The awakening of an econ student
from carmeloferlito
I became an economist by mistake. The malicious will say that you can deduce it from the quality of my writings. I like to believe in the bizarre paths of Destiny on which the flights of human liberty stumble along.
Here I would like to link my personal experience – of little interest to the reader – to the far more interesting subject of the ongoing debate in economic science. Indeed, as is well known, particularly since the crisis began in 2007, a certain disillusionment has been growing about economists’ ability to foresee the course of events. While asking economists to foresee something perhaps pushes them into the sphere of magic to which they do not belong, there is strong discontent with their ability to explain events in progress. If the beautiful and highly formal mathematical models developed over the course of decades do not serve to predict the future – and it astonishes me that someone might believe that – they lack ex-post usefulness in interpretation. In short, they are not very useful. read more
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
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– Victor Beker and Beniamino Moro –
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—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
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Real-World Economics Review Blog 
I sympathise entirely. Just one point of definition. Setting up abstract theoretical models and then using algebra or set topography to solve the models for their equilibrium properties can be described as mathematical economics. It is not econometrics. That is something quite different, namely the use of statistical methods to test theoretical models against real data or the calibration of models that are not rejected by data. Most theoretical models would and do fail when tested on data – which is the author’s point. Because the two activities both use symbols or numbers rather than words, they are sometimes confused but econometrics can be used to test any model – neo-classical, Keynesian, Schumpeterian or Marxist. It is not to be identified with one way of generating theories.
I could agree with this quibble were it more obvious that the mathematical models were models of the economy and not a variation on someone else’s model of a political ideal (i.e one pulling so much wool over eyes that truth finding never gets beyond finding loose ends.
An awakening is necessary to right economics alright. But awakenings don’t occur unless you discover and analyze the aspect of the economy that holds all of the de-stabilizing emergent qualities of economics in place. And that of course is the money system and its paradigm of Debt Only.
Don’t take my word for it, take the words of Steve Keen who said that the reason neo-classicals won’t recognize that its a monetary economy not a veil over barter is “because if they did they’d have to admit that the money system destabilizes the economy.” And that’s just one small but utterly important insight short of locating the essence of the real problem which is the monopolistic monetary and financial paradigm of Debt ONLY. That crashing realization is the inversion of the positions of the earth and the sun….of economics.
Dave, again I sympathise. I wouldn’t claim that all the theoretical models found in the literature are based on curiosity about he real economy. Some are indeed a variation on some other model, elaborated in the effort to get published and get tenure. My only point is specifying models, useful or fatuous, is not the same exercise as testing modes empirically.
When the Spaniards found silver in South America in the 16th century it led to a boom. The Spanish crown taxed the output of the Potosi mine and had silver coins minted – the famous pieces of eight. The useful arts in Spain itself suffered relative neglect because a fortune awaited those who could go on a military expedition and share in the plunder. The expansion of silver coins in circulation led to an inflation. Spain became a rentier economy and over a century or so ceased to be the pre-eminent European power. It was an example of two phenomena combined: one, discoveries of precious metals in the those days raised the effective money supply and could cause inflation; two, the so-called “Dutch disease” whereby one activity becomes so much more profitable than others that it drives up labour costs and other activities become uneconomic in the jurisdiction in question. (The term comes from the situation in Holland in the 20th century where the discovery of offshore gas drove up the exchange rate hitting other traded industries).
The point of the above is that it was a period of dysfunctional monetary expansion, not caused by excess lending by a fractional-reserve banking system. Most modern hyperinflations have been caused by the monetization of a persistent public deficit as seen recently in Zimbabwe. That is not to deny that all recent recessions in developed economies have been caused by excessive speculation at least partly dependent on bank lending. The moral is: there is more than one road to ruin, Institutions change. Greed for power and wealth is perennial. The need to circumscribe it never goes away.
Is there some “wool over eyes” going on here? The dysfunctional monetary expansion was not caused by a central bank, but it was caused by [the wool in] the fractional-reserve banking system. In Zimbabwe it was caused by monetization of the government’s deficit, not the deficit of the public it supposedly represented, who paid the price in real terms. But what is money? Your definition of ‘monetization’ would be nice to know.
I don’t really disagree with your moral, but circumscribing (drawing a line round) greed and wealth is not going to stop it unless is drawing a line distinguishing what is right from what is wrong in the minds of the very young, when they can still be taught right attitudes and to FEEL rights and wrongs (c.f. Christian ethics and Mosaic morality). But also (particularly in small families) they can get “spoiled”.
Gerald, in your first comment here you have used the term “set topography”, which I found neither in my Collins dictionary of mathematics, nor by googling. This is of particular interest to me given my argument that an electrical or other communications circuit is topological (i.e. can be of any shape, or as W W Sawyer put it, has a “rubber geometry). I have found two definitions of topography, the second not far off what I see as going round INSIDE a communications circuit, which can be either a set of continuous processes and/or a set of discrete messages. The economy as a complex system is then four such circuits carrying different types of information (viz. aims and feed-backs from the present, past and future).
“1. the arrangement of the natural and artificial physical features of an area, as in “the topography of the island”.
2. In Anatomy (BIOLOGY), the distribution of parts or features on the surface of or within an organ or organism”.
As you seem to know what you are talking about, I would very much like to know how you yourself understand the term ‘set topography’.