Home > Uncategorized > Does it — really — take a model to beat a model?

Does it — really — take a model to beat a model?

from Lars Syll

A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative model to the failing mainstream models, I shouldn’t expect people to pay attention.

This is, however, to totally and utterly misunderstand the role of philosophy and methodology of economics!

As John Locke wrote in An Essay Concerning Human Understanding:

19557-004-21162361The Commonwealth of Learning is not at this time without Master-Builders, whose mighty Designs, in advancing the Sciences, will leave lasting Monuments to the Admiration of Posterity; But every one must not hope to be a Boyle, or a Sydenham; and in an Age that produces such Masters, as the Great-Huygenius, and the incomparable Mr. Newton, with some other of that Strain; ’tis Ambition enough to be employed as an Under-Labourer in clearing Ground a little, and removing some of the Rubbish, that lies in the way to Knowledge.

That’s what philosophy and methodology can contribute to economics — clearing obstacles to science by clarifying limits and consequences of choosing specific modelling strategies, assumptions, and ontologies.

unnameadIt takes a model to beat a model has to be one of the stupider things, in a pretty crowded field, to come out of economics. … I don’t get it. If a model is demonstrably wrong, that should surely be sufficient for rejection. I’m thinking of bridge engineers: ‘look I know they keep falling down but I’m gonna keep building em like this until you come up with a better way, OK?’

Jo Michell

  1. John deChadenedes
    January 16, 2020 at 8:41 pm

    Good point. And I would add that it’s time for people who want to contribute something worthwhile to the evolution of economics to stop writing sophisticated critiques of conventional economics. It’s not worth it. The rusted hulk will never run, no matter how many analyses are done on why it won’t go. The new model we really need is one that starts by clearly saying (1) what the economy is, and (2) what its purpose is. I would further suggest that – in contrast with economics as currently practiced – this model set out its foundational premises clearly, so they can be examined and discussed. For my part, I would start with these two premises: I. There is enough to go around. and II. Every person is born with an inalienable right to a life-sustaining share of everything needed for a dignified and productive life. I would like to discuss or even argue with you all about this, if you are interested or if you have an idea for a different approach.

  2. January 16, 2020 at 9:58 pm

    I agree with Keynes that it takes a certain amount of confidence in the future to plant a crop or make some other investment, and such confidence does seem to require some sort of a ‘model’. The difficulty seems to me that economists (among others) want their models to give a false confidence, which only a false model can do.

    In the case of bridges, if people need to cross a river, they need some ‘model’ and will make do with an imperfect one if that is all there is. The solution, surely, is (as John suggests) to identify alternative models and criteria for assessing models, so that we can use better ones. My own view is that mainstream models are not so bad for many purposes much of the time: my approach would be to start by supplementing them with an appreciation of their limitations: what load can they bear? This would both help us to avoid failure and to be able to use them with confidence where appropriate. Even a faulty bridge can be useful if you know its faults.

    Much of Lars’ posts seem helpful in this respect, but we do seem to need an alternative of some kind, perhaps even a ‘mathematical model’, albeit perhaps not one that mainstreamers would recognize as such.

  3. Yoshinori Shiozawa
    January 17, 2020 at 6:29 am

    Lars Syll repeats almost the same text. He has cited John Locke’s same text at least three times without counting the present one:
    -November 14, 2019 Why philosophy and methodology matter for economics
    -June 18, 2019 My philosophy of economics
    -December 22, 2017 My philosophy of economics

    I am one of persons who emphasize the dictum: It take a theory to beat a theory. I also proposed some positive directions. Lars remained and remains deaf.

    This is what I have posted a few month ago as comments to Syll’s post “Why philosophy and methodology matter for economics”.

    Yoshinori Shiozawa November 15, 2019 at 1:41 am Reply
    I wonder why Lars Syll continues to ignore many strands of heterodox economics. They are all against mainstream economics and are trying to build a new theory which may replace it.

    All those economists in heterodox economics strands know where the mainstream economics is wrong or ill formulated (their reasons may be different). Even though, we can say that heterodox economists have many difficulties and are wondering how to proceed in their research. If philosophy and methodology (of economics) are to be useful, they must help heterodox economists in their work. They do not expect any concrete concrete research programs from Lars. Only a general suggestion may be helpful for heterodox economists in finding a new direction of their research. Why does Lars continue to repeat again and again rather trivial objections to mainstream economics? Why does he not try to play a more positive role in the rebuilding of economics?

    Yoshinori Shiozawa November 15, 2019 at 1:51 am Reply
    Let me add one more point. Lars Syll’s present stance of arguments has very bad side-effects for young students of economics. To know the flaws of neoclassical economics is necessary but it is only necessary to find a more correct way to do economics. Lars’s arguments lead many hopeful students out of economics. We are in a state in which we need a true economics because of tremendous troubles that are related to economy.

  4. Yoshinori Shiozawa
    January 17, 2020 at 6:48 am

    Jo Michell tweeted as follows: It takes a model to beat a model has to be one of the stupider things, in a pretty crowded field, to come out of economics.

    Normal dictum says: It takes a theory to beat a theory. The biggest difference between the normal dictum and that Jo cites is that the normal dictum talks about theory, whereas Jo talks about model. Model may be a a particular form of theory, but theory is not a model. The fact that Michel talks about models indicate shallowness of his argument.

    Jo Michell, himself a Post Keynesian, in his tweet on January 10, praised a paper on Robert Solow: The productive career of Robert Solow.

    Is this an interview that can be praised wholeheartedly? It explains how Robert Solow achieved a tremendous success either in research and teaching. But, the paper tells nothing about Solow’s core idea: the aggregate production function. Many authors starting from Anwar Shaikh and including Nobel prize winner Herbert A. Simon criticized the relevance of the concept. Now we have a book like Felipe and McCombie’s book The Aggregate Production Function and the Measurement of Technological Change. It is true that Solow is critical of DSGE models (Lars Syll once talked about it), but it does not imply that he is searching a new economics. Aggregate production function is the very concept at the core of all mainstream macroeconomic models. If Jo Michell wants to beat the mainstream macroeconomics as a whole (not each of irrelevant models), the first things to do is to doubt the relevance of Solow-Swan type production function. Although he must be a sincere and hopeful Post Keynesian, he still lacks deep critical eyes on economics. I cannot think that Jo Michell is really thinking about the strategy to escape from actual economic dead end. To cite such a person’s tweet as his argument’s support reveals how Lar Syll is doomed.

  5. Frank Salter
    January 17, 2020 at 8:22 am

    I keep pointing out that the quantity calculus disqualifies all quantitative conventional and heterodox economic analysis. So why not start from that point. I must conclude therefore that Lars Syll has failed to recognise this. Why? Does he believe there are examples of hypotheses conforming to the quantity calculus. If so, I hope he will demonstrate even one.

    The quantity calculus is critical analysis. So it needs to applied. Why do economists fail to recognise this? I would love to see their rationale.

  6. Robert Locke
    January 17, 2020 at 9:45 am

    In the 1980s I visited the British Academy of Management, to interview Philip Nind, its head; in whose library I ran across a shelf full of the Operational Research Quarterly issues, beginning in the 1950s. The masthead of the journal reads: “Operational Research is the application of the methods of science to complex problems arising in the direction and management of large systems of men, machines, materials and money, in industry, business, and defence. The distinctive approach is to develop a scientific model of the system…[whose] purpose is to help management determine its policy and action scientifically.”

    So I sat down and read the issues of the journal to see how they were doing since issue one (30years of issues by 1980s.) I reported this experience in my book, Management and Higher Education Since 1940, Cambridge UP, 1989, pp 25-35. In the late 1970s, somewhat to my surprise, Russel Ackoff, in “The Future of Operational Research is past,” wrote: “The successful treatment of managerial problems deserves the application not only of science with a capital S, but also all the arts and humanities we can command.” I began to understand what my mentor meant when he noted that he had learned more about socio-economy during the ten years contemplating art since his retirement than during a career in social sciences.

    Ackoff was one of the guru’s who brought science into British OR. So IT WAS SURPRISING TO FIND HE TURNED HIS BACK ON his field’s scientific ambitions. My conclusions from a 50 year study of these scientific ambitions, is that no science has appeared in economics. And my guess is, despite hopes, none will.

  7. Gerald Holtham
    January 17, 2020 at 11:03 am

    Many problems can be elucidated or even solved by operational research methods. Many more problems in management cannot be so solved. Wisdom consists in knowing when to apply a method and when not. The same is true of economics. Only those innocents who want answers to everything without having to examine the circumstances of the case get impatient and write off what has been learned.

    • Robert Locke
      January 17, 2020 at 11:33 am

      Was Ackoff an innocent? Based on my comprehensive reading, I told Bill Kingston at the Trinity College School of management in the mid1980sthat OR had suffered a sort of collective nervous breakdown about the effectiveness of the discipline. At a lunccheon the next day, with 15 or 20 department members sitting around a large table, Kingston singled out the OR professor, using my comment. “Is it true that OR suffered a sort of nervous breakfdown in the late late 1970s, as Robert Locke says After a pause, he answered “yes.” The point is that problems that people following OR methods thought would resolve the problems could not be solved by them. This wisdom is very fluid and hence, pointless.

  8. Gerald Holtham
    January 17, 2020 at 11:39 am

    Frank, I thought I had given you a rationale. Many economic relations of interest are between monetary, not physical quantities. The pecuniary value of one entity, eg aggregate imports is related to the pecuniary value of another, eg aggregate incomes in a country. Both measured in currency. That has its own units and they are consistent. The relationship is multivariate not bivariate but, taking other factors into account, it is reliable. There is no consistent physical relation between imports and incomes when aggregated by weight! I don’t know anyone, including physical scientists, who think your point is correct.
    If I can’t persuade you, I’m afraid you are not persuading me. So why don’t we talk about something else?

    • Frank Salter
      January 18, 2020 at 12:59 pm

      I fail to understand why you appear to believe that when I assert something I am saying that you are wrong. That is simply not true. There are many ways in which we can be correct as
      the same time. I agree that there are many ways in which monetary analysis can be useful. After all, I used Solow’s data from 1909 to 1949 and showed it was consistent with labour-time which is the natural unit of output.
      I do not disagree about the use of units when they are consistent. However I will comment on your “by weight” example. The chief engineer of an international consultancy, who I knew, always used the aggregate weight of equipment when initially comparing tenders.
      I do not know to what you are referring when you say physical scientists do not agree with “my point”. If it is that labour-time is the natural unit of output, I would be surprised if it has ever crossed their minds. My offer is still open. If you send me your email address, I will send you a mathematical proof that the natural-unit of output is labour-time.

  9. Gerald Holtham
    January 17, 2020 at 12:07 pm

    Robert, no doubt OR suffered from overreach and people were disappointed that there were complex problems where it didn’t help. Nervous breakdown and a period of reassessment are then appropriate – better than denial, which is too common in economics. None of that implies that nothing had been learned and that there were no problems that had been resolved. A series of limited but useful techniques is not a general theory but that is no reason not to apply them when appropriate. Something similar is true in economics. Yes, one has to resist pretensions to generality but some models can be adapted to be useful in tackling particular problems. Not to be scorned in my view.
    Sorry, I’ve no idea about the degree of Ackoff’s innocence.

    • Meta Capitalism
      January 17, 2020 at 1:25 pm

      Whatever do you _really_ mean by your use of the term innocent Gerald?

  10. Yoshinori Shiozawa
    January 17, 2020 at 3:47 pm

    Rather than Robert, I support Gerald who holds a mild and pragmatic attitude vis-à-vis (the concept of) science(s).

    Robert Locke:
    {blockquote}My conclusions from a 50 year study of these scientific ambitions, is that no science has appeared in economics.{/blockquote}

    If “these” means OR (operations research or operational research), Robert’s conclusion may be right (when we change the last word “economics” by “OR”). If “these” means various efforts in economics in general, Robert put up too strong a proposition that is impossible to confirm or refute. The term “science” is too ambiguous. It is difficult to get a clear and distinct definition of “science”.

    Moreover, the case of management studies does not give be a good proof for the fact that no science has appeared in economics (in what concept you interpret this proposition). OR can be classified among management sciences (here “science” only means a part of high learning.). The aim and the function of management science and economics are different at one clear point.

    Take an example. Faye Duchin wrote a paper titled “A World Trade Model Based on Comparative Advantage with m Regions, n Goods, and k Factors” (Economic Systems Research Vol. 17, No. 2, 141?162, June 2005). I have written a paper with a similar flavor of title “A New Construction of Ricardian Trade Theory–A Many-country, Many-commodity Case with Intermediate Goods and Choice of Production Techniques” (Evol. Inst. Econ. Rev. 3(2): 141?187, 2007). The situation and analytical tools are quite similar but Duchin’s is OR paper and mine is economics paper.

    Where is the difference? Duchin assumes a subject who optimizes something (an objective function). In my paper there is no such subject but many agents who seek to make a good choice among sets of production techniques. As an OR paper, Duchin’s paper is a failure in three reasons. (1) It is impossible to calculate a solution for his model economy. (2) The theoretically assumed solution does not describe what happens in the actual economy. (3) There is no such optimizing subject (excepting the case where a world government exists). My paper does give no optimal solution. It only describes what kind of division of labor (specialization pattern) is possible conceptually. As a part of management science, both papers are failure, because no actual solution is obtained. As economics, my paper gives certain degree of understanding how world economy works.

    Robert has liberty to think mine is no science. All depends on his conception of science. I also acknowledge that my paper of 2007 was not a good paper as a theory of international trade. After I published the paper, I presented my paper in various occasions and came to acknowledge that I was still trapped in a long tradition from the time of John Stuart Mill, i.e. to determine terms of trade between countries. When I abandoned it, I found that international trade theory can be constructed along the classical line of cost-of-production theory of values (essentially that of Ricardian theory of value). I have written the paper: The new theory of international values: an overview(2018). This was a kind of paradigm change (at least for me) although it was in a particular domain of international values. Recently I have found a new definition of “regular values” and succeeded to integrate the new theory of international values into a coherent theory of value that incorporate both domestic and international economies. It is Chapter 2 “A large economic system with minimally rational agents” of a new book Microfoundations of Evolutionary Economics(2019).

    I believe there is at least some scientific progress in the above development. The new book brought new understanding on how large network of productions and exchange as big as the world economy works by actions of agents (firms and consumers) who are myopic and limited in rationality. This kind of understanding was never obtained in the neoclassical tradition.

  11. Craig
    January 17, 2020 at 4:54 pm

    “You never change things by fighting the existing reality.
    To change something, build a new model that makes the existing model obsolete.”

    ― Buckminster Fuller

  12. gerald holtham
    January 17, 2020 at 5:03 pm

    Meta-cap: I strive to be polite. I suppose by innocent I really meant hopeful. Expecting too much of a “social science” is naïvely hopeful. John Hicks said economic analysis is like walking around a large building. It looks different from different sides. We can make a drawing of each aspect but it is very difficult to see the thing as a whole. It may be impossible if the building is being continuously rebuilt.. Social relations are n-dimensional and it is hard to think or visualise in higher dimensions. If someone produces a serviceable map of one side of the building, it is pointless to complain that the map doesn’t help with the other sides. As long, that is, as people confine themselves to the appropriate side when using it. If they don’t, blame them – not the map.
    Shiozawa-san’s modelling approach is ambitious and aims to map two or even three sides of the building. Even he would not claim to map it all. The flex-price parts of the economy, like financial markets and some primary sectors need different treatment. No such analysis would satisfy some contributors to this blog, however. They have a more teleological attitude. They don’t want an analysis of how the present economy works but a blueprint for a better one. Getting a better one requires political analysis and a political programme. Contrary to Keynes and some bloggers, economists don’t rule the world.

    • Meta Capitalism
      January 18, 2020 at 4:37 am

      Gerald, have you read Shiozawa’s book? Have you read every one of his historical posts on this forum? For the record I have and I have archived his entire corpus of comments on RWER and read everyone. If you have not then I think you are presumptuous to speak for him. He makes claims you have in your comments refuted. Apparently you are innocently and naively unaware of this. If you have than that raises further more serious questions in my mind as to why you are glossing over important differences.
      You state a misleading half-truth when you say “economists don’t rule the world.” It is more rhetoric and hyperbole than an honest analysis of the impact that economists and economics have had upon political history and evolution. That is an oversight I find beneath your at times cogent intellectually analysis. I know, at least I believe, you know better.
      It was the naïve and/or willfully bind belief of politicians (being advised by economists making the claim they were merely acting as “scientists” and that economics was a “science” that led may American politicians to act as they have acted (I can quote them if you like). So, while it is obvious to anyone that “economists don’t rule the world” it is evasive and frankly troubling rhetoric to ignore the impact they have and the harm they have caused (no doubt many sincerely believing the dogma they preached was “science.”

      • Yoshinori Shiozawa
        January 18, 2020 at 10:52 am

        Meta Capitalism >>For the record I have and I have archived his entire corpus of comments on RWER and read everyone.

        Thank you, Meta. There is no other people who dare to take time to do so. It reveals who you are. Why do you use several different handle names?

        I have posed you a question on January 13, 2020 at 6:34 am as a reply to Lars’s post What went wrong with economics?. I posted a short notice on January 14, 2020 at 10:34 am to Blair Fix’s post Where’s the Barefoot Revolution in economics? just under your “reply” and asked you to take note of my “question”.

        You have not answered the question. I doubt if you could not do, because you have no idea. At any rate, it seems what you want to do is to speak ill of other people. What others?

      • Meta Capitalism
        January 19, 2020 at 11:16 am

        I have to write repeatedly the same or similar thing…. [I]f this state of RWER blog does not change, it is hopeless that economics changes. We have to produce a new culture. (Yoshinori Shiozawa, Leaps of Logic & Non Sequiturs, RWER, 1/18/2020)

        The idea that if the comment sections in this blog “don’t change [then] it is hopeless that economics changes” I find ludicrous. This silly claim is just as vacuous as your equally ludicrous claim that somehow single-handedly Lars is driving young people away from economics. Your the-sky-is-falling rhetoric is in la-la-land not reality.

        RWER is one blog among many that are challenging Mainstream Economics (ME) and frankly, no single blog is so important that it can change an entire culture let alone a field such as economics. I would think that would be common sense, but apparently it is not.
        I have no illusions about changing this blog as you do. Personally, I think this is the nature of blogs as RWER is not unique in this way. All blogs attract trolls who troll the blog with repetitious comments simply because they have their own personal agendas to hawk.
        You want to hawk your book, Salter his paper, and so on it goes. I note you don’t even bother to read the books on this site; you could care less about the underlying viewpoint and mission of this blog. You have a personal agenda to push and engage in many personal projections that have nothing to do with the overarching message as seen in the works published and showcased on this blog. You are in my view are the very kind of troll you complain about and who post repetitiously the very kind of bad comments that drive out good comments and attempt to divert the focus to your personal agenda, your personal gripes, your personal biases, all the while ignoring the content of the good material available on this site.
        You repeatedly stoop making ad hominem accusations that are laughable; Lars is destroying young people’s desire to study economics; he is only appealing to “math phobia”, and other such ignorant fallacious arguments. You are an educated man; you demean only yourself with such nonsense. If anything, such nonsense of a so-called economist will drive perceptive young people away from economics, or at the least this blog.
        Who cares if Lars is only acting as a gardener removing some conceptual weeds; he is not doing this any more than a plethora of other authors doing the same. There are many books published and listed by WEA and RWER that are discussing solutions, ways forward, such as Geoff Davies (here, here, and here) or Fullbrook here). But issues like global warming, environmental degradation, rising inequality and its socially destabilizing consequences are not anywhere on your literature-only-economics agenda.
        In my view the time for shallow forms of niceness are over. Our planet is burning, our children are being robbed of a meaningful future, and theoretical economic professors like Shiozawa are engaged in perpetuating literature only economics while ignoring the REAL issues threatening our children’s future today.

        In the history of human beings on Earth, it should be obvious that human beings fail the most whenever ignorance, arrogance, and authority coincide. Arrogance and complacency provide the barriers that have enabled economics professors to avoid changing for the better and have even helped many of them laugh at any suggestion that they must, indeed, change for the betterment of society. In this environment, polite, scholarly critiques of economic discourse, in the most cordial of manners, and in the most proper etiquette, have dramatically failed to break these barriers. Sometimes it is simply that the “medium is the message”—politeness, whether for the right reasons or the wrong reasons, implies less urgency and less demand for change than rudeness does. In my view, if impolite criticism of economics professors can somehow reduce the level of complacency in the profession by only 1 percent, and it is at a cost of my being perceived as “unprofessional” in having been so impolite, then to me it would a worthwhile trade-off. (Payson 2017, 17-18)

        (….) Some may repeat the adage, “You get better results with sugar than with vinegar.” I am all too familiar with that adage, and I agree that it works great in many situations like asking a spouse to please make a fresh pot of coffee. When it comes to asking economics professors to think differently about the research they perform, and to be more responsible to their students and to economic science, I have not seen sugar work very well at all, and trust me, there is an awful lot of such sugary literature about this topic that has been written over many generations—again, with no real effect. (Payson 2017, 18)

      • Yoshinori Shiozawa
        January 20, 2020 at 3:36 am

        If “RWER is one blog among many that are challenging Mainstream Economics (ME)” as Meta put it, it is a hope.

      • Frank Salter
        January 20, 2020 at 9:53 am

        I would ask Meta Capitalism if he has read my paper. I seek only to establish what is true. I hope that he shares this with me. As the mathematics in my paper define abstract production theory, it would be sensible to discuss its validity rationally.

  13. Craig
    January 17, 2020 at 5:47 pm

    The reason OR hasn’t and won’t get us to science and a scientific model breakthrough is because it’s not where the real problem is. “It’s the monetary and financial paradigm, stupid!” Am I saying OR or any other line of research is wrong/invalid? Of course not, but if you want to solve the biggest problem you have to identify it first. Steve Keen re-identified it and even stated in one of his videos that “the reason neo-classical economists won’t recognize that the economy is monetary in nature and not a veil over barter is because they would have to acknowledge that the money system de-stabilizes it.”

    Only problem was he then dropped that and went on to (valid and important) researching of energy in the economy. It takes a new insight (merely re-identifying an old insight doesn’t cut it) to actually make progress, like recognizing the reality inverting power of a direct and reciprocal (equal minus and plus) price and monetary policy of sufficient percentage at the point of retail sale. That sitting in plain sight for 500 years basic accounting and algebraic operation is the telescope and the ellipse of economics.

  14. Yoshinori Shiozawa
    January 18, 2020 at 1:17 am

    My fundamental position on economics is that economy is a complex system. When I say it is complex, I usually mean it by three aspects:
    (1) An economy is complex as a system. It contains many different kinds of entities that are all different with each other and interactions between them raise a process quite difficult to trace.
    (2) An economy is complex for agents who act in it. Our capability is bounded in three moments: (2a) We are myopic. We have limited range of information collection. (2b) Our rational capability is limited (bounded rationality). Even if we have some model ideas on the working of the economy, we cannot infer what happens in the future. (2c) Our capability to work on the economy is quite limited. We can change only a few number of variables if we want.
    (3) An economy is complex for economists as scientists. Even if we accumulate and extend knowledge on the economy, we can clarify only a small part or some aspects of the whole working of the economy as a whole.

    Standard complex systems theory treats only aspect (1). Topics like non-linearity, chaotic behavior of a time series, self-organization, emergence, fractals belong to this. For economics, and for any social and human sciences, aspect (2) is important. Human behaviors are not very different from animal behavior. (I have illustrated this point by citing Üxküll in Chapter 1 of our book.) Although these two aspects are important and they composes the main feature of economics, I am thinking that aspect (3) is as important as others when we want to consider scientific strategy with regards to economics.

    To build an economic theory that covers all aspects of the economy is an ideal but difficult to implement. Even in the case of physics, Newtonian physics did not included electro-magnetic dynamics. Now physicists think that there are four kinds of fundamental forces: (1) gravitation, (2) electro-magnetic force, (3) weak force, and (4) strong force. It is told that physicists are approaching to unify three kinds of forces (2), (3), and (4). Even if gravitation is the oldest force known to us among the four, to unify (1) and three others seem to contain a quite difficult problems. If they succeed to unify these forces, they will get really a theory of everything (in physics). Economics is very far from such a situation. What we have to do is, I believe, rebuild many relatively independent but firm theory of various fields. To unify some of them is also important and challenging works of theoretical economists. Gerald has a good judgement on the state-of-the-art economics.

    I willingly admit that money is important as Craig insists. Theories developed in our book assume money, because we assume monetary exchanges (exchange of products against money), but money plays only a limited function in our theories. Even though, some problems of what is normally considered monetary are explained by our theory. For example, inflation is ordinarily thought as monetary phenomena but our theory can clarify in what situation inflation occurs. Inflation is not a simplistic phenomena as quantity theory of money assumes. Even though I admit that money is important and crucial to the good function of the economy, we have no good theory (or sufficient understanding) of monetary phenomena. In my impression, Craig is too simplistic in proposing a monetary reform. We do not have enough knowledge to design a good and bold monetary institution which solves everything.

    • Yoshinori Shiozawa
      January 19, 2020 at 2:02 am

      Point (3) that economy is complex for economists is very important. It raises grave hurdles for the construction or re-building of economics. It is impossible to construct a new economics from scratch. Human being is not as clever as may people assume. We must proceed on the shoulders of past giants.

      It is opportune to cite a famous parable of Neurath’s boat. Oxford Reference explains it as follows:

      The powerful image conjured up by Neurath, in his Anti-Spengler (1921), whereby the body of knowledge is compared to a boat that must be repaired at sea: ‘we are like sailors who on the open sea must reconstruct their ship but are never able to start afresh from the bottom…’. Any part can be replaced, provided there is enough of the rest on which to stand. The image opposes that according to which knowledge must rest upon foundations, thought of as themselves immune from criticism, and transmitting their immunity to other propositions by a kind of laying-on of hands. See also foundationalism, method of doubt.

      From various facts (some parts of them are told by Lars Syll), it is evident that present mainstream economics necessitates a fundamental repairing, but we are sailors on a boat of economics. We have no other materials other than accumulated knowledge of economics (including economic history and many facts accumulated in these two and half centuries).

      I have an impression that many contributors to this blog are thinking that reconstructing economics is an easy task once we get a clever idea. They are wrong. We should know our difficulty and we should proceed slowly. Core theory cannot be a theory of everything. Please remind that modern physics started from Galileo Galilei and Johannes Kepler, not from Newton. What Kepler discovered after several decades of endless calculation is only three laws of planetary motion, a phenomenon of only an extremely small part of the universe called solar system.

      • January 21, 2020 at 10:06 am

        “The powerful image conjured up by Neurath” is a delight, Yoshinori, but your “Core theory cannot be a theory of everything” does not follow from it. The core theory can be how to make a systematic stock-taking of what you’ve got, and if this reveals the ship is foundering because it is weighed down by a parasite, then the repair to the system will be to cut off the parasite and throw it overboard. In our present economic system that parasite is debt money.

      • January 21, 2020 at 2:34 pm

        Dave, i have come across people like you before. It seems to me that you are all seriously deluded. Things go horribly wrong when you agree that there is a parasite, and agree to remove it, but then start hacking away at different things. Maybe there are many parasites? Or one parasite that you all see in different ways. Who cares? Why not just collaborate in getting back to a sound structure?

        If you ever get back to Malvern, let me know. http://www.malvernfestivalofideas.org.uk/ may also of interest. I found last year’s VERY helpful. There are certainly parasites somewhere: good analogy!

      • Yoshinori Shiozawa
        January 21, 2020 at 2:25 pm

        Dave, “Core theory cannot be a theory of everything” may not follow from Neurath’s boat parable. I talked about third aspect of complexity in my post before Neurath’s boat: An economy is complex for economists. Even Kepler drew much on Tycho Brahe’s observations for many years. As it is well known, Tycho believed a (revised version of) geocentrism. A difficult synthesis is required.

      • January 21, 2020 at 5:19 pm

        Dave M, I live in Malvern, and these days rarely get out it. As for being deluded for working out a logical solution when it is quite obvious that our world is on the verge of sinking, that surely applies to those who simply deny, wish there wasn’t or don’t notice there is a problem. Before rubbishing what I am trying to say, get your head round my long discussion of it with BinLi on “What Went Wrong With Economics”. As a mathematician, you ought also to follow the link on Philip Woodward to get some idea of the company I have kept. Yoshinori, sadly, hasn’t shown any sign of having read the draft paper on it I sent him a couple of years ago, for he is still neglecting the adequacy of the language necessary to express real complexity (c.f. Shannon’s Information Theory), so seeing complexity as quantity of information rather than the complex numbers of physical science and their equivalent in the grammar of both ordinary and scientific languages. (C.f. nouns, adjectives, verbs and adverbs; in Algol68 variables, values, types [modes of interpretation] and typed procedures).

        Yoshinori, though my paper started from acceptance of the Big Bang rather than Locke’s subjective “tabula rasa”, I became aware of the problem it addresses when I was 18, and for 64 years since then have been drawing on my own and other people’s observations. Each step in my algorithmic map uses the PID evolutionary ordering of time in the same way as arabic numbering uses the ordering of numerals. At each level you can compare the result with reality for yourself. An economy is complex in your sense, but becomes manageably complex when seen in algorithmic form, with each level a subset of the previous one, so that the monetary system of management is a subsystem of economics and automated chrematism (money-making) a subset of that. A real-world engineer doesn’t need to know everything, but he does need to know where to look and how to recognise problems like wrong way motion: money going up instead of trickling down.

      • January 21, 2020 at 5:50 pm

        Dave T. I’m sorry if I called you deluded, but what sort of logic is it that assumes that there is only ever one significant parasite or that we will all see it the same way?

        Incidentally I do see things more or less the same way, but we seem have identified the reason for that, so it signifies nothing. Our talks appear on the web site eventually. I’d appreciate your comments on last year’s. Are we on to something? If not, please put us right. Also, could you ask someone to get you a brochure from the TIC?

        Have you thought of joining https://mraths.org.uk/ ? I asked around and they don’t seem to know about you. This is a pity as the BBC is publicising the seminal contrubtuion of Malvern to the modern world, without seeming to know much about it. I think MRATHS would be delighted to capture your memories.

        I am all too familiar with what people say that Philip thought about uncertainty, but despite my best efforts never had the opportunity to talk to him. (Gatekeepers!) I wonder what he thought his Ratio Club contemporaries (Turing, Good, Ashby) thought about uncertainty.I know what I think, but his view would be more authoritative.(I’m with Denniston on this, by the way.)


      • Craig
        January 22, 2020 at 3:59 am

        “The core theory can be how to make a systematic stock-taking of what you’ve got, and if this reveals the ship is foundering because it is weighed down by a parasite, then the repair to the system will be to cut off the parasite and throw it overboard. In our present economic system that parasite is debt money.”

        Hurray! That’s as close as anyone else here has gotten to the deepest insight. I would only modify it thusly: That parasite is the monopolistic paradigm of Debt Money ONLY.

      • January 22, 2020 at 10:11 am

        What do you make of our speaker at http://www.malvernfestivalofideas.org.uk/ ? Spot on? Incendiary? Deluded?

      • Yoshinori Shiozawa
        January 22, 2020 at 7:53 am

        Dave Taylor, I have read your paper. Frankly speaking, I could not understand it. So I do not applaud nor criticize it. I am waiting until someone make me understand it.

        Complexity means many different things. What I wanted to point in my Reply on January 18, 2020 at 1:17 am is only that we should take into account at least three aspects when we talk about complexity. The fist aspect is most often argued. Second aspect is related to bounded rationality of H. A. Simon, although direct links are rarely discussed.

        When we consider strategy of re-building economics, the third aspect is in my understanding the most important. Even the greatest economists in the past made many mistakes (I can raise such examples for each of Ricardo, Marx, and Keynes, although I estimate them over all other economists.). We can proceed extremely slowly and making a long detour.

        In our present time, economics made a fatal error since the arrival of neoclassical economics around 1870’s. Then, what we can envisage is to return to classical political economics, and Ricardo in particular, and restart from there. To throw off all is, I believe, equivalent to return to vague ideas before Smith. If I make a parable, it is to return to before geocentric system, before Claudius Ptolemaeus. We should know that geocentric system was a great scientific achievement without which It is not certain whether we are now in the modern science age.

      • January 22, 2020 at 9:52 am

        Dave M asks “what sort of logic is it that assumes that there is only ever one significant parasite or that we will all see it the same way?”

        A complex logic, where the ‘one’ is a dynamic one with real and linguistic truth values (as in a hand marking out hours on a clock), where falsehood is parasitic on truth and liars (infecting the deluded) are parasitic on the loving. Contra Craig’s ONLY, most of us ‘time-share’ between the two states, but a single falsehood can infect a culture with chronic illness. Hence anyway my “Complex Truth and Honest Money”.

        On “Gatekeepers!”, my son did arrange for mrath to contact me, but they didn’t. I see myself as a perpetual apprentice, but the hierarchy seem to see me as a “straw man” (remembering the Wizard of Oz) because I haven’t got a certificate. Philip I only ever encountered as a pre-occupied modest little man wandering round the maths block, silent as ghost. Not until his lifetime achievement award did I become aware he had been behind the radar, controls and computers that I worked with. On uncertainty, in what way did he differ from Shannon, whose motivation was also practical engineering? The Good I knew was not Jack but Ted, who taught me a great deal about operational amplifiers, hence analogue computing and PID.

      • January 22, 2020 at 10:15 am

        Respect. Would you like me to poke them for you?

      • January 22, 2020 at 10:37 am

        Yoshinori, thanks for acknowledging receipt of my paper. Accepting that it is me that is unusual in this, when I come across something I don’t understand, I worry at it like a dog with a bone until I do . As I’ve suggested above, following the BinLi discussion on “What Went Wrong with Economics” may help you make more sense of the symbolism. What I’ve just written for Dave Marsay addresses the issue of Complexity.

        On rebuilding economics, my strategy is to continue in practice
        as nearly as possible as we are, in principle using credit cards rather than debit cards. Where we differ is in our understandiing of the purpose of economics (“household” management vs “sound” banking) and its ethic (“the reciprocity of rights and duties” vs the right of the wealthy or powerful to enforce “debt slavery”). Adam Smith, following Hume, could offer only sympathy in defence of the the poor, not moral law. You admire the banker Ricardo, but William Cobbett knew the family and didn’t have such a good opinion of him.

    • Yoshinori Shiozawa
      January 20, 2020 at 6:38 am

      For Complexity in aspect (3) in my above post, see

      Maria Alejandra Mardi’s article Compleixty in Economics

      and the comment I have added there on September 6, 2018.

    • Craig
      January 21, 2020 at 5:32 pm

      “I have an impression that many contributors to this blog are thinking that reconstructing economics is an easy task once we get a clever idea. They are wrong. We should know our difficulty and we should proceed slowly. Core theory cannot be a theory of everything. Please remind that modern physics started from Galileo Galilei and Johannes Kepler, not from Newton. What Kepler discovered after several decades of endless calculation is only three laws of planetary motion, a phenomenon of only an extremely small part of the universe called solar system.”

      Not just a clever idea, but rather a clever and insightful new paradigm. As I have posted here many times a new paradigm is BOTH an INTEGRATIVE idea AND PROGRESSIVE phenomenon. Integrative in that it fits seamlessly within the legitimate structures and complexities of the body of knowledge/area of human endeavor it applies to AND deeply insightful enough to alter the entire pattern for the better in that it resolves the major problems of the old paradigm.

      Kuhn’s book was an accurate scientific history, but was not a study of paradigms and the paradigmatic phenomenon ITSELF. Paradigm-ology, the study of the signatures of imminent and accomplished paradigm changes would be a much more fruitful and beneficial body of knowledge.

      “We do not have enough knowledge to design a good and bold monetary institution which solves everything.”

      I’ve never said the new monetary and financial paradigm solves everything. It DOES change everything in that it changes the entire pattern, and it does that because it resolves the major problems (not every problem) of the present/old paradigm. The money system and its paradigm ARE THE PROBLEM. Change that….and you’ll change economics.

  15. January 18, 2020 at 11:02 am

    I find myself in sympathy only with the first comment here: John deChadened wanting to restart the discussion from agreement on what economics is and does, and its feasability. Yoshinori fails to distinguish the intuitive practice of science from the formal recording of it, while Robert similarly sees OR (developed during the war to optimise search patterns) as inadequate because formal, whereas OR practitioner Patrick Rivett found in a successful mine rescue that it had been organised by the telephone operator, who was the only person in contact with all the personnel involved. In particular, Yoshinori wrote this:

    “Normal dictum says: It takes a theory to beat a theory. The biggest difference between the normal dictum and that Jo cites is that the normal dictum talks about theory, whereas Jo talks about model. Model may be a a particular form of theory, but theory is not a model. [Good]. The fact that Michel talks about models indicate shallowness of his argument”. [Wrong].

    Very few people understand theory well enough to criticise it. Things get done because most people are able to follow models and see how to adjust their own copies to circumstances.

  16. January 19, 2020 at 3:27 am

    Thanks again Lars. Thomas Greco & I and a few other realists have the bioethcally valid model for a worthwhile alternative to anti-ethical dystopia & a possible ecotopian future, but who cares? I have yet to find a single other human being–other than Greco & Paul Wildman & Scott Howard–willing to co-found the ecotopian civilization our children need for a least worst-case scenario.
    I guess Carl Sagan was right: The longer & worse we’re bamboozled, the less we want to know about it. Sigh…oh, well…Sayonara y’all ~

  17. Ken Zimmerman
    January 20, 2020 at 1:35 pm

    Lars, I am certainly not with you on this one.

    You contend,

    [quote] ’tis Ambition enough to be employed as an Under-Labourer in clearing Ground a little, and removing some of the Rubbish, that lies in the way to Knowledge.

    That’s what philosophy and methodology can contribute to economics — clearing obstacles to science by clarifying limits and consequences of choosing specific modelling strategies, assumptions, and ontologies. [end quote]

    What is it you believe will be constructed on this “cleared ground?” Literary critics used to write about the “great American novel.” Till someone pointed out a problem. How was that choice to be made? They figured out finally that it had to be by the readers of American novels. Otherwise, we are left with the flights of fancy, obtuse language, and theories of great literature of literary critics. That criterion shows us there are many “great American novels.” I suggest the same is the case in science, including the social sciences, and including economics. Instead of looking up to ‘great men’ (now ‘great persons’) we need to look ‘down’ instead. To those who live the lives, take actions, and make the decisions that Locke, etc. describe (mostly badly). These “lowly folks” are the creators whose creations social scientists, historians, and anthropologists convey to audiences in their writings. For example, Johann Gutenberg did not invent movable type. It was invented in China. William Harvey did not invent the circulation of the blood in the body. It was invented in China. Isaac Newton was not the first to state the First Law of Motion. It was stated 200+ years before Newton in China. And in every instance the Chinese inventors (where they are known) were not ‘great persons’ but in the vernacular of the times commoners and no way countable as scientific geniuses. Furthermore, the British government of the 17th century put the likes of Galileo, Newton, William Gilbert, Christian Huygens, and Edmund Halley to work on providing an accurate measurement of longitude. But it was not a member of the scientific elite but a skilled craftsman—a clock maker named John Harrison—who finally, well into the 18th century, provided the solution to the longitude problem. The ‘gentlemen of science’ opposed Harrison’s approach to such an extent that it wasn’t till the 20th century that it was fully adopted. Harrison would likely find your ‘dependence on philosophy and methodology’ more hindrance than aid.

    • Yoshinori Shiozawa
      January 20, 2020 at 8:06 pm

      Ken, I applaud you for this comment. This is the case your background helped you.

      I am not asking Lars to be a great economist. As a philosopher of economics, he can find topics in which he can positively contribute to the re-building of economics in his way. For example, if he has ability to estimate where the mainstream economics is wrong, he must have a good judgement to find some good works in heterodox economics. If he explains the significance of a work, it will spread faster than the case he does not and he can contribute positively to the re-building of economics.

      If there is a reason he cannot do this, there is a risk of making a bad judgment. It is inevitable. We should not blame him for his brave wrong judgement. The future of a theory when it is born is uncertain and all theory makers bet for the success of the theory. If it was proven wrong, the only possible way is to admit that the theory was wrong and search better one. We have to go beyond the mound of many falsified theories.

      • January 21, 2020 at 2:51 pm

        Sorry for being pedantic, but why not let 1,000 flowers of credible theories flourish and guide policy. Do we really have to stick to Kuhn’s dismal paradigms?

        (Okay, we may need to discuss what makes theories credible, but hopefully you get the idea.)

      • Yoshinori Shiozawa
        January 21, 2020 at 4:01 pm

        Dave proposes a democracy among people interested in economics. That’s all right. It must be what is really happening. It must prevail in this small circle of blog contributors. I have no objection to your observation.

        However, we have various democracies. Even in political election, which brings better results: regime that permits only positive campaigns and that permits only negative ones. Quality of politics may be different. As far as economics matters, more positive campaign might generate better results. This is what I am proposing.

  18. ghholtham
    January 20, 2020 at 2:15 pm

    Meta. Yes I have read Shiozawa’s book. It is an impressive piece of work. My point is that there are parts of the economy to which the analysis would not apply. I believe he accepts that himself but I was speaking for myself, not him.
    I maintain my view that the influence of economists is overrated. Politicians and power-brokers pick the doctrine that supports the views they already hold. In the film “Another Country” one character says to another: “you’re not a Marxist because you read Marx; you read Marx because you’re a Marxist”. That’s how it works.

    • Yoshinori Shiozawa
      January 20, 2020 at 7:23 pm

      Thank you, ghholtham, for your kind and sincere reading. In my chapter (chapter 2 of our book), I emphasized the importance to know the range of validity for a theory or law. This is I believe a common knowledge in physics and natural sciences in general but almost unknown in economics. Keynes wrote his General Theory of Employment, Interest, and Money. He must have been influenced by glaring results of Einstein who developed the main part of General Theory of Relativity until 1915. Many economists after him pretends to have developed a theory that explains everything in economy. Partly owing to this bad habit, many economist and economics fans like to claim a theory of everything, forgetting that an economy is complex for economists. See my Reply above on January 18, 2020 at 1:17 am.

    • Meta Capitalism
      January 20, 2020 at 10:33 pm

      Yes I have read Shiozawa’s book. ~ Gerald Holtham

      Curious, did you read it before or after my comment? The historical evidence shows both patterns; politicians and power brokers pick doctrines they already hold and sometimes are influenced by what they believe is “science.” It is not either or in many cases.

      • Meta Capitalism
        January 20, 2020 at 10:52 pm

        Addendum: Many theorists also start with an ideology and develop pure theory to support pre-existing ideological beliefs and then falsely claim this is science. One example is the question of government regulation and the states role in the economy.

      • Ken Zimmerman
        January 21, 2020 at 12:16 pm

        Meta, from what anthropologists and archaeologists have been able to determine, among institutions humans have created, government and religion preceded the development of economies. From this perspective, alone it would be surprising if any economy could be created or operate outside oversight by both government and religion. This could occur only if some event or events pushed economic adaptability ahead of government and religious adaptability in human cultural development. There is no evidence of any such event or events.

      • January 21, 2020 at 2:40 pm

        Ken, is there any evidence that considering economics as a discipline in itself, aside from the other social sciences (or ‘sciences’) is anything but dangerous? Or any evidence (preferably comprehendable by a mathematician) of where one should look to put economics in context?

        It seems to me that one couln’t possibly even begin to develop a mathematical model of actual economies without this sort of input. Or am I missing something?

      • January 21, 2020 at 5:35 pm

        Dave M, see my comment where you tried to rubbish me above. To put economics in context one needs not evidence but a map. Let me ask you: do you consider graphical (as in flow diagram) methods mathematical? If not, why not?

      • January 22, 2020 at 10:06 am

        Dave T.

        Excellent question! Sorry if you thought I was rubbishing you. I’m a great fan of category theory, so much so that anything that seems to contradict it I react to almost viscerously. Bad habit I know. So have you tried diagramming your own statements? More importantly, perhaps, could you give us any evidence of how any members of the Ratio Club would have reacted to your statements. As I did? Or am I being too pedantic?

        I rather hoped you would diagram my statement the way I intended and reply more positively. Maybe a beer sometime, though. If you get to our festival, do introduce yourself. (Easy to spot, for anyone with diagramming skills … maybe?)

      • Robert Locke
        January 21, 2020 at 8:43 pm

        Ken, we’ve been through this before I think, but I was once asked to give a keynote address in Groningen’s School of Management, on the theme of Social Justice in a Free Market Economy,” in which I tried to base social justice in the arrangements of civil society, and avoid the interference of government into the economy as a road to social justice. By civil I concentrated on stakeholders views of firm governance that avoid the heavy hand of the state. Meta does this conform to a Japanse way?

      • January 22, 2020 at 10:09 am

        Why not check out http://www.malvernfestivalofideas.org.uk/ and get someone whose opinion you rate to attend? Its not meant to be exclusive.

  19. January 21, 2020 at 2:46 pm

    Metacapatilism, I think you make a good point in your addendum. But what should the role of government be? From a cybernetic perspective it seems obvious that democratic institutions ought to at least set the context for economists. But in practice the demos and their representatives seem to have been in thrall to economic ideologies.

    Any view on how it should work, and what steps might be taken to get there?

    • Meta Capitalism
      January 22, 2020 at 3:34 am

      I agree “it seems obvious that democratic institutions ought to at least set the context.” Personally, I would say that it matters little what form a government takes as long as it guarantees a few basic things that are the foundation of any democratic society. The Nordic countries that embody democratic socialism have done the best job, in my view, of balancing the role of government and market capitalism. Note the idea of a so-called “free market” and/or “invisible hand” are fairy tales spun by neoliberal ideologues who really preach a form of predatory capitalism which is termed “market fundamentalism.” All markets are rigged; the only question is by whom, for whom, and how transparently and answerable to democratic institutions that allow the social control of corporations so they cannot usurp and undermine a government of the people, for the people, and by the people.

      I view “market fundamentalism” (aka predatory capitalism) as a bigger threat to democracy today than socialism or communism. America is literally on the verge of becoming an “elective despotism” and it wasn’t communism or socialism that created the cultural rot and economic disenfranchisement that lead to the disintegration of the social fabric of American culture.

      There are more than a number of good works out there on this subject. Anyone who wants to know can find them.

  20. Robert Locke
    January 22, 2020 at 8:21 am

    “All markets are rigged; the only question is by whom, for whom, and how transparently and answerable to democratic institutions that allow the social control of corporations so they cannot usurp and undermine a government of the people, for the people, and by the people”

    If this is true then the markets must be controlled institutionally in some way by the stakeholders in society, that is what happens when “voice” is not only given to proprietors in firms but to others when firms are considered to be organic in composition.

    • Meta Capitalism
      January 22, 2020 at 8:54 am

      Totally agree.

  21. ghholtham
    January 22, 2020 at 5:19 pm

    Meta: I’d already read it; that’s how I knew what I thought. After? I don’t read that fast!

    Yes some economic models clearly have a conscious ideological intent – the theory of rational expectations, for example. In more cases, they reflect a world view but are without any conscious political intent. Instances of power-brokers of one interest and persuasion changing their opinion as the result of an theoretical economic argument are vanishingly rare, I would say. Policy is moved by events -the New Deal followed mass unemployment; Volker’s “monetarism” followed the outbreak of very fast inflation. Economic theory has often provided an ex post rationalisation for what policy was doing.. Since economic theoreticians don’t spend a lot of time looking at data they are usually behind events.

    I can think of two exceptions. In 1943 Kalecki foresaw the political business cycle of the post-war years whereby the government induced a mild recession from time to time to arrest wage inflation. In the 1970s Minsky foresaw the boom bust that would result from uncontrolled financial asset markets – the cause of every substantial recession since 1980. You can do an economics course these days to masters level and never come across the names Kalecki or Minsky. That says a lot about how economics is taught. But people on this blog who fulminate about “economists” should realise the term embraces some maestros who have improved the understanding of those prepared to listen. If the economics profession had listened more to H.A Simon in the 1970s many errors would have been avoided too. They gave Simon the Nobel prize in 1978 and then mainly ignored him. Minsky was ignored without compensation. The first Nobel was awarded in 1969 and Kalecki died in 1970 so who knows whether he would have got it. .

    • Meta Capitalism
      January 22, 2020 at 9:34 pm

      Indeed that would be ;-) It took me months to read Mirowski’s “More Heat than Light,” but it was worth it. Feeling your angst and appreciating your insights in your January 22, 2020 at 6:26 pm comments on Reflections on the “Inside Job” post. I have Minsky sitting on my shelf ready to read, but alas have not reached his shelf yet. You are correct that that there are thoughtful, insightful, “maestros” in the field of economics and many who are working to improve the dismal science today.

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