Home > Uncategorized > The dangers of neglecting methodology

The dangers of neglecting methodology

from Lars Syll

rosenbergAlex Rosenberg — chair of the philosophy department at Duke University, renowned economic methodologist and author of Economics — Mathematical Politics or Science of Diminshing Returns? — had an interesting article up on What’s Wrong with Paul Krugman’s Philosophy of Economics some time ago. Writes Rosenberg:

Krugman writes: ‘So how do you do useful economics? In general, what we really do is combine maximization-and-equilibrium as a first cut with a variety of ad hoc modifications reflecting what seem to be empirical regularities about how both individual behavior and markets depart from this idealized case’ …

When he accepts maximizing and equilibrium as the (only?) way useful economics is done Krugman makes a concession so great it threatens to undercut the rest of his arguments against New Classical economics …

One thing that’s missing from Krugman’s treatment of economics is the explicit recognition of what Keynes and before him Frank Knight, emphasized: the persistent presence of enormous uncertainty in the economy … Why is uncertainty so important? Because the more of it there is in the economy the less scope for successful maximizing and the more unstable are the equilibria the economy exhibits, if it exhibits any at all …

There is a second feature of the economy that Krugman’s useful economics needs to reckon with, one that Keynes and after him George Soros, emphasized. Along with uncertainty, the economy exhibits pervasive reflexivity: expectations about the economic future tend to actually shift that future …

I think Rosenberg is on to something important here regarding Krugman’s — and other mainstream economists’ — neglect of methodological reflection. 

As Rosenberg notes, Krugman works with a very simple modelling dichotomy — either models are complex or they are simple. For years now, self-proclaimed “proud neoclassicist” Paul Krugman has in endless harpings on the same old IS-LM string told us about the splendour of the Hicksian invention — so, of course, to Krugman simpler models are always preferred.

Krugman has repeatedly told us that ‘Keynesian’ macroeconomics has substantially contributed to making economics a science where the model is the message.

Sure, ‘New Keynesian’ economists like Krugman — and their forerunners, ‘Keynesian’ economists like Paul Samuelson and (young) John Hicks — certainly have contributed to making economics more mathematical and model-oriented.

wrong-tool-by-jerome-awBut if these math-is-the-message-modelers aren’t able to show that the mechanisms or causes that they isolate and handle in their mathematically formalized macromodels are stable in the sense that they do not change when we ‘export’ them to the real world, these mathematical models do only hold under ceteris paribus conditions and are consequently of limited value to our understandings, explanations or predictions of real economic systems.

When it comes to modeling philosophy, Paul Krugman has in an earlier piece defended his position in the following words (my italics):

I don’t mean that setting up and working out microfounded models is a waste of time. On the contrary, trying to embed your ideas in a microfounded model can be a very useful exercise — not because the microfounded model is right, or even better than an ad hoc model, but because it forces you to think harder about your assumptions, and sometimes leads to clearer thinking. In fact, I’ve had that experience several times.

The argument is hardly convincing. If people put that enormous amount of time and energy that they do into constructing macroeconomic models, then they really have to be substantially contributing to our understanding and ability to explain and grasp real macroeconomic processes. They don’t, and so why waste time on them?

Krugman’s explications on this issue is interesting also because they shed light on a kind of inconsistency in his art of argumentation. For years now  Krugman has in more than one article criticized mainstream economics for using too much (bad) mathematics and axiomatics in their model-building endeavours. But when it comes to defending his own position on various issues he usually himself ultimately falls back on the same kind of models. In his End This Depression Now — just to take one example — Paul Krugman maintains that although he doesn’t buy “the assumptions about rationality and markets that are embodied in many modern theoretical models, my own included,” he still find them useful “as a way of thinking through some issues carefully.”

When it comes to methodology and assumptions, Krugman obviously has a lot in common with the kind of model-building he otherwise criticizes.

A gadget is just a gadget — and brilliantly silly simple models — IS-LM included — do not help us working with the fundamental issues of modern economies any more than brilliantly silly complicated models — calibrated DSGE and RBC models included. And as Rosenberg rightly notices:

When he accepts maximizing and equilibrium as the (only?) way useful economics is done Krugman makes a concession so great it threatens to undercut the rest of his arguments against New Classical economics.

  1. Paul Davidson
    May 6, 2017 at 12:19 am

    over a decade ago, I convinced John Hicks to write an article to explaining why he no longer believes ISLM modeling has anything to do with Keynes. I published this article by Hicks in the JOURNAL OF POST KEYNESIAN ECONOMICS under the title : ISLM: An Explanation.

    Obviously Paul Hrugman has never learned anything since he graduated with his Ph D.a

    • May 8, 2017 at 5:22 am

      Read it some time ago. Hicks thought so little of it. Why are mainstream macro theorists and texts so packed with it still? Why does anyone consider it useful?

  2. May 6, 2017 at 2:33 am

    The entire effort to capture economic reality in mathematical models is misguided. Modeling requires simplifications and assumptions that result in such a distortion of economic reality that the outcomes are near useless. Economics is about human behavior; the entire concept that there is an economic reality beyond determined by its own universal laws is faith, not science. Human behavior is too complex to be caught in models. Economics should be rebuilt from the bottom up, using the empirical methodology of the (real) social sciences – sociology, psychology, history. For more take a look at this book: Crisis, Economics and the Emperor’s Clothes – a free download from http://www.new-economics.info.

    • robert locke
      May 6, 2017 at 6:12 am

      you’ll never come to terms with the maldistribution of emoluments unless you deal with the institutionalization of firm governance.

  3. May 8, 2017 at 12:42 pm

    Why do economists believe in (and it is a belief) macroeconomics and microeconomics? These are conveniences for economists. Simplifications at the very heart of professional economics. They mean little or nothing to actual humans who are living their lives and doing things. Seems to me it’s silly and pointless to question the models economists create based on these two categories, when no economists question the categories. If economists are going to follow the actors, in whatever they do and say, they can’t begin that work by following something that does not exist for these actors. An historical and anthropological exposition of the basic foundations of how and why economists work as they do would, in my view be a good place to begin reforming economics into a useful social science.

    • robert locke
      May 8, 2017 at 5:01 pm

      “An historical and anthropological exposition of the basic foundations of how and why economists work as they do would, in my view be a good place to begin reforming economics into a useful social science”

      If this is true, Ken, then real world economics should be engaged in the quest given in your quote. Are we on this real world economics blog engaged on this quest. If so how are we doing? I get the impression that people on the blog can do the negative part, show the limitatiions of the toolkit of mainline economics, but cannot do the expositon of the basic foundations of how and why economists work….” in real world contexts.
      .

      • May 8, 2017 at 6:25 pm

        Some of us are actually quite able to reconstruct the ‘foundations’. Asad, for instance, is doing some of this.

        And if anyone has actually understood my comments to this blog, it is clear to them that I could. I feel, however, that I am speaking to dead air, save for Asad who is very much on the same track. He, unlike myself, is also incorporating Polanyi’s largely anthropological and historical views. Like myself, he is trying to take into account benefits from use/consumption and the reality that life forms have needs that are not subject to price changes.

      • June 30, 2017 at 6:03 pm

        Ken, I think you are missing the point that academic economists simplify because they are primarily teachers and commentators rather than originators in their field. That actually is true of most science, which prior to patenting aimed to publish findings for the benefit of future generations.

        Robert, from the paper I shared with you off-line I hope you do realise my macro-economic foundations of micro-economics did start off from Polanyi’s history – Townsend’s rejoinder to Adam Smith’s invisible hand in his story of biological population control – even though I translated it into its electrical equivalent in order to discuss the IS/LM model as equilibrating potential divisions, and control servos as information sub-systems piggy-backing on energy flows. That enabled me to see that a real economy would be more like internet micro-communications piggy-backing on power flows than the present centralised macro control of power distribution by piggy-backing it on money flows.

        Thus, Larry, I too am “quite able to reconstruct the foundations” but, save for Asad, “feel I am speaking to dead air” – when not to echo-chambers which invert the sense of everything I say.

        May I say I have found this particularly frustrating with those, like Lars Syll, who lead these discussions, for without their getting involved in what we say they seem unable to move us on from stating the problem to trying out proposed solutions.

      • July 1, 2017 at 1:07 pm

        davetaylor1, I agree all science simplifies. Otherwise complexity would make the job of science impossible. Issue is, does each attempt at simplification aid understanding or impede it? That’s what scientists, real scientists focus on when they use simplifications.

  4. Norman L. Roth
    May 8, 2017 at 4:19 pm

    May 08, 2017

    Mr. Zimmerman,

    What on earth do your incoherent sanctimonious polemics have to do with the subject at hand ? Sweeping generalizations followed by vaporous accusations of being anti-human, are hardly a recommendation for being taken seriously at YOUR self appointed task of “reforming economics into a useful science”. It is your kind of simplistic polemics that make you guilty of the same acting-out that you childishly accuse ALL economists in the known universe of.
    Economics, regardless of all its problems and self-inflicted dilemmas, just isn’t your cup of tea.
    Neither is LOGIC 101. Why don’t you just give it a rest ?

    Sincerely meant,

    GOOGLE: {1}Norman L. Roth {2} Norman L. Roth, Economist {3} Norman L. Roth, Origins of Markets {4} Norman L. Roth, Technological Time {5} Norman L. Roth, Economics of Work

    • May 8, 2017 at 8:56 pm

      Ken Zimmerman’s comments are hardly ‘incoherent’. Even Daniel Kahneman talks about the Econs as basically anti-human, and, given the implicit neoclassical assumption that economics is NOT about our providing for our needs and wants, his views that mainstream economics needs to be made scientifically useful is proper. That is because there are no scientific foundations to micro-economics, and the current mainstream belief that macro-economics can be constructed upon something with no scientific foundations amounts to putting lipstick on a pig.

      I have not read your book nor do I find its blurb review particularly useful.

    • robert locke
      May 9, 2017 at 8:49 am

      Norman, sometimes I find your comments interesting, but this rant against Zimmerman on a blog that is devoted to real world economics shows more than one screw has gotten loose. As an historian, I never found economic analysis helpful in understanding real world events. As a fact, I find the use of economic theory destructive to historical understanding, and have said so since the late 1970s, when the NEH, under the influence of neo-classical economics and econometrics, tried to reinterpret economic history. Time on the Cross, the refutation of the French stagnation retardation thesis, etc. all mistakes engendered by ahistorical methodologies that ignore the concerns found in the sources. See R. Locke, End of the Practical Man, Introduction, 1984, Management and Higher Education Since 1940, Cambridge UP, 1989. Haven’t read them? Not surprising. Economists don’t read history. But these two books are considered to be pioneering in the history of management education.. When I pushed the envelop farther in The Collapse of the American Management Mystique, OUP 1996, I stepped on the toes of the business education establishment and good grief….

    • May 10, 2017 at 10:51 am

      Norman, sorry for the late reply. Had to read your book first. Interesting. I think it misses the point a bit. Your book seems an unabated attack on mainstream economics and economists. But I could be wrong on that. I like that part of the book.

      Your claim that the “Promethean imperative” or the “Instinct of Workmanship” are the most elemental motivations of economic activity is, in my view incorrect. Before technique, tool, building, etc. is imagination. First, humans invented stories to explain themselves, the world, the universe. Then they invented ways to interact with these stories, using other stories. In terms of what today is “economics” they invented hunting and gathering, along with tight-knit and self-contained groups, family and village life, and values of trust, duty, obligation. Humans lived this way for 90% of their time on the planet. But human imagination doesn’t stop inventing stories. So, government was invented, monarchy, war, technology, and other forms of economic life (mercantilism, capitalism, etc.). None of these are “natural” or innate on the planet or in human life. So, the greatest danger to humans has always been their own imagination. First, it could fail to give humans what they need to survive, culturally speaking. But more important it could produce ways of life that reduce the chances of human survival, or in some cases actively attack the species. To fix any problems or even successes thus created humans need to understand to the extent they can how those were created. That is, their anthropology and history. I’ve never minced words here or on any other occasion that in my view economics (about 90% of it anyway) is anti-human since it reduces the likelihood that humans will survive, both in terms of biological evolution and cultural adaptation. Neoliberalism hurts not just poor people, disadvantaged people, or non-white/ non-Anglo people. It endangers the species. This needs to be recognized, understood, and if possible stopped. So, we need to destroy such things as neoliberalism, the DSGE, “free” markets, and control of the world by multinational corporations. But we also need to imagine new options and arrangements to replace these. So far, regarding economic affairs rebelling economists have not lived up to the second objective. Now is the time. Keynes clearly recognized our choices. Humans evolve/adapt or die. Right now, dying (as a species) is winning. In 2010, microbiologist Frank Fenner, one of the scientists who helped eradicate smallpox, made the claim that the human species, along with other species, will be extinct within 100 years due to overpopulation, unbridled consumption, and climate change. Many agree with Dr. Fenner, but keep it quiet for fear of panic. And, of course humans’ economic ways of life are involved in all three.

  5. June 30, 2017 at 1:33 pm

    I am currently trying to complete a short book on «The Economy as a Complex System»… Or «Newtonian» deterministic mechanics versus «Hegelian» historical conditioning… This discussion seems to indicate that we are in the presence of a «methodenstreit», all over again… Still, a very interesting thread to follow.

  6. July 3, 2017 at 4:25 pm

    I have essentially given up on this discussion site as one interested in reconstructing economics as a science. Critique is not reconstruction. Only moving beyond critique to what might replace what is critiqued might led to useful reconstruction. But, even trying to do that here,introducing factors which go well beyond critique, leads nowhere, for even praiseworthy mental experiments are simply treated as over-simplifying. If, for instance, one were to say that an observer traveling at the speed of light would age more slowly than those traveling at lesser speeds, the response here will be that it is absurd even to hypothesize that there could be an ‘observer’ traveling at the speed of light, which naturally misses the point of the mental experiment. Ken Zimmerman, for instance, utterly missed the point of my asking what would happen if and only if money prices determined consumption as a starting point from which one could then introduce needs and wants and preferences. And, he ignored where I went from there — my showing the falsity of the construction of demand ‘curves’ using modern assumptions. That differs very much from Keen’s blistering critiques of demand curves –very valuable ones from an entirely different direction — for my approach not merely throws out such ‘demand’ curves as theoretical nonsense, but also allows one to reconstruct macro-economics taking account income distributions, the needs of life forms and the non-neutrality of money.

    • robert locke
      July 4, 2017 at 7:28 am

      My problem is that bloggers do not want to forego the idea the economics is a science, or should be one. It is a subject not a science.

      • July 5, 2017 at 4:57 am

        I agree absolutely. Economics is a scientia : a body of unproven and unevidenced theory lacking any realistic hypotheses. It resembles Ptolemaic astronomy in its axiomatic-deductive approach, but is less well developed, for at least the Ptolemaic astronomers paid some attention to the actual motion of the planets. It was that attention toevidence which brought it down. Yes, slowly but inevitably.

        I have little use for ‘blackboard’ economists who have defined a subject matter –consumption–barren of life forms, much less human beings, and who use a fuzzy word devoid of meaning :: namely utility as a positive ‘satisfaction or benefit’ when, obviously, having a any benefit at all is confused with realizing any level of satisfaction with having it, and which also says, in effect, contrary to any observed facts, that any way one gets a benefit of any kind –even if it is well below what is basic to survival–yields some kind of positive satisfaction all of the time. If I got loss of an antibiotic than is useful for treating a disease I have, I think I can claim that I would be dissatisfied with the amount I managed to obtained, especially since less than needed amounts would leave me diseased or dead.

        We can construct the bare bones of a scientific economics theoretically … but such theory must then be supported by actual, real world data.

        And, when we come to production, the theory of the firm is nonsense. Anyone would any sense, especially engineering sense (or actual business sense) would laugh at it. It is as much of a charade as the theory of the consumer.

        To consume is to use to obtain a benefit from a particular use. That is not to be conflated with merely buying or selling.

    • July 4, 2017 at 10:29 am

      I don’t have a problem with Larry’s position – in fact I would like to get more directly in touch with him so we could compare notes. Taking literally his hypothetical about growing old more slowly is of course equivalent to taking literally the scholastic “how many angels (ideas) can dance on the point of a pin” (the point being ideas are not spatially located).

      I do have a problem with Robert’s position, when I ask myself whether my electronics is a subject or a science. Of course it is a subject, but it is a subject which has flourished by being based on the science of physics. Likewise an economics based on information science looks promising whereas the one based on meaningless physics does not: indeed its confusion provides far too ample a cover for charlatans, fraud and downright lies. So I’m not trying to make a science out of economics as we see it being practised: I’ve been looking for (and found) a paradigm change from methods based on inappropriate mechanics to ones based on people and information systems they’ve already got: the “elephant in the room” that can’t be seen by the mechanical minds of the current generations of politicians and economists.

    • July 5, 2017 at 12:19 pm

      What I’ve tried to say, sometimes not well is that economics in human life is not a thing but a performance. It has no definite beginning or end points. It can be and is created from minute to minute by people in their relations with one another and with the nonhuman world. It’s the performance economists need to consider, to study. And that study, like the performance of economics is also performance, created from minute to minute by humans and nonhumans. History as a form of study exists because human living is always historical (in time). The study of history is the first place to begin considering economics. Supply curves, demand curves, “utility,” money, etc. may be useful theoretic constructs to lead us through what’s been created and how it was created. But they are not economics. They are representations of the performance of economics. The performance over flows these concepts, and changes over time as interactions change. We’re always required as scientists to invent new theoretical constructs to represent and display what we believe is economics. And, as scientists we always come up short with our constructs. Close observation, repetition, and use of all study tools available are the basics of any science. So it should be with economics.

      • July 5, 2017 at 6:38 pm

        Ken, when you say “Supply curves, demand curves, “utility,” money, etc. may be useful theoretic constructs to lead us through what’s been created and how it was created. But they are not economics, my reply is that they are not useful theoretical constructs for they ignore the needs and behavior of life forms.

        As such, they are NOT economics: that is, if economics is the study of the economic activity of human beings. That economics is and must be the study of human behavior in their economic activity is something I think we can agree upon. Certainly, that was Polanyi’s point.

        Which is to day that how we organize our production and exchange relationships is part of that subject matter. Our history of how we do so cannot be severed from the study of economics.

        This said, what we have today is a monetary systemwherein all exchanges occur. Neither the monetization of exchange nor the influence of nominal prices on what exchanges occur support any notion of the neutrality of money, one underlying the idea that economists can use relative ‘real’ prices in the manners they do in their theory, for that kind of analysis implies that there exists no relationship between the income distribution within society and what overall is being produced and consumed within that society.

        I begin with the simple statement that the monetary system imposes upon and constrains human behavior in ways we must understand/hypothesize about if we are to develop a useful economics either as a study or as a ‘science’. Indeed, how money operates must be a subject matter addressed by economists. Incorporating how money operates is essential to developing any actual understanding of how and if we realize our needs and how and if we realize our preferences. The notion that we always realize our preferences is part of the ‘mathemagics’ built into current theory because it presumes we do via a set of assumptions about ‘indifference’ that have no real world existence.

        Where we are far apart, Ken, lies in my view that portions of economics can be studied independently of other portions within a scientific framework of testable hypotheses, and that if we do so, then we can describe a part of the real world of economic decision-making.

        And where I start is by noting that both production and consumption describe the use of ‘goods’ that are ‘goods’ because empirically definable benefits follow from particular uses. In that sense, All is Consumption, and the monetary system as a means of consuming ‘goods’ and distributing the means to consume subject to its price system is my particular focus.

      • July 7, 2017 at 9:46 am

        Larrymotuz, I agree with much you say. But it seems too simplistic.

        First, mainstream economics profession’s theoretical constructs do a poor job of including such events as environmental harm and environmental justice. This is but one way in which the profession fails.

        Economics is the process of human efforts to endure, to make themselves durable. Hunter-gathering changed after over 150,000 years because it failed this goal. The other efforts that followed it, from feudalism to capitalism also failed. Each effort collapsed in turn. Today we live in a world split between the wealthy, healthy, and secure; and the poor, sick, abused. Economists do not study this situation. Instead they propose remedies for it that continually fail. Why? Because most of those remedies have no practical basis for success and are grossly immoral.

        You are correct that economics based on money is a large part of economic activities today. This raises several questions. First, what is money. Based on historical and sociological research the description of money common in most economics textbooks is entirely false. Money was not invented to make economic actions more efficient and effective compared with barter. There is not one example of a pure barter economy. Economist Felix Martin in his book “Money: The Unauthorized Biography,” tells us money not a fixed, physical thing, but a virtual “social technology” that should be used to enable a more democratic and equitable world, bring order to the banking system and foster “peace, prosperity, freedom and fairness.” Money is not a business or economic tool, but rather a process of relationships, sets of ideas and practices which organize what we produce and consume, and the way we live together. I agree. Second, as a result there are multiple forms of money. Viviana A. Zelizer notes that, “We routinely assign different meanings and separate uses to particular monies.” In her research, she focuses on such varieties of money as gifted-money, poor peoples’-money, dirty-money, charitable-money, etc. Hyphenated money is the norm, not the exception. That’s why Martin can assert that money can produce financial anarchy as well as financial security, depending on how its defined and applied. Money owes us, says Martin, “…an equitable society, a functioning political system, a peaceful economy that can stay off the exhausting roller coaster of financial booms and crashes. There is a need right now to change the process of money. With this broader view of money, we’re also able to include work and production that is not compensated with dollars (even digital ones), such as household work, care giving, and support for children and aging parents. So, money may constrain and restrict human actions, but as we re-create money so we also inspire and expand human possibilities and freedom.

        You seem interested in money designed to further consumption and the creation of commodities for markets. That’s certainly one form of money. But I prefer the form of money that supports democracy, human dignity, equality, and financial security. They both provide the means (the goods) to make human life durable, buy only one of them also makes that life enjoyable, useful, and dignified. This is an “economic” decision that has far too often been made with little thought. So, yes benefits might flow from money used for markets. Question is what benefits and for whom? The “phenomenology of money” is a good way to begin this investigation. But we need to keep in mind just how difficult preparing any phenomenology is. And that the investigation cannot end with phenomenology, but go on to money in collective life.

      • July 7, 2017 at 10:22 am

        Just an aside remark to this very informative comment: of the various books on money, that I’ve read, the most interesting one – full of humor, I might add – is the book by J.K.Galbraith, «Money, Whence it Came Where it Went»… Worth reading, just for the sheer pleasure of it.

      • July 9, 2017 at 4:50 am

        Fonseca-Statter, love this Galbraith book. I think most social scientists ignore it as too “economical.” But I think it’s a wonderful book. I always remembers Galbraith talking about how scholars of money behave as if they had invented the stuff and are in a privileged position to understand and explain it. Nothing is further from the truth.

      • July 13, 2017 at 10:14 pm

        Ken, my approach is not simplistic. It is ultimately data driven. It highlights that profound differences exist between the voluntary choices human beings can make, given their incomes, and involuntary necessity driving so-called ‘choices’ in a monetary system. It creates measurable objective utility functions, so that it cannot be said that those who obtain less of necessities needed are nevertheless maximizing ‘satisfaction’. Indifference analysis that suggests that people always get what they positively prefer is simply a crock as is always positive utility. My approach not only allows one to examine the conflict between choice and necessity, but to show how this changes when prices or income changes.

        I also do not ‘assume’ budgets. I have, rather, a budget formation decision lacking in all of neoclassical economics, and, for that matter, most of economics. I say most because engineering economics as practiced by engineers as project budgeting depends entirely on the outcomes they hope to realize.

        So, mine is an economics of budgeting based on outcomes; an economics of ‘settling for’ rather than maximizing. An economics able to discuss not how the utility of money is constant or declining but how having more money allows one to actually realize getting satisfaction in the various dimensions wherein human beings derive satisfaction or not.

        My approach is fully data dependent except for one hypothesis: namely that, if money prices and income are the only considerations –i.e. that if there are no preferences no needs–then the optimum ‘choice’ will always be a basket wherein the amounts spent on any item in the basket will be identical across all ingredients within the basket. If you had any understanding of just how many textbooks illustrate consumer choice decisions with subjective functions like I = f(x,y) = x^a *y^a you might understand what I am getting at.

        In a two good decision, that always implies y = px/py * x which just happens to be a consumption possibility schedule of basket points for any level of income you care to define, although this consumption possibility schedule dependent upon income is currently undefined in economics.

        I am not making anything simpler by defining that schedule as a consumption possibility schedule imposed by a monetary system in the absence of preferences. I am showing that money, prices, and incomes matter in ways heretofore misunderstood in existing theory and that deviations from this non-preference function –i.e. actual data plotted for individuals and for aggregates– are extremely important in what they can show about the conflict between choice and necessity, affecting the range of what is produced for whom, the stability of economic ‘paths’ in aggregate, and a whole lot more. Indirectly, and depending on how the data show people behave, it may also permit some non-subjective measure of ‘preferences’ in terms of tastes.

        Simple does not begin to describe what I am trying to do. Reconstructing the very foundations of economics within monetized societies starting with the fact that we are life forms whose choices are most definitely affected by necessity, prices and incomes may seem simple to you, but it is anything but.

      • July 15, 2017 at 12:10 pm

        larrymotuz, sorry if I offended you. Did not intend to do so. Based on your detailed summary I still make two suggestions. First, you cannot build such a scheme based on the assumption that money is of single form or use. The forms and the results of economic arrangements and transactions change based on changes in money. The forms and results of research and policy recommendations will likewise change based on the types of money involved. Second, you’re beginning at the wrong end of the world. You begin with a list of assumptions from economists’ theories and then collect data based on those assumptions. Those assumptions may fit some situations. But certainly, will not fit others. I always begin with the theories and assumptions of the actors performing in the world, whomever they are. Bankers, home purchasers, shoppers, hedge fund traders, etc. After all, it’s their ways of life you want to uncover and describe. They’re the experts. You’re just a stranger attempting to peak into their worlds.

  7. July 5, 2017 at 5:00 am

    I can be reached at larry.motuz@gmail.com.

  8. July 5, 2017 at 2:36 pm

    The skeleton of my methodological approach to the study of the Economy as an historical process of production and distribution, is a conflation of «historical» and «anthropological» approaches. As if I were a visiting observer from another planet… In a sense, the study of the historical evolution of the interactions between humankind and «mother» Nature… From some 30.000 years ago to the present.
    We, humans, seem to be the only biological species with the compulsion of producing more than we need for our own reproduction. The decision as to what to do with the «surplus», used to be a collective (in the days of primeval communitarianism…) and through various stages do chiefs, kings and emperors (with the «generous» assistance of soothsayers and all kinds of «priests»… The ritual usage of that «surplus» could still be studied in the ceremonies of the «potlatch» at the turn of the XIX to XX century.
    Once that decision power fell into the hands of private merchants we entered a period of exponential growth and «intestinal» crises… This is the rough summary of a communication to an international symposium in June 2015 (on «Physis and Complexity»…
    My point is that we need to start from the study of the system as a totality and then «descend» to the details of «agents» behavior, motivations and processes.
    Nicholas Georgescu-Roegen and his «The Entropy Law and the Economic Process» (even if somewhat outdated…) is a good reference.
    https://www.academia.edu/17153917/The_Economy_as_a_Complex_System.

    • July 5, 2017 at 5:55 pm

      I haven’t read your paper yet, but the transition from communal property with personal use to private property is part of what, for lack of a term, I call the phenomenology of money. It is a history well worth exploring.

      I have said elsewhere:

      The word property comes from the Latin: pro prius meaning “own use”, whereas possession, posse sedere merely and temporarily sat upon the possibility of another’s use while it was possessed but not ‘owned’.

      Private property is individually ‘owned’. It’s use –however it is used– is determined by its individual owner: no one else.

      Personal property was not necessarily ‘private’ property. Thus, a community might have a common field wherein a portion was reserved for the use of a family. Or, the common property of a community might be personally used by others to graze their animals –subject to strict rules set by the community.

      Thus, personal property can be reserved for own use by custom, tradition, and law without ever becoming private property.

      The above shift accentuated the actions of individuals over those of the community, emphasizing the ‘I’ and de-emphasizing the ‘We’, introducing into economics a methodological individualism wherein the ‘We’ effectively vanished along with ethical considerations about how property was to be used.

      I am very much looking forward to reading your paper.

      • July 5, 2017 at 8:30 pm

        Just a short word of caution… That paper is also a very schematic «bird’s eye view» of what I have in mind… Needs a lot of development…

      • July 8, 2017 at 11:56 am

        I have read it and it was well worth reading.

    • July 7, 2017 at 9:53 am

      Interesting points, Fonseca-Statter. We can resolve the problems you list by redefining money. This means changing the process of relationships, sets of ideas and practices which organize what we produce and consume, and the way we live together. Money can do all this. We should expect this of money and make certain it happens,

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