taught capabilities to earn their keep.”

    • davetaylor1
      June 20, 2014 at 3:17 pm

      As Garrett says, “Me, too?” Are you tarring us all with the same brush? Having had my dictionary out I can see what you mean by “ethnographic maieutics” and “anthropologically” recasting “the ‘rational actors’ of economic discourse”. Socratic dialogue, drawing out of us what our ancestors put in, is indeed not a new way to teach economics. It is perhaps a failing of academics, who even in the RWER’s New Thinking forum expect full referencing: this being, of course, inconsistent with new thinking as against reshuffling the old. Someone has to be first!

      You do seem to be tarring us all with the same brush, which isn’t fair. You yourself haven’t engaged with Justalucky*, who has picked the key point that what is now being called ‘economics’ is actually what Aristotle and Soddy rightly distinguished as ‘chrematistic’ (if that’s the correct form of the word for money-making). Bloggers are often being quoted (I’m thinking of my friend Jesper Jespersen), and not necessarily engaged with the blog, never mind with your comments on it. Not being a respectable economist, and being a scientist concerned with truth and not status, I myself have gone out of my way to find common ground with you. Perhaps you might have understood that better if you had drawn the crossed diamond I described and labelled its four points with your differing “anthropods”: as in “Father and Mother feeding the Kids and the Grandparents showing them better ways of doing so”. Economics has evolved FROM a biology of this form, and INTO a chrematistics of the same form, but lately Chrematistics completed with derivatives has morphed from Free Trade into yet another level with a new type of “Freedom to Make Money”, where usurers have hijacked the government and turned into reinforcement the previous feedbacks controlling freedom to go and do wrong.

      When you wrote, I was still trying to write up for Garrett the story of this evolutionary sequence. Like Bacon, Chesterton and the authors of Proverbs before me, I’m more an aphorist than a story teller, and what’s proverbial here is that “if you take care of the pennies, the pounds will take care of themselves”. When the universe began, four “pennies” (the four phases of an energy sine wave at the then end of time) were all there were; but if we take them as being a “pound”, no matter how significant the digits become as the universe evolves and the counting algorithm reuses the numerals, there are still four pennies to a pound.

      • Fred Zaman
        June 20, 2014 at 9:37 pm

        Dave, I don’rt see anything in your comments even remotely anthropological in character. Sorry.

      • davetaylor1
        June 21, 2014 at 9:22 am

        But Fred, I don’t see anything remotely anthropological in your equations. I don’t expect to. They, like my diagram, are a mere mathematical framework: yours quantitatively algebraic, mine topologically ordered.

        Let’s define our terms. From my dictionary:

        Anthropology: the science of man in its widest sense.

        So what do you suppose I was talking about when I wrote, “Perhaps you might have understood that better if you had drawn the crossed diamond I described and labelled its four points with your differing “anthropods”: as in “Father and Mother feeding the Kids and the Grandparents showing them better ways of doing so”.

        I’m seeing the components of the economy as people communicating with each other through communications infrastructure including social institutions. People with talents in a human sense as different from each other as those between single cell, vegetative, animal and human life, (infinitely variable, Garrett, in that, like a complex number, they include different quantities of each); and social infrastructure (not least monetarisation and urbanisation) more or less forcing people to communicate via particular social and neural pathways.

        Shannon’s “The Mathematical Theory of Communication” may be a bit dry for most people’s tastes, but it seems to me a lot more obviously relevant to economics than Maxwell’s thermodynamics, relying on a demon to effect an equilibrium between two lots of bouncing balls (1% high-flyers and 99% crunched-up low flyers) separated by a [banking] bottleneck. That may be a good description of what we seem to have, but it is not scientifically “taking economics to bit to see how it works”.

  25. Garrett Connelly
    June 22, 2014 at 1:06 pm

    Sunday morning, USA, I no longer read the Sunday paper because it has become so bothersome to factor out civilian moral management from actual news. Thus I was reading Piketty so the I may finish his book and get back to economic evolution and PIDs as Physical Inference Devices.

    After pointing out Pareto’s endorsement of Mussolini, bottom pp of p367, Piketty points out;

    “Pareto’s case is interesting because it illustrates the powerful illusion of eternal stability, to which the uncritical use of mathematics in the social sciences sometimes leads.”

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