Mathematics and the constructions and emergent outcomes of socioeconomic phenomena
from Ikonoclast
When we are dealing with physical phenomena, the fundamental laws of the cosmos are independent of human understanding or modelling of them. No matter what you or I or any human thinks of the Laws of Thermodynamics or even whether we are ignorant of them, the fundamental phenomena follow a course which can be well modeled by those laws when those laws are mathematicized to permit accurate descriptions and empirically verifiable predictions. However, when it comes to socioeconomic phenomena, what we think and believe enter into the constructions and emergent outcomes of socioeconomic phenomena themselves (along with fundamental law effects also entering into the constructions and outcomes). At this level, any theory of the system enters into the system as a compounding or complicating element. Thence meta-theory (theory of the impact of theories on the system) will also enter into the system. These theories enter into the system by changing the behaviors of human subjects, not by changing any fundamental laws of course.
It is not possible to mathematicize the above process into fundamental economic laws for the simple reason that most socioeconomic rules are arbitrary and may be changed at any time. Here we must distinguish between rules and laws. Rules are social decisions on how to conduct matters. Hence rules in this sense are any and all of customs, legal laws, accounting rules, finance rules and so on. Rules instituted into systems become algorithms or recipes; lists of ingredients, methods and time orders for doing things. Any of these rules may be made one way or made any other way with the major proviso that rules which contradict fundamental laws are not actionable. Rules which self-contradict are also not actionable unless one rule takes precedence over another rule.
It is not possible to fully mathematicize the changing ground of socioeconomics precisely because the bounds of the problem can be changed by changing the rules of the game (meaning the cooperative-competitive game) of socioeconomic behaviors in praxis. The socioeconomic system which we seek to model continually mutates as we change its rules. Changing the rules happens by any and all of fiat or consensus up to and including gaming, loophole finding, criminality and so on. Also, theories of the system enter into the system as outlined above. Changing the rules sets up new constellations of bodies and interactions (as processes) and annuls other constellations. This statement refers again to the relational system cosmology analogy. This is not just an n-body problem where n is a huge number. It is also an “n-rule” problem where the rules continually mutate in designed and un-designed ways.
The totally new social cosmology Bichler and Nitzan very rightly call for is not predictable nor even envision-able in many ways. Being a new and emergent complex system it will demonstrate radical novelty. Radical novelty in systems emergence theory is not predictable because an explanatory gap, or an epistemological gap, unavoidably exists between the precursor or substrate system and the next radically different system.
Calls to theoretically elucidate (and worse, calls to mathematically delineate) the new system are totally inoperable calls. We cannot predefine it by positive or prescriptive statements. We do not know the right way to go as it is an open-ended problem with an infinite or near-infinite move tree. The problem is as if it were a hyper-complex chess game played on an near infinite board. The analogy of search tree “look ahead” logic is appropriate. In a massively complex open-ended problem, the series of perfect moves leading to perfect or “won” game is incalculable. What are calculable are very bad and indeed dreadful moves which lead to checkmate (human civilizational or species extinction) in a “few moves” meaning in a relatively short time frame.
https://rwer.wordpress.com/2019/05/01/on-the-use-of-logic-and-mathematics-in-economics/#comments
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Real-World Economics Review Blog 
As long as theory postulates that one needs ‘permission slips’ –money and/or liquidity– to be a ‘consumer’, and as long as economics says that only the welfare of ‘consumers’ matters, it will be plagued with the irresponsible use of mathematics to delineate subjective preferences and with being totally irrelevant to the behavior of life forms.
Life forms don’t need ‘permission slips’ to be consumers. They are bodies, have bodies, and must act out of those bodies.
When money can be traded for all goods, and vice versa, then relative prices in terms of money operate as a constraint on what can be consumed and in what quantities. In the absence of ‘preferences’, the ‘ideal basket’ of goods is such that p1x1 =p2x2=p3x3= …pnxn, which operates as an independent constraint on the bio-psycho-social consumption of goods to obtain objective benefits from their use.
So, if one examines the ‘rules’ for obtaining ‘permission slips’ to consume, then one can broadly outline socioeconomic ‘likelihoods’ as potential social and economic ‘paths’ we are headed to or already in. Indeed, it is possible to mathematically describe these for both individuals and societies.
Well said Ikonoclast. Glad your post was highlighted. I greatly have enjoyed your comments.
If you still do not understand the economic model based on the social structure of society, then all theories will be an empty sound. The theory of the impossibility of understanding the theory of extreme stupidity. What is the difficulty in constructing a matamatic model of exchange between three elements in which three types of property are involved? The economic construction is simple and clear (but not for the author of the article) and is not based on a mathematical model. On the contrary, the mathematical model should be built on the basis of the existing economic structure for 250 years. It’s like trying to build a wheel based on wheel theory and claim that changing a wheel theory affects the rotation of the wheel itself!
I disagree. The problem is not really that economic theories enter into the system as confounding elements. The problem is that the theories are just wrong. All of the fundamental and usually unstated premises of economics are false. It is also not the case that socioeconomic rules are arbitrary and may be changed at any time. We are actual beings who live on an actually existing planet. We have only five elements with which to provide for everything we need and want: energy (sunlight), natural resources (rocks, trees, water, etc.), time, knowledge, and ingenuity. That’s it. You can make up theories that pretend otherwise but they will be useless at best. Economics is not about the allocation of scarce resources. It is, or should be, about the sharing of plentiful resources. The first premise of economic reasoning should be that every person is born with an equal and inalienable right to a share of everything necessary for a secure, dignified, and productive life.
According to Ikonoclast, in socio-economic phenomena the “n-body” physical/natural system component is compounded by the “n-rule” social-decision normative component, and “meta” (recursive) pathways of causality, the result being a dynamic explosion of behavioral possibilities and radical uncertainty, rendering mathematicized modeling of that behavior infeasible.
But, social-decision rules need not always add complexity and uncertainty. They can also reduce them — constraining behavior, limiting the range and uncertainty of outcomes, making behavioral modeling easier.
At the moment, what would be more relevant to this profession, is to anticipate human behaviour based on an empty basket, as is the case with billions of people around the world. That would be a real contribution. Zero-sum game.
Helen Sakho
I cannot claim that my original post on this subject is a fully worked out theory or system of thought. It’s a quick meditation on the complexities of the problems we face. As such, it has provoked some guarded agreement perhaps but also much decidedly strong disagreement. I think this illustrates the situation we face when we move out of the “church of modern dogma” meaning mainstream economics itself as a secular dogma.
Mainstream economics has its economic ontology settled by dogma. We who move out of that gospel tent are left with the very difficult problem of determining anew what is real, how it is real and how it interacts; basic ontological puzzles which lead all the way up to hard science puzzles and social science puzzles. If we wish to avoid simply raising up another dogma, another ideology, then we need first to develop a science-congruent ontology for economics.
The complex systems and open-ended emergence problems of our situation (as a globally inter-connected socio-economic system coming into conflict with real global limits) cannot be minimized. The paragraph quote below gives a feel of the complexities we face from a systems and emergence perspective.
“Understanding emergence along the lines of self-organization has become so ubiquitous the two terms have just about become synonymous. However, the usual connotations of self-organization result in a misleading account of emergence by downplaying the radical novelty characterizing emergent phenomena. It is this radical novelty which generates the necessary explanatory gap between the antecedent, lower level properties of emergent substrates and the consequent, higher level properties of emergent phenomena. Without this explanatory gap, emergent phenomena are not unpredictable, are not non-deducible, are not irreducible, and thus are not truly emergent. For emergent phenomena to be genuinely emergent, processes of emergence must accomplish the seemingly paradoxical feat of producing an explanatory gap while simultaneously maintaining some degree of continuity with the substrate level.” – Professor Jeffrey A. Goldstein.
This elucidation by Professor Goldstein can certainly be taken as word-model explanation for the existences and emergences of the types of issues and problems Lars Syll has been referring to recently in his posts related to Keynes. I refer to dot-points like;
“1. Uncertainty vs. Risk;
2. Economic reality is not a ’nomological machine’;
3. Unknown unknowns;
4.’’Non-ergodicity” – The past not projectible into the future
– A sample’ taken from the past doesn’t necessarily say anything about a future ’Population’”.
I’ve been criticized, in a couple of forums, for throwing out the baby (mathematics) with the bath water (mathematico-deductivist reasoning based on false premises and false ontologies). This criticism is entirely valid. In the careless rush of blogging I have indeed done this. I’ve had it pointed out to me in another forum that;
“(Your) critique of mathematical economics is not convincing, given that (you) used a mathematical object, which in the applied area is known as “search tree” (or decision tree), to illustrate the complexity of decision making under uncertainty. Furthermore, and perhaps more importantly, communication between natural scientists and economists is facilitated by the language of mathematics.” – Ernestine Gross.
To reiterate, this criticism is entirely valid. The real problem, defined more accurately, occurs when mathematics or rather mathematico-deductivist reasoning is based on false premises and false ontologies. When the premises are wrong the conclusions are wrong no matter how accurately they are derived mathematically. Essentially, I am arguing that we need to get our premises right, which in economics means getting basic ontology right (or as right as humanly possible).
I caricature the central dogma of mainstream economics as follows:
“Free markets plus free trade will produce an endless cornucopia of justly distributed goods and services with infinite substitutions solving all resource scarcities.”
This isn’t too far from what most classical, neoclassical and neoliberal economists believe and assert. (Keynesians are a bit different). Indeed, doctrinaire neoliberals or “economic fundamentalists” do assert precisely this and they are in policy ascendancy in most major economies around the world and have been now for some 40 years. Some disavow that these are their precise beliefs but it does define how they act in the praxis of applied economics. Praxis is what matters.
There are clear embedded ontological assumptions (and omissions) is this vision of economics. The environment (as a complex system biosphere of physical and living systems) appears nowhere except as vivisectioned “resources”. It is not made clear that the economy is a system inside a greater system, the biosphere, and dependent on it, materially and energetically. Analyses based on a scientifically correct ontology (to a very high degree of certainty) are thence impossible in mainstream economics: ruled out of court, out of analysis and out of calculation right from the outset.
The other key terms also contain embedded ontological assumptions which are demonstrably incorrect. Economic substitution, while a real phenomenon, is not infinite or infinitely elastic. Some requirements are non-unsuitable and will remain so. The human need for potable fresh water is non-unsuitable. It is now becoming clear that the need for biosphere eco-services may well impose limits to growth before raw resource limitations. We have not run of fossil fuels but we have run out of biosphere space for dumping CO2 safely. I could go on to critique the construction of private ownership and free markets; the ideas that humans are only selfish and only produce for others for selfish reasons and so on. But this is a blog post, not an essay or book.
We need to generate a scientifically supportable ontology for economics. This is not a new argument these days of course. The environmentalists, climate scientists and biophysical economists, to name a few, have all preceeded me and the above three paragraphs at least are wholly derivative. However, the need to generate a scientifically supportable ontology for economics goes deeper. The next essential problem relates to the “real-nominal” bifurcation which Bichler and Nitzan (and other thinkers) have grappled with. The function of money and financial capital in the system needs to be better understood, including possibly even radical solutions to the money / financial capital issue. The most radical solution would be the abolition of money and finance capital, at least in its present form.
Larrymotuz refers to money as “permission slips” to consume and quickly outlines how these permission slips (issued according to one set or any given set of rules) could be mathematically described in behaviors; both money behaviors and real system behavior effects one assumes. This is a better way to look at money, in my opinion, and we need to expand our understanding to take account of the fact that money in our current system is not just “permission to consume”. It is all of (to give a fuller list) permission;
(a) to consume;
(b) to out-consume;
(c) to deny consumption (by corollary);
(d) to destroy (environments, other people’s lives).
(e) to reorder society, production and consumption if you possess enough “slips”.
(see Bichler and Nitzan on the concept of “creorder”.)
Currently, money is idealised as a pure form of a number of things: as a pure form of justice, of entitlement and of rights. Part of the dogma of the current economic system is that money rewards are proportional to input to society, to the creation of “value”. Thus the distribution of rewards mediated by money is ipso facto “just”. Equally, the possession of large amounts of money (at which point it may be termed financial capital) gives one the right reorder to production, consumption and society, very possibly against the wishes of a great many people. Money votes the order of society not people. More precisely a few people with a lot of money vote the order of society.
All of this indicates (I think) the need to reduce the power of money and financial capital to order society. Concomitantly, while doing that we would and should increase the power of science, democracy and moral philosophy to order society. The final evolution in the money story could be the abolition of money itself, hard as it might be at this stage to envision how that might work.
In practical terms, more laws to limit the uses of money, to put upper limits on the individual possession of money and to set permissible and impermissible earnings ranges and distributions would be a way to work towards the goal of decreasing the power of big owners of money to “creorder” society and increasing the power of all the people to “creorder” their society.
My brief comment above was on a relatively small point of disagreement. Your overall analysis of the kinds of challenges involved in modeling socio-economic behavior, the ways in which complexity and uncertainty can compound dynamically and interactively, is, to me, powerful, insightful and correct — especially your ideas on “laws” vs. “rules” and on “meta” change.
My intent was to throw in a more hopeful element — the notion that complexity and uncertainty not only expand (“open-ended emergence”), but also can contract, as ingredients (particularly social decisions) are being added to the mix. That potential, too, should not be reflexively minimized.
I’d be grateful for links to other forum discussions of your work, if you are willing to share them.
Have you read Tony Lawson? Because of a wonderful poster (sorry, don’t know off hand who it was, but thanks!) to the PZLibrary I am now able to start reading Lawson in great detail. I think he would help some of the analysis you are undertaking Ikonoclast.
Regarding mathematics you might find Roi interesting. I did, so for what it is worth, Breaking Mathematical Sense.
Thank you Ikonoclast for the Blair Fix citation.
Money is a great tool, no need to get rid of it. What we need is a philo/etho/eco-dollar and integrated economics. Integration of truths, workabilities, applicabilities and highest ethical considerations is the very process of wisdom. Call it a Wisdomics and apply the policies aligned with such thinking.
And who will produce the emission and on what basis?
“Wicodollar” would be a good name for a currency to evaluate wisdom in this day and age.
Today there is as much, if not more consensus among scientists about global climate change as there was 300 years ago about the laws of thermodynamics and the laws of motion. Polling shows that majorities of “ordinary” people in the USA, Europe, Asia, etc. accept the conclusions of this science. Yet around the world opposition to the science of climate change is well funded, unyielding, and denies the science at the highest levels of government and science. What explains this if science is, as many of us were taught in school just telling us the facts? The “school” explanation of science needs to be reconsidered. If scientific knowledge is like all knowledge, socially produced — and thus partial, fallible, contingent — science can no longer – in fact, never could – assert any sort of absolute grasp on “reality.” But the common culture of the modern era included the belief that by following the scientific method, scientists were able to arrive at objective facts that transcended their human origins. In his widely read, “The Structure of Scientific Revolutions,” the physicist-turned philosopher Thomas Kuhn considerably weakened the Whig interpretation of science by showing how historical developments were governed by contingency and debate. The Social Studies of Science and Technology (SST) 30 years later points out the traditional view of science seems to be little more than a self-serving fiction. Observations of day-to-day research — what SST terms science in the making — appear not so much as a stepwise progression toward rational truth as a disorderly mass of stray observations, inconclusive results, and fledgling explanations. Far from merely discovering facts, scientists seem to be, as Latour and Woolgar wrote in “Laboratory Life,” “in the business of being convinced and convincing others.” During the process of arguing over uncertain data, scientists conspicuously announce they are, in some essential sense, always speaking for the facts; and yet, as soon as their propositions are turned into indisputable statements and peer-reviewed papers — what SST calls ready-made science — they claim that such facts had always “spoken for themselves.” That is, only once the scientific community accepts something as true are the all-too-human processes behind it effectively erased or, as SST says, black-boxed. Things involved in science – instruments, equations, test results, photographs, bacterial cultures, etc. – can acquire enormous power because of the complicated network of other items, known as actors (not just scientists, but non-scientists, as well as many nonhumans), that are mobilized around it. The more socially “networked” a fact is (the more people and things involved in its production), the more effectively it could refute its less plausible alternatives. For example, argues Latour, the medical revolution commonly attributed to the genius of Pasteur should instead be seen as a result of an association between not just doctors, nurses and hygienists but also worms, milk, sputum, parasites, cows and farms. Science is “social,” then, not merely because it is performed by people (this is a reductive misunderstanding of the word “social”); rather, science is social because it brings together a multitude of human and nonhuman entities and harnesses their collective power to act on and transform the world.
The idea that we can stand back and behold nature at a distance, as something discrete from our actions, is an illusion. Humans create their cultures. By so doing they create not just their ways of life, but the ways of life of nature. Climate scientists and others invented the term Anthropocene to recognize this interaction today. Humans have become tantamount to a geological force. In his book “Down to Earth” Bruno Latour writes, “Scientists have largely looked at the problem of climate-change denial through the lens of rational empiricism that has governed their profession for centuries; many limit their domain to science, thinking it inappropriate to weigh in on political questions or to speak in an emotional register to communicate urgency. Even though the evidence in support of global warming has long been overwhelming, some scientists continue to believe that the problem of denialism can be solved through ever more data and greater public education. Political scientists, meanwhile, have shown that so-called “irrational” individuals, especially those who are highly educated, in some cases actually hold onto their opinions more strongly when faced with facts that contradict them.” Instead of accusing Trump supporters and climate denialists of irrationality, Latour argues that it is untenable to talk about scientific facts as though their rightness alone will be persuasive. In this respect, “Down to Earth” extends the sociological and anthropological analysis that SST brings to bear on scientists to the minds of antiscientific voters, looking at the ways in which the reception of seemingly universal knowledge is shaped by the values and local circumstances of those to whom it is being communicated.
It has long been taken for granted that scientific facts and entities, like cells and quarks and prions, as well as for economists, economies, firms existed “out there” in the world before they were discovered by scientists. SST argues instead that scientific facts should be viewed as a product of scientific inquiry. Facts are “networked;” stand or fall not on the strength of their inherent veracity but on the strength of the institutions and practices that produce them and make them intelligible. If this network breaks down, the facts will go with them. This explains why climate change facts have trouble surviving and neoliberal economic facts do not.
Does this hold for all countries Ken? Are there not differences? What are they? It seems important to know. Just asking.
Rob, just a few examples. The economics Nobel went to William Nordhaus, a guy whose economic theories and math enabled climate change denial and delay. Trump and Republicans in Congress ignore the National Climate Assessment, which details current and expected future impacts of global warming on the United States.
Four years ago, bipartisan majorities in the California Legislature approved a landmark clean energy bill that many hoped would serve as a template for a national effort to reduce dependence on foreign oil and mitigate the threat of climate change. Now a well-financed coalition of right-wing ideologues, out-of-state oil and gas companies and climate change skeptics is seeking to effectively kill that law with an initiative on the November state ballot. The money men include Charles and David Koch, the Kansas oil and gas billionaires who have played a prominent role in financing the Tea Party movement.
In a months-long investigation, journalists Susanne Götze and Annika Joeres tracked down climate change deniers where no one had expected them to be. They act as scientific advisers to the German Bundestag. They sit as conservative and liberal MPs in the EU Parliament. They head neoliberal economic organizations. They influence the climate policy of all far-right parties in Europe. Their commonality: They are usually men over the age of 60. They yearn for a world in which no one is bothered with laws designed to halt climate change, they contradict scientific consensus and advocate for an unrestrained economy.
Correct Ken, and that’s why the best way to get climate deniers and neo-classical economists “off the dime” is to offer them a better self interested third alternative to the dualistic anthropocene-no anthropocene “debate”. Wisdom has always been about the third integrative and greater alternative to dualing orthodoxies, and as paradigms are the quintessential integrative phenomenon of a singular concept that defines and creates an entire plauralism/pattern the primary emphasis and activity of economics and economic theory should be on discovering and most rationally implementing the policies, regulations and structural changes of the new paradigm.
The problem with Kuhn’s analysis is it studies the mere historical process of paradigm change and not the nature and signatures of historical paradigm changes themselves. My book concisely exams both the Kuhnian signatures of imminent need for a paradigm change, and even more importantly the inherent signatures and basic operations of past accomplished paradigm changes. It shows that our current monetary, economic and ecological situation fulfill all of the imminent signs of such need for change and that the new paradigm of Direct and Reciprocal Monetary Gifting fulfills all of the signatures of historically ACCOMPLISHED paradigm change. Irony is one of the accomplished signatures of paradigm changes and although one would think that increasing the ability to consume as Monetary Gifting would do, with policies, regulations and structural changes aligned with the concept behind even the concept of the new paradigm such could actually be the means of “cutting the Gordian knot” that keeps a thorough resolution of anthropocene climate change from becoming possible.
Craig, scientific facts are a product of scientific inquiry. Facts are “networked;” stand or fall not on the strength of their inherent veracity or connection to “reality” but on the strength of the institutions and practices that produce them and make them intelligible and useful. In other words, the network that creates and supports them. If this network breaks down, as is happening with the current broad attacks on the scientific process (not the scientific method) the facts will go with it. Western societies are on the threshold of losing science and scientists. The technicians will likely keep their jobs, but their connections to science networks is tenuous, at best.
Ken,
Correct. And I’m just trying shine a light on the new paradigm that will re-integrate economics, make it more scientific, make it and the money system serve humanity instead of enslaving it and if properly understood and thoroughly implemented enable the financing of the huge projects necessary to resolve anthropocene climate change. That’s all.
Wisdom/Natural Philosophy is the superior human mental process in no small part because it includes the scientific method and yet is not constrained by it. In descending order the levels of human mental process are:
Zeitgeist
Paradigm Perception
Wisdom
Science
Theorizing
Craig, what you’re seeking seems more a change in the evolutionary and cultural history of Sapiens. We can’t undo 2,000,000 years of evolution and 70,000 years of cultural adaptation easily and certainly not quickly. In fact, I’m not certain it’s possible for us today to do it at all. But we can certainly add to the latter at least. In doing so we can clarify the actor networks that create and sustain science. As to the “scientific method,” that’s as they say in the carnival world, the come on for the suckers. As in the “Wizard of Oz” it’s what’s behind the curtain they don’t want the suckers to see.