Home > Uncategorized > Re-thinking Theoretical Economics – new WEA book

Re-thinking Theoretical Economics – new WEA book

New paperback from WEA Books
A Philosophical Framework for Rethinking Theoretical Economics
and Philosophy of Economics

by Gustavo Marques
is now available from the Amazon pages listed below

Here are links to the book’s pages on the various Amazons
United States $18.50,  Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, Spain, United Kingdom £14.25

This book argues that mainstream theoretical economics has been a basically misdirected effort at creating and exploring imaginary worlds with little practical use, rather than focusing on developing instruments to understand and explain real-world economic phenomena, Gustavo Marques’ new book shows how economic theory could be redirected so as to help find solutions to real-world problems.

Exposing the ungrounded pretensions of the mainstream philosophy of economics, Marques’ carefully argued book is a major contribution to the ongoing debate on contemporary mainstream economics and its methodological and philosophical underpinnings. Even those who disagree with his conclusions will benefit from his thorough and deep critique of the modeling strategies used in modern economics.
Lars Pålsson Syll, Malmö University, Sweden

Is ‘mainstream philosophy of economics’ only about models and imaginary worlds created to represent economic theories?  Marqués questions this epistemic focus and calls for the ontological examination of real world economic processes.  This book is a serious challenge to standard thinking and an alternative program for a pluralist philosophy of economics.
John Davis, Marquette University, USA and University of Amsterdam

In recent decades economists have focused heavily on the development and use of models. In this scholarly but accessible book Marques clearly describes the limitations of this approach and suggests alternative directions. It is a valuable addition to the armoury of anyone concerned about the nature of mainstream economics.
Stuart Birks, Massey University, New Zealand

In this book Gustavo Marqués, one of our discipline’s most dexterous and acute minds, calmly investigates in depth economics’ most persistent methodological enigmas.  Chapter Three alone is sufficient reason for owning this book.
Edward Fullbrook, University of the West of England

Other reasonably priced WEA Paperbacks
Finance as Warfare by Michael Hudson
Developing an economics for the post-crisis world by Steve Keen 
On the use and misuse of theories and models in mainstream economics by Lars Palsson Syll
Green Capitalism. the God That Failed by Richard Smith
40 Critical Pointers for Students of Economics by Stuart Birks 
The European Crisis editors: Victor Beker and Beniamino Moro
Piketty’s Capital in the Twenty-First Century editors: Edward Fullbrook and Jamie Morgan
The Economics Curriculum: Towards a Radical Reformulation, editors: M. Alejandra and J. Reardon

  1. October 7, 2016 at 8:12 pm

    An economy can be thought of as a feedback control system. When put into that framework it is obvious why economies are unstable and what is needed, generally, to stabilize them. Finding the specific solutions will still be a daunting task.

    • October 9, 2016 at 8:22 am

      Absolutely true, Charles. I’ve been saying this for years but it helps to have it stated this baldly.

      The reason finding the specific solutions has been a daunting task, in my view of this as a control system developer, is that the economy, like life, has evolved by the original system becoming a subsystem of a larger one with more freedom of controlled movement. (C.f. cells becoming plants becoming mobile animals becoming intellectually mobile humans creating control system).

      First, increasingly reliable navigation facilitated international trade, and in our own time international information exchange has become as rapid as face-to-face communication. Its aim has gone from cooperation to reliably feed the locals controlled with the pressure relief valve of emigration, to profiting from mass production supplying international trade by negative information feedback matching supply to demand to reliably return a monetary profit, to reliably making money. This unfortunately requires only a metaphorical printing press with just a few people to run it.

      From a human point of view it has become unstable because the former corrective feedbacks from failures of human and (cumulatively) ecological well-being, and from failures of sales and accumulation of stocks when aiming for commercially profitable production, have not only become logically irrelevant, but when habitually relied on become positive feedbacks, increasing commerce by narrowing the bandwidth of ecological and human well-being. Having just read Herman Daly’s extremely lucid “Essays Against Growthism” (see advert right) I can strongly recommend it.

      Post-World War I, control was still of the Steam Age variety, hence the wasteful blowing off of economic steam at the end of the post-war reconstruction bubble, i.e. the reduction of stocks and thereafter rate of production we knew as the Slump. The steeper the hill, the more coal the driver puts on the fire, and if he’s in the dark about when to ease off, the greater will be the blow-off at the top.

      Pre-World War II, Keynes learned from steam age mistakes and moved towards the control systems of the Information Age, using information about accumulating human unemployment rather than speculation about the unforeseeable to motivate increasing diversion of commercial blow-off into infrastructure maintenance and development. In effect he reduced commercial capitalism to a subsystem of political economics.

      Post-World War II, Shannon and Wiener, who had worked on interpreting corrupted and and encrypted information, introduced information theory, dynamic error correction logic and cybernetics, but shamefully, most academic economists, not even having understood Keynes, continue to represent politics as a subsystem of economics while – like lawyers – making jobs for themselves by covert obfuscation and support for tendentious legislation. As often noted here: they have concealing the truth about how the system works (even from themselves) by using graphical methods and mathematical equations which imply any errors are in the specific data rather than in the logic of their own way of looking at it.

      So, for a solution to be specific [dictionary definition: “constituting or determining a species”] it must change the one thing which is common to the operation and morals of the whole politicised economic system, namely the understanding of money. Backing it with collateral merely reinforces the problem of people wanting it because they think it valuable, and paying more attention to acquiring it than to the social value or disvalue of how they do so. Hence my own advocacy of operating by means of a credit card system, where money represents not value but debt. “Those who won’t work, shan’t eat”, indeed, but Saint Benedict’s ultimatum was given to monks who, having had their livelihoods and comforts provided, refused to share the work of the community. From childhood on, what is valuable in life is not earned beforehand, but rightfully repaid afterwards, not begrudgingly but gratefully. Given a lift as a hitch-hiker, I express my gratitude by giving others lifts when I am able. Given the possibility (re-enacted by Christ) that the Big Bang was God dying that we might live, the least we can do is look after the family and home he gave us.

      • October 9, 2016 at 11:27 pm

        Finding and defining the inputs, outputs, feedback, gains and bandwidth of the elements is, to me, the daunting task. William McChesney Martin recognized the need for negative feedback when he pronounced his famous “punch bowl” remark. He and the Fed generally are tasked to control the economy albeit with weak tools plus near zero understanding of response times, phase relationships etc. The one I love was the Feds attempt to give Bush 1 an edge in the ’92 election but they did not understand how long their “boost” would take so Clinton ended up claiming it because it happened on his watch early in his administration. But you are very correct. Technology has advanced to a point where the FOMC could be replaced by an AI machine taking actions on a daily basis, not once each four months, using lots of variables such as CPI, stock market averages, money velocity, bank loan rates and, I would suggest, a dynamic tax system. Such a system could outperform the FOMC in that part of the economy.

      • October 10, 2016 at 10:07 am

        “But you are very correct. Technology has advanced to a point where the FOMC could be replaced by an AI machine taking actions on a daily basis,”

        In these terms my credit card argument was actually for properly educated individuals rather than for AI machines, and against any need for an FOMC and “variables such as CPI, stock market averages, money velocity, bank loan rates and … a dynamic tax system”. Individuals receive feedback from their bank statements about their level of indebtedness insofar as they are not earning their keep, while governments need to establish easily achievable fair shares and feed back what needs doing to repair, keep in phase with and maintain social infrastructure and the reproductive capacity of Nature.

        More easily said than done, I know, but this is about the need for “Small is Beautiful” rather than state-run or fraudulent “Reserve Banking” economics. Given electrical tools and automation, I am envisaging a time-sharing rather than specialist-sharing of the work necessary: on the land, in the mass-production of production materials, on communications and local arts, crafts and development infrastructure, and in the care, education and self-regulation of our communities.

        On this last, it is not enough to claim the world is over-populated. For a community to regulate its own size it needs a LOCAL target level (so imbalance is noticeable), general understanding of fertility cycles and the ideal of self-control, together with feed-backs on deaths, pregnancies and births (allowing for re-targeting after catastrophic infrastructure-destroying events like wars and earthquakes).

      • October 10, 2016 at 11:49 am

        A notable omission from the above sketch was local housing [shorthand for “accommodation”, together with its sewage and other utilities?]. This before “development infrastructure”.

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