Home > Uncategorized > Has mainstream economics — really — gone through a pluralist and empirical revolution?

Has mainstream economics — really — gone through a pluralist and empirical revolution?

from Lars Syll

1390045613In an issue of the journal Fronesis yours truly and a couple of other academics (e.g. Julie Nelson, Tony Lawson, and Phil Mirowski) made an effort at introducing its readers to heterodox economics and its critique of mainstream economics. Rather unsurprisingly this hasn’t pleased the Swedish economics establishment.

On the mainstream economics blog Ekonomistas, professor Daniel Waldenström rode out to defend the mainstream with the nowadays standard defence — heterodox critics haven’t understood that mainstream economics today has gone through a pluralist and empirical revolution. Since heterodox critics haven’t noticed that, their views on the mainstream project is more or less irrelevant.

Well, the problem with that defence is that it has pretty little with reality to do. 

When mainstream economists today try to give a picture of modern economics as a pluralist enterprise, they silently ‘forget’ to mention that the change and diversity that gets their approval only takes place within the analytic-formalistic modelling strategy that makes up the core of mainstream economics.logo_netzwerk_500px_transparent You’re free to take your analytical formalist models and apply it to whatever you want — as long as you do it with a modeling methodology that is acceptable to the mainstream. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. If you haven’t modeled your thoughts, you’re not in the economics business. But this isn’t pluralism. It’s a methodological reductionist straightjacket.

To most mainstream economists you only have knowledge of something when you can prove it, and so ‘proving’ theories with their models via deductions is considered the only certain way to acquire new knowledge. This is, however, a view for which there is no warranted epistemological foundation. Outside mathematics and logics, all human knowledge is conjectural and fallible.

Validly deducing things in closed analytical-formalist-mathematical models — built on atomistic-reductionist assumptions — doesn’t much help us understand or explain what is taking place in the real world we happen to live in. Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modelling exercises pursued by mainstream macroeconomists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Had mainstream economists not been so in love with their smorgasbord of models, they would have perceived this too. Telling us that the plethora of models that make up modern macroeconomics ‘are not right or wrong,’ but ‘just more or less applicable to different situations,’ is nothing short of hand waving.

Take macroeconomics as an example. Yes, there is a proliferation of macromodels nowadays — but it almost exclusively takes place as a kind of axiomatic variation within the standard DSGE modelling framework. And — no matter how many thousands of models mainstream economists come up with, as long as they are just axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and explanation of real economies.

Most mainstream economists seem to have no problem with this lack of fundamental diversity — not just path-dependent elaborations of the mainstream canon — and the vanishingly little real world relevance that characterise modern macroeconomics. To these economists there is nothing basically wrong with ‘standard theory.’ As long as policy makers and economists stick to ‘standard economic analysis’ — DSGE — everything is fine. Economics is just a common language and method that makes us think straight and reach correct answers.

Most mainstream neoclassical economists are not for pluralism. They are fanatics insisting on using an axiomatic-deductive economic modelling strategy. To yours truly, this attitude is nothing but a late confirmation of Alfred North Whitehead’s complaint that “the self-confidence of learned people is the comic tragedy of civilisation.”

Daniel Waldenström — like so many other mainstream economists today — seems to maintain that new imaginative empirical methods — such as natural experiments, field experiments, lab experiments, RCTs — help us to answer questions concerning the validity of economic theories and models.

Yours truly beg to differ. There are few real reasons to share his optimism on the alleged pluralist and empirical revolution in economics.

I am basically — though not without reservations — in favour of the increased use of experiments and field studies within economics. Not least as an alternative to completely barren ‘bridge-less’ axiomatic-deductive theory models. My criticism is more about aspiration levels and what we believe that we can achieve with our mediational epistemological tools and methods in the social sciences.

The increasing use of natural and quasi-natural experiments in economics during the last couple of decades has led several prominent economists to triumphantly declare it as a major step on a recent path toward empirics, where instead of being a deductive philosophy, economics is now increasingly becoming an inductive science.

In randomised trials the researchers try to find out the causal effects that different variables of interest may have by changing circumstances randomly — a procedure somewhat (‘on average’) equivalent to the usual ceteris paribus assumption).

Besides the fact that ‘on average’ is not always ‘good enough,’ it amounts to nothing but hand waving to simpliciter assume, without argumentation, that it is tenable to treat social agents and relations as homogeneous and interchangeable entities.

Randomisation is used to basically allow the econometrician to treat the population as consisting of interchangeable and homogeneous groups (‘treatment’ and ‘control’). The regression models one arrives at by using randomised trials tell us the average effect that variations in variable X has on the outcome variable Y, without having to explicitly control for effects of other explanatory variables R, S, T, etc., etc. Everything is assumed to be essentially equal except the values taken by variable X.

Just as e.g. econometrics, randomisation promises more than it can deliver, basically because it requires assumptions that in practice are not possible to maintain.

Like econometrics, randomisation is basically a deductive method. Real target systems are seldom epistemically isomorphic to our axiomatic-deductive models/systems, and even if they were, we still have to argue for the external validity of the conclusions reached from within these epistemically convenient models/systems. Causal evidence generated by randomisation procedures may be valid in ‘closed’ models, but what we usually are interested in, is causal evidence in the real target system we happen to live in.

‘Ideally controlled experiments’ tell us with certainty what causes what effects — but only given the right ‘closures.’ Making appropriate extrapolations from (ideal, accidental, natural or quasi) experiments to different settings, populations or target systems, is not easy. ‘It works there ‘s no evidence for ‘it will work here.’ Causes deduced in an experimental setting still have to show that they come with an export-warrant to the target population/system. The causal background assumptions made have to be justified, and without licenses to export, the value of ‘rigorous’ and ‘precise’ methods — and ‘on-average-knowledge’ — is despairingly small.

So, no, I find it hard to share Waldenström’s and other mainstream economists’ enthusiasm and optimism on the value of the latest ’empirical’ trends in mainstream economics. I would argue that although different ’empirical’ approaches have been — more or less — integrated into mainstream economics, there is still a long way to go before economics has become a truly empirical science.

Heterodox critics are not ill-informed about the development of mainstream economics. Its methodology is still the same basic neoclassical one. It’s still non-pluralist. And although more and more economists work within the field of ’empirical’ economics, the foundation and ‘self-evident’ bench-mark is still of the neoclassical deductive-axiomatic ilk.

Sad to say, but we still have to wait for the revolution that will make economics an empirical and truly pluralist and relevant science. Until then — if you’r familiar with the Swedish language — why not read Fronesis and get a glimpse of the future to come? Mainstream economics belongs to the past.

  1. Ikonoclast
    November 25, 2020 at 1:16 am

    The challenge is to develop a valid ontology for economics. In medicine, early theories of disease failed to yield efficacious treatments because their ontology (a theory of basic real existents and how they interact) was wrong. A few of the more common ideas founded on false ontologies were that diseases were caused by evil spirits, miasma and imbalances of the four humors. It was not until the advent of the germ theory of disease that real progress was made. More basic and real biological existents were found, microscopic “germs” or pathogens, and the pathogenic theory of disease was founded. With continued research, further causes of disease were found, namely deficiency disease, hereditary disease and physiological disease. Again, this progress was made possible by basic empirical research into real existents via the disciplines of physics, chemistry, biochemistry, genetics, physiology (a complex system discipline) and neurology (another complex system discipline).

    Since conventional economics has made a total mess of things, and it is founded on a demonstrably false ontology, the discipline must be torn down and rebuilt from scratch. The conventional economists are the modern world’s equivalent of the medieval school-men. Their arguments are those of the syllogism and mathematico-deductive logic while being based on a false ontology of economic objects. When the premises are false, all ensuing deductions are false. Conventional economists still talk about “spirits” only they call them sentiment, optimism, pessimism and so on. Instead of the homunculus to explain human reproduction they have homo economicus to explain economic reproduction.

    The problem with conventional economics is that it commences with prescriptions and then using the prescriptions as axioms, develops its theorems. However, to study the real we cannot begin with prescriptions. We must begin with empirical investigation and accurate descriptions of the real and the interactions of real existents. This is why, at the first level, economics must begin with thermoeconomics, also referred to as biophysical economics. At this level we must seek to equate production and production possibilities only with the empirically measurable and empirically sustainable.

    At the same time, we cannot ignore our current cultural norms, in particular the prescriptive norms of private property and (supposedly) free markets. This is where contemporary economics is prescriptive and normative, prescribing these norms as absolutely necessary and non-negotiable. With these norms taken as axiomatic givens, the “laws” of economics are sought. But the results of axioms (when derived) are theorems or pre-determined outcomes, not laws. The normative rules of conventional economics create behaviors but these behaviors are in no way law governed (in the sense of fundamental scientific laws). Rather, they are axiomatically guaranteed outcomes within the limits of what is empirically possible. This is a fundamental point. Human rules (as opposed to fundamental laws of nature) create specific results within the bounds of the possible.

    If conventional economics will not own up to its prescriptive foundations, as it in fact does not, then it is revealed as dishonest and merely an ideology dressed up in the trappings of false mathematico-deductivist justifications. Can a non-mathematician critique complex mathematical models in economics or other disciplines? No, not in their own terms. However, the empirical evidence for or against a mathematical model set (in a discipline arena) can be assessed by a basically science-literate person. I am neither an aeronautical engineer nor am I an atmospheric physicist. I cannot critique their mathematical models. Yet, I can see that planes fly and that modern climate models also “fly” while still being granular and imperfect. In the second case, “fly” means that word summaries, diagrams and basic formulae of climate models make scientific explanatory sense (cause and effect sense) to a science-literate person and the models also make predictions which are being borne out empirically by real-world developments.

    It’s difficult, for me at least, to see any way that mathematico-deductivist economic models fly outside of the theoretical spaces in which they are constructed. That is, it is difficult to see that they fly in real spaces in the real world). That’s fine up to a point. Theory, be it sociological or scientific, is the next step after inductive and adbductive reasoning from empirical hints and instances. But eventually the theory must be taken back to the empirical realm for testing. Much of “conventional” economics seems to me to be unclear about whether it is descriptive or a prescriptive discipline. I’m not alone in thinking this. These debates are now generations old and objective conclusions are not just rare but seemingly non-existent. The state of micro and macro in “conventional” economics seems as deplorable as ever.

    “Of several major theoretical problems, the most basic is that economic theory reasons deductively, from axioms. An axiom, said the English economist Peter Wiles, is “only a premise one is not allowed to question, dressed up as something grand.” … By reasoning deductively from axioms, economics confuses the normative with the descriptive.” – Robert Kuttner.

    My central question is this. Does economics need to go back to basic ontology (in philosophical and scientific terms) in an attempt to correct and properly found its ontology of economic objects and processes? I contend it does need to do this. If you can’t get the base ontology right (what really exists at the most basic observable levels) then you cannot get anything else right. Medicine, fas I said, could make no real progress until it abandoned the humors theory for the germ theory et. al.

    Economic theory has been going around in circles since the Cambridge capital controversy [1] at least.

    Note 1- “The Cambridge controversies were not a tempest in a teapot. We agree with Bliss’s conclusion in viewing “the theory of capital not as some quite separate section of economic theory, only tenuously related to the rest, but…as an extension of equilibrium theory and production theory to take into account the role of time.” Major issues—explaining (and justifying) the return to capital, visions of accumulation, limitations of equilibrium tools—were and are at stake. While many of the key Cambridge, England, combatants stopped asking questions because they died, the questions have not been resolved, only buried. When economists decide to delve again, we predict controversies over these questions will be revisited, just as they were time and again in the 80 years prior to the Cambridge controversies. – Whatever Happened to the Cambridge Capital Theory Controversies? – Avi J. Cohen and G. C. Harcoourt, 2003.

  2. Mr. T
    November 25, 2020 at 1:41 am

    I agree with you, although I would not call the mainstream “neoclassical” (but that’s another story). Jonathan Aldred had recently pointed out that the empirical modern economists who believe they have overcome thinking in schools of thought are ultimately just “data geeks”. But even here, as you write, it is ultimately a hegemonic modelling culture.

    However, does the criticism of deductivist modelling not also apply to heterodox approaches, say, post-Keynesianism, evolutionary economics or complexity economics?

    • Meta Capitalism
      November 25, 2020 at 8:53 am

      However, does the criticism of deductivist modelling not also apply to heterodox approaches, say, post-Keynesianism, evolutionary economics or complexity economics? ~ Mr. T.

      .
      While I am not speaking for Lars I think it most certainly does. The mainstream economics (ME) created deductivist models divorced from reality and then built mathiness therefrom, thereby breaking mathematical sense and creating pseudo-scientific nonsense:
      .

      Mathiness

      The belief that mathematical reasoning is more rigorous and precise than verbal reasoning, which is thought to be susceptible to vagueness and ambiguity, is pervasive in economics. In a celebrated attack on Nobel Prize winner and New York Times columnist Paul Krugman, the Chicago economist John Cochrane wrote, ‘Math in economics serves to keep the logic straight, to make sure that the “then” really does follow the “if,” which it so frequently does not if you just write prose.’15 But there is a difficulty here which appears to be much more serious in economics than it is in natural sciences: that of relating variables which are written down and manipulated in mathematical models to things that can be identified and measured in the real world. This is an aspect – perhaps the principal aspect – of a problem which Paul Romer, 2018 Nobel laureate, has described as ‘mathiness’.16 Romer points to concepts such as ‘investment specific technology shocks’ and ‘wage markup’ which are no more observable, or well defined, than toves or borogoves. They exist only within the model, which is rigorous only in the same sense as ‘Jabberwocky’ is rigorous; the meaning of each term is defined by the author, and the logic of the argument follows tautologically from these definitions.”

      Start reading this book for free: https://a.co/amyo5yZ

      .
      If you examine very closely the arguments of Shiozawa’s Microfoundations of Evolutionary Economics (and he claims to be heterodox) his so-called axioms are a series of postulates on the scope of human decision making that are every bit as much a gross oversimplification and stereotype of the process of human decision making. It is a grand spoof of biology and psychology based on a few very slim “small world” claims made by behavioral economists. Truly a waste of the paper it is written on.

    • November 25, 2020 at 8:28 pm

      What Mr T says and Meta quotes surely implies that ‘heterodox’ is simply the mirror image of ‘orthodox’, so we need a new name to distinguish a not-merely deductive approach to economics. The problem is that the necessary distinction is like sex, originating at a level of evolution far before that of human economies. I’ve ended up with ‘complex truth’, a four-fold system of interactive logic applicable retrospectively at least as far back as the formation of matter, which allows my economics to be post-Keynesian, evolutionary and complex without being any of what many economists (including Yoshinori) claim to be heterodox. See also

      https://rwer.wordpress.com/2020/10/12/limits-of-mainstream-economics-today/#comment-175251

  3. Craig
    November 25, 2020 at 2:48 am

    Economics has gone through a pluralist and empirical revolution. It’s just that THAT is not enough, and of course its just an academic phenomenon not a viral “infection” of the individual’s mind.

    Economists and economic pundits are still unconscious instead of self aware, still nomadic hunters and gatherers instead of homesteading agriculturists and city dwelling artisans, still trying to resolve the perturbations of the orbit of Mars instead of inverting the positions of the earth and the sun and still factoring for-profit banking and finance and its monopolistic paradigm of Debt and Loan Only instead of opening your minds to Monetary Gifting with a direct and reciprocal price and monetary policy at the point of retail sale.

    In other words you’re non-activists who are failing to analyze on the paradigmatic level and hence, despite your railing against academic orthodoxies and otherwise well taken minor observations and palliative reforms, your virtually all stuck in erudite duncery and getting no where FAST. Meanwhile your children or grandchildren will probably be victimized by either a monopolisitic corporatocracy or a vulgar marxism as climate change and the end of the age of petroleum falls upon them in another 20-30 years. Yes, the end IS near.

    It’s the monetary and financial paradigm, stupid!!!

  4. Norman L. Roth
    November 25, 2020 at 10:16 pm

    Craig, There’s nothing like a bit of that old-time monetary ‘gifting’ a la Major Douglas, Dietrich Eckhart, Anton Drexler etc. a.k.a ‘quantitative easing’ . Just borrow & print the stuff & any body who objects is just a ‘reactionary’ And top it all off with the meringue of sanctimony. After all “A nation cannot owe itself money”. ’cause it’s just internal book-keeping’ . ‘eh fellas ? Ach, Der ewige spinner ! Please GOOGLE: {1} Norman L. Roth {2} Norman L. Roth, Ecnomics {3} Norman L. Roth, Technological time

    • Craig
      November 26, 2020 at 4:09 pm

      Norman,

      I thought you to be reasonably well informed until you confused quantitative easing which is nothing more than an asset swap with a paradigm changing concept like monetary gifting. Get up to date, boy. And please stop the ad hominem while you’re at it.

      Despite the fact that his (very insightful) policies were not informed by a well defined concept of pattern/paradigm because he lived before Kuhn and hence did not fit them to that form of analysis, C. H. Douglas had more of an incisive and iconoclastic intellect than anyone I’ve seen posting here, virtually all of which are stuck in obsessive duality, complexity and hence the regurgitation of heterodox orthodoxies ad nauseum…when as I have repeatedly posted here the key to paradigm perception and real enlightenment is deep simplicity, that is the integrative mindset AKA Wisdom.

  5. ghholtham
    November 26, 2020 at 12:57 pm

    “The Economics of Climate Change”, Nicholas Stern; “Deaths of Despair and the Future of Capitalism”, Ann Case and Angus Deaton, “Innovation and the Evolution of Industries” Malerba, Nelson, Orsenigo and Winter.
    For example. They address important issues and none mentions DSGE.
    In all the words above I could not find a single concrete suggestion as to how to analyse social phenomena or anything that was even the prelude to a hint of a sketch for anything that looked like a theoretical schema. Truly the aridity of economics is only exceeded by the barrenness of its critics.

    • Meta Capitalism
      November 27, 2020 at 5:41 am

      “The Economics of Climate Change”, Nicholas Stern; “Deaths of Despair and the Future of Capitalism”, Ann Case and Angus Deaton, “Innovation and the Evolution of Industries” Malerba, Nelson, Orsenigo and Winter. For example. They address important issues and none mentions DSGE.

      .
      Why should they? Are you saying they should? Or are you saying they talk about important issues without mentioning DSGE? If the latter I agree.
      .
      But your own emphasis on econometrics is too an arid approach to real-world problems when values and meanings that truly determine how we approach economic problems are ignored. Tell me Gerald, how does econometrics address the question of justice?
      .

      We would like to see an America that is more just. The problem is that different people have very different and mutually incompatible ideas of justice. But we can go a long way focusing instead on obvious injustices, features of society on whose wrongness many people can agree. We do not have to complete the whole jigsaw puzzle of justice to make arguments for reform. This is what the economist and philosopher Amartya Sen calls the comparative approach, which he contrasts with the transcendental approach that begins by describing an ideal society.1 If we can agree on the identification of a list of injustices, each one removed takes us toward a better world.
      .
      To take some concrete examples, there is wide agreement that making money out of human suffering is wrong, and that wealth inequality based on that suffering is unjust. There is also broad agreement, on both right and left, among people with very different political views, that rent-seeking and crony capitalism are unjust. Whatever we think about wealth seeking, we can agree that it is unjust to get rich through special favors, such as those excoriated by Adam Smith as supporting “absurd and oppressive monopolies.” By contrast, there is no such agreement that any action that reduces income inequality is thereby automatically desirable. (
      Case, Anne. Deaths of Despair and the Future of Capitalism (p. 245). Princeton University Press. Kindle Edition.)
      .
      Many economists who think about income distribution endorse the view, first extensively used in economics, and which philosophers now call “prioritarianism,” that the more people have, the less weight (priority) their wellbeing should be given in policy making. Prioritarians endorse equality, and economic prioritarians design tax systems that aim for income equality while recognizing the limitations that come from the fact that the more heavily people are taxed, the less they will contribute to the economy. The resulting tax system depends on factual issues, particularly on how people respond to taxes, and on how much the rich contribute to the wellbeing of others. It also rests on values, and particularly on prioritarianism, which not everyone endorses; indeed, we suspect that the majority of Americans do not. In particular, it is a controversial ethical position to argue, as economic prioritarians do, that the value to society of giving additional income to those in the top 1 percent of the income distribution is so small that it can be ignored. (Case, Anne. Deaths of Despair and the Future of Capitalism (pp. 245-246). Princeton University Press. Kindle Edition.)
      .
      We should declare our own values on these matters. We believe that those in distress deserve priority, but not that there should be any decline in priority with income or wealth among those who are not in distress. The anguish associated with deaths of despair is a matter of the greatest importance; reducing inequality by redistributing from the seriously rich to the merely rich, or even to the educated middle classes, does not seem important to us unless it brings other benefits. That is why we are not disturbed by inequality in and of itself, but very concerned with the inequality that comes about through theft and rent-seeking, or through the involuntary upward redistribution that we have described throughout this book. To be clear, we are not denying that inequality can sometimes have consequences that undermine other important social goals—for example, if the rich use their wealth to corrupt democracy, or to agitate against public goods on which most people depend. But we are against the high marginal rates on top incomes that result from prioritarian calculations. Instead, we prefer to fight rent-seeking directly, which, if successful, will do much to reduce inequality. (Case, Anne. Deaths of Despair and the Future of Capitalism (p. 246). Princeton University Press. Kindle Edition.)

      You _almost exclusively_ speak of “how to analyse social phenomena” in terms of econometric’s “theoretical schema” as though that is the only way to approach economics and the problems (e.g., climate change, inequality, etc.) economic practices as embodied in the real-world create. I have seen you, now and then, “declare [your] own values on these matters” and I have more often than not (I cannot think of time off the top of my head I did not agree) found them reasonable. Yet, because of the nature of this blog the majority of your posts are not about values but about methodology. Perhaps it is because of the nature of THIS blog?
      .
      It seems to be that economics (and many economists) have the cart before the horse so-to-speak. First we must engage in those discussions which illuminate values, meanings, and ethical questions such as “Is healthcare a right or privilege?” While it hard to believe this is even an open question, nevertheless it is. It is only after settling such value-laden ethical questions can we then begin to envision the form economic theorizing can take it seems to me. Once we have determined the values then it seems we can engage with an appropriate methodology to execute the management, regulation, and coordination of policy making informed by sound science.
      .
      But alas, it also seems there are many “economic frameworks” in which to think, as the example above shows. So it seems the field of economics is a divided community perhaps just as divided as society in many ways with many “schools” of economic thought sometimes in opposition to each other.
      .
      Perhaps the the aridity of economics is because of their abundance of “theoretical schema” only matched by their equally barren of values and ideals because of their ingrained beliefs that these simply don’t matter when they most certainly do.
      .
      Time for economists to put their values right out in the open on the table I think.

  6. ghholtham
    November 26, 2020 at 1:10 pm

    Meta’s hostility to Shiozawa is becoming pathological. Shiozawa’s work is a contribution to understanding the operation of the manufacturing sector of the economy and its role in trade. As he avows himself it is not applicable to flex-price sectors such as financial markets and it is of very doubtful application to the service sector where inventories are not possible. He does not assume perfect information or foresight and he analyzes process without assuming an equilibrium a priori. It is therefore a clear departure from the neo-classical school. Of course it is an abstraction like all theory. You might as well criticise Jung for not taking account of how the economic context influenced extroversion and introversion.
    Let’s at least try to be reasonable.

    • Meta Capitalism
      November 27, 2020 at 4:04 am

      “In practice, what math does is let macroeconomists locate the FWUTV’s [facts with unknown truth values] farther away from the discussion of identification. The Keynesians tended to say “Assume P is true. Then the model is identified.” Relying on a micro-foundation lets an author can say, “Assume A, assume B, … blah blah blah …. And so we have proven that P is true. Then the model is identified.” (Paul Romer, The Trouble With Macroeconomics, Stern School of Business, New York University,Wednesday 14th September, 2016)
      .
      ‘Mathiness’ masquerading as science is often used by mainstream economists to hide the problematic character of the assumptions used in their theories and models. But — without showing the model assumptions to be realistic and relevant, that kind of economics indeed, as Romer puts it, produces nothing but “blah blah blah.” (Lars Syll, RWER, ‘Mathiness’ in economics)
      .
      The belief that mathematical reasoning is more rigorous and precise than verbal reasoning, which is thought to be susceptible to vagueness and ambiguity, is pervasive in economics. In a celebrated attack on … Paul Krugman, the Chicago economist John Cochrane wrote, ‘Math in economics serves to keep the logic straight, to make sure that the “then” really does follow the “if,” which it so frequently does not if you just write prose.’ But there is a difficulty here which appears to be much more serious in economics than it is in natural sciences: that of relating variables which are written down and manipulated in mathematical models to things that can be identified and measured in the real world … Concepts such as ‘investment specific technology shocks’ and ‘wage markup’ which are no more observable, or well defined, than toves or borogoves. They exist only within the model, which is rigorous only in the same sense as ‘Jabberwocky’ is rigorous; the meaning of each term is defined by the author, and the logic of the argument follows tautologically from these definitions. (Kay et. al. https://a.co/amyo5yZ )
      .
      Lacking a simplified, predictable character at its heart, political economy looked destined to remain mere art, not science. That frustration prompted John Stuart Mill to pare down the description and become—in the footsteps of Leonardo—the first economic caricaturist. Political economy ‘does not treat the whole of man’s nature . . . nor the whole conduct of man in society’, he argued in 1844. ‘It is concerned with him solely as a being who desires to possess wealth’. To this desire for wealth, Mill added two other exaggerated features: a deep dislike of work and a love of luxuries. He admitted that the resulting depiction was ‘an arbitrary definition of man’, based on ‘premises which might be totally without foundation’, making the conclusions of political economy ‘only true . . . in the abstract’. But he justified his caricature, confident that no ‘political economist was ever so absurd as to suppose that mankind are really thus constituted’, while adding that ‘this is the mode in which science must necessarily proceed’. Not everyone agreed: in the 1880s the political economist Charles Stanton Devas coined a now infamous nickname when he derided Mill for ‘dressing up a ridiculous homo oeconomicus’ and examining only the ‘dollar-hunting animal’. But by presenting a simplified and predictable character, Mill’s caricature opened up the scope for economic theory and apparent scientific method, and so it stuck. (Raworth, Kate. Doughnut Economics (p. 84). Chelsea Green Publishing. Kindle Edition.)
      .
      The economist most eager to further Mill’s efforts at caricature was William Stanley Jevons. He was inspired by Newton’s success in reducing the physical world to atoms and then constructing its laws of motion from a single atom up. So he attempted to model a nation’s economy along the same lines, reducing economic activity to what he called the ‘single average individual, the unit of which population is made up’. To achieve this, he had to make the caricature even more exaggerated so that human behaviour could be described mathematically, which for Jevons was the ultimate in scientific credibility. He noted that the philosopher Jeremy Bentham had been busy expounding the idea of utility—a ‘felicific calculus’ based on an ambitious classification of 14 kinds of human pleasure and 12 kinds of pain—in order to provide the quantifiable basis for creating a universal moral and legal code. Seizing upon the mathematical potential of this concept, Jevons drew up ‘calculating man’, whose fixation on maximising his utility had him constantly weighing up the consumption satisfaction that he might derive from every possible combination of his options. (Raworth, Kate. Doughnut Economics (pp. 84-85). Chelsea Green Publishing. Kindle Edition.)
      .
      With this move, Jevons placed utility at the heart of economic theory —a spot it occupies to this day—and from it he derived the law of diminishing returns: the more of a thing that you consume (be it bananas or shampoo), the less you will desire still more of it. But, despite each one of his desires following such a law of satiation, this economic man knew of no satiation overall. Alfred Marshall put it most vividly in his influential 1890 text Principles of Economics. ‘Human wants and desires are countless in number and very various in kind,’ he wrote. ‘The uncivilized man indeed has not many more than the brute animal; but every step in his progress upwards increases the variety of his needs . . . he desires a greater choice of things, and things that will satisfy new wants growing up in him.’ Thus, by the end of the nineteenth century, the caricature clearly depicted a solitary man, ever calculating his utility, and insatiable in his wants. (
      Raworth, Kate. Doughnut Economics (p. 85). Chelsea Green Publishing. Kindle Edition.)
      .
      It was a powerfully simple depiction which opened the way to new kinds of economic reasoning. But still it was not enough: the nineteenth-century model of economic man may have been ever-calculating, but he was not all-knowing, and his inherent uncertainty (which forced him to act upon opinion rather than knowledge) barred the way to complete mathematical modeling. Hence in the 1920s, Chicago-school economist Frank Knight decided to endow economic man with two godlike traits—perfect knowledge and perfect foresight—enabling him to compare all goods and prices across all time. This was a decisive break with the old portrait: no longer merely exaggerating recognisably human features, Knight embellished his Homo economicus with superhuman powers. And with that, he had turned the caricature into a cartoon. He knew it too: he admitted that his depiction of humanity was loaded with ‘a formidable array’ of artificial abstractions, resulting in a creature who ‘treats other human beings as if they were slot machines’. But economic science needed just such an idealised man to inhabit its idealised economic world, he reasoned, in order to unleash the potential of mathematical modelling, and so he became the world’s first economic cartoonist. (Raworth, Kate. Doughnut Economics (p. 85). Chelsea Green Publishing. Kindle Edition.)

      .
      You are the one becoming irrational here Gerald and unable to deal with reality. It is a simple fact that one can create caricatures of human beings and how they cope in various situations (i.e., decision making) in more than one way. You can either create a caricature in which they are infinitely knowledgeable utility calculating machines (e.g., homo economicus) or go the other way and create a caricature in which they are utterly incapable of higher human cognitive abilities that we use every day to cope in complex situations, including in an automotive company.
      .
      Shiozawa has created a caricature of human’s and their decision making abilities by doing exactly what Romer notes above, “Relying on a micro-foundation” that says “lets … say, “Assume A, assume B, … blah blah blah …. And so we have proven that P is true. Then the model is identified.”
      .
      It goes something generally like this. Human’s engage in “routine behavior” (omitting that they also daily use complex cognitive and emotional abilities within larger social networks at the same time); in fact they are like fitness climbing ticks not even as smart as a dog (which it could be argued has cognitive abilities far exceeding a tick).
      .
      After a brief anthropomorphizing of how amazingly intelligent ticks are — “ticks are ingenious” — and ignoring vast fields of biology and psychology (spoofing biology and psychology or also known as epistemic trespassing) we then assume based on examples from behavioral economics (e.g., Kahneman) it is claimed based upon a series of caricatures qua assumptions qua FWUTV’s [facts with unknown truth values]* that humans make economic decisions like fitness climbing ticks and Turing machines (i.e., “I came to think of humans as a kind of Turing machine. I searched for stories which reinforced” his own bias, noting “Üxküll’s tick and the Turing machine parable all fitted together in one idea.” “We find an astonishing coincidence with my Turing machine parable of animal and human behaviors.”)** and that this is their “routine” way of making decisions. Of course, in the text there are lots of caveats given, such as these simplifications are for the purpose of mathematical tractability, etc., etc., etc.
      .
      Then, having created a caricatures of human beings and their decision making it is now possible to reduce this to simple mathematically tractable “if-then rules” capable of mathematical modeling and Walla!, microfoundations! and a micro-macro loop! all sounding so “scientific.” Unfortunately it doesn’t represent reality in real-world economic situations, even within an automotive company. So Gerald, if you have a problem facing _reality_ I do believe you are the one that has become pathologically irrational.

      ——
      .
      * One FWUTV is the claim that, “Routine behaviors comprise 99% of our behaviors.” Note no citation is given for this assumption, nor is it contextualized, yet it is critical to his model for without it one cannot reduce human decision making to simple “if-then rules” or what he calls “C-D transformation. One must ask, which hat did he pull this FWUTV out of? Another example of a FWUTV is his analogy of an economic agent with a tick, claiming “The contrast between limited capabilities and the difficulty of task execution [of a tick] is impressive. As an economic agent, we are in a similar situation.” Of course, human agents are not ticks and they relay on more than simple routine “if-then rules” when developing business strategies and business plans. But those are not so mathematically tractable.
      .
      ** Note, “I came to think of humans as a kind of Turing machine. I searched for stories which reinforced the parable. There were many of them. However, Üxküll’s tick story was the most impressive.” (Shiozawa, Yoshinori; Morioka, Masashi; Taniguchi, Kazuhisa. Microfoundations of Evolutionary Economics (Evolutionary Economics and Social Complexity Science) (Kindle Locations 884-887). Springer Japan. Kindle Edition.) is a perfect example of greedy reductionism and reducing human nature by eliminating what is important. It is the perfect example of cheap epistemic trespassing or spoofing by a practitioner of one field of other fields the writer has only a superficial knowledge of. For example, Shiozawa writes, “Humans are much more competent and are capable of more complicated calculation, but, in view of the complexity of the real world, we are also in the same situation as animals (Kindle Locations 887-899).” Animal cognitive psychology tells us much about the cognitive ability of animals. We have learned much, including that certain higher animals have capabilities we once thought they didn’t have. Yet we have also learned their limitations compared to humans. It is these higher faculties that must be ignored to make Shiozawa’s model work. This is essentially what has been done in mainstream economics caricature of homo economicus, yet here we see it done in the context of heterodox economics based similarly upon axiomatic deductive reasoning based upon a series of _assumptions_ that when examined closely prove either erroneous or misleading.

      • Craig
        November 27, 2020 at 4:53 am

        The Martians must be laughing.

      • Meta Capitalism
        November 27, 2020 at 5:59 am

        Addendum: The essential flaw in the kind of greedy reductionism that created both _homo economicus_ and some types of “complexity economics” in its “social insect” model qua fitness climbing ticks & Turning machines aka _bestiola economicus_ is succinctly summed up in a book I would have never known if not for Shiozawa misquoting it:
        .

        Even such purely academic theories as interpretations of human nature have profound practical consequences if disseminated widely enough. If we impress upon people that science has discovered that human beings are motivated only by the desire for material advantage, they will tend to live up to this expectation, and we shall have undermined their readiness to moved by impersonal ideals. By propagating the opposite view we might succeed in producing a larger number of idealists, but also help cynical exploiters to find easy victims. This specific issue, incidentally, is of immense actual importance, because it seems that the moral disorientation and fanatic nihilism which afflict modern youth have been stimulated by the popular brands of sociology and psychology [and economics] with their bias for overlooking the more inspiring achievements and focusing on the dismal average or even the subnormal. When, fraudulently basking in the glory of the exact sciences, the psychologists [, theoretical economists, etc.,] refuse to study anything but the most mechanical forms of behavior — often so mechanical that even rats have no chance to show their higher faculties — and then present their mostly trivial findings as the true picture of the human mind, they prompt people to regard themselves and others as automata, devoid of responsibility or worth, which can hardly remain without effect upon the tenor of social life. (Andreski 1973, 33-34, in Social Sciences as Sorcery)

        .
        Indeed, the Martians are laughing at us setting up theories of human decision making with ticks (not even rats!) so simplistic and mechanical (aka Turing machines qua if-then CD-Transformations) that a rat has a better chance to show its higher faculties then humans do!

    • Meta Capitalism
      November 27, 2020 at 4:22 am

      ghholtham
      November 26, 2020 at 1:10 pmReply
      Meta’s hostility to Shiozawa is becoming pathological. Shiozawa’s work is a contribution to understanding the operation of the manufacturing sector of the economy and its role in trade. As he avows himself it is not applicable to flex-price sectors such as financial markets and it is of very doubtful application to the service sector where inventories are not possible. He does not assume perfect information or foresight and he analyzes process without assuming an equilibrium a priori. It is therefore a clear departure from the neo-classical school. Of course it is an abstraction like all theory. You might as well criticise Jung for not taking account of how the economic context influenced extroversion and introversion.
      Let’s at least try to be reasonable.

      Indeed, Gerald, let’s be reasonable, so perhaps you might check your emotions a bit ;-) You ignore the fact that the many caveats in Shiozawa’s book are not how he is hawking it on RWER. Never never mentions the caveats at all, but rather he claims to have revolutionized and provided “microfoundations” for heterodox economics. He hasn’t. This is blog and the comments thereon count too. You say, “He does not assume perfect information or foresight and he analyzes process without assuming an equilibrium a priori.” So what, irrelevant and ignoring the fact that he chooses to take the opposite extreme of _homo economicus_ and fabricate a _bestiola economicus_ (aka social insect model) simply because this is mathematically tractable, not because it is true or accurately models reality in the real world. This again is exactly the mistake of ME and the fact is that the same mistake can be made by heterodox economists. That is the issue not your many non sequiturs and straw men above.

    • Yoshinori Shiozawa
      November 27, 2020 at 6:10 am

      I must thank Meta for introducing our book, although he pictured it in a very distorted way. Readers can easily know how I argued, however, if they abstract Meta’s math phobia. Interested readers are requested to read Marc Lavoie’s book review which is freely downloadable because it is published on open-source basis. Marc Lavoie is the author of voluminous Post Keynesian Economics: New Foundations (Edward Elgar, 2014) which is for the moment the most comprehensive overview of various strands of Post Keynesian economics. Lavoie’s book review contains no mathematical expressions except that he used expressions t, t+1 and t+2 to indicate three different time points. Readers can also consult Yoshio Inoue’s book review. Inoue (read i.no.u.e) examines our book from a more philosophical point of view, because he is a specialist in history of economic thought.

      • Meta Capitalism
        November 27, 2020 at 7:37 am

        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. (RWER, 1/16/2020)

      • November 27, 2020 at 12:53 pm

        Inoue’s abstract says “Many were opposed to formal theory itself in the genealogy of heterodox economics,including evolutionary economics. There have also been numerous discussions on which side is correct. This review attempts to clarify that there is some ideological reason to be against formalistic approaches from the viewpoint of economic thought and that it is not necessary to decide which side is correct. The other is about how an economic system, which is built on bounded rationality, affects its bounded rationality itself through the circulation of economic activities. These thought experiments are inspired by the “micro–macro loop” method considered in this book …”.

        His conclusion says that “The “micro–macro loop,” as this book calls it, cannot be constrained to such literal economic activities as price setting or production decisions. It will inevitably include the character formation of economic agents as well. If so, the limited intelligence of humans will not only be a given condition, but will also be what capitalism induces and reinforces for the people living under it. We believe that evolutionary economics should think about this aspect of the “micro–macro loop.” Although it may sound somewhat ironic with the name evolutionary economics, the idea of capitalism growing lesser human intelligence will allow some interesting new angles of comparison to develop between neoclassical economics and evolutionary economics”.

        So why has Yoshinori not pursued this line (to be found in G K Chesterton’s “The Outline of Sanity”, 1926) rather than niggling here at people offering views other than his own?

      • Yoshinori Shiozawa
        November 27, 2020 at 5:26 pm

        Thank you, Dave, for your advice. I am stopping “niggling” at people including yourself except Lars Syll. Objections and counterarguments against many of Syll’s contentions are not negligible, (1) because the stake is so important (It concerns the strategy of re-building economics. This is a public affairs.), and (2) because his influence is substantial.

        As for what I should do along the line as you have advised it, I have written a paper after the book:A new framework for analyzing technological change this year. If you like, I can send you the PDF. This paper responds to Inoue’s request that Dave has cited above in relations to micro-macro loop, because the paper treats how the technological change induces economic growth and the increase of real wage rate. We did not included this theme in our book. There are many other topics that we could not treat in the book. But, that does not necessarily imply that we have no idea for the further development of the core theory. Other topics that I want to explore include these:
        (1) What derives the emergence and rapid growth of global value chains.
        (2) How is the principle of effective demand is explained by the new new theory of value.
        (3) Why we should reject equilibrium framework.

        Unfortunately, I am old enough and the writing does not proceed as I desire. But, I have not abandoned my plan. I am still ambitious enough.

    • Calgacus
      November 28, 2020 at 4:11 am

      ghholtham: I too was struck by the perplexing hostility from the earliest comments from Meta I saw here. Shiozawa has responded very gracefully. I do disagree with some of what Shiozawa has said – For instance the Meir Kohn paper focuses on important issues but seems to be wrong and sometimes self-contradictory albeit in an interesting, even enlightening way. Kohn’s perception that Keynes was doing equilibrium analysis [e.g. with S ≡ I] is usually wrong; so he misconstrues some of Keynes’s important arguments and definitions and their importance. Many – not all – economists in the 30s and 40s got it right, but the basic understanding was often, even usually lost in the intervening years.

      But I do agree with YS’s important point that Lars Syll goes too far, throws out the baby with the bathwater. Syll often argues in such a way that only hurts “heterodox” economics and the truth- and only helps the soulless minions of orthodox economics. ;-) Orthodox economics isn’t “mathematical” or “deductive” as the orthodox AND Syll AND those Syll quotes agree. Orthodoxy is mainly, usually (but not always) just plain wrong. They’re “spherical bastards” (google that and Fritz Zwicky) :-) Specious. logically, mathematically faulty arguments for conclusions violently at odds with common sense and observation.

      So orthodoxy is usually just pseudomathematical chaos that doesn’t smell at all mathy to mathematicians – who can tell when a page of Greek symbols is just crap, not math. [ Partly from long experience marking papers, some by students who would be great at math – if they put half as much energy into learning it, rather than faking it. :-) ] Or can tell when a purely verbal page – what nonmathematicians would consider “not-math” – contains the most mathily profound math.

      It is the LACK of mathematical rigor and spirit, the lack of correct deductive reasoning from axioms and consistent definitions in orthodox economics, not the presence of these things that is the problem. Syll is 180 degrees off here. That needs to be said every time the error is made.

      • Yoshinori Shiozawa
        November 29, 2020 at 6:49 am

        Calgacus >> Kohn’s perception that Keynes was doing equilibrium analysis [e.g. with S ≡ I] is usually wrong.

        On this point, let us discuss as economics specialists in other thread such as What is ‘effective demand”? or more privately through e-mails. There are so many noises in this blog. In the “effective demand” thread, I am waiting that Jespersen answer my questions. He is at this moment very busy and cannot reply immediately, but he has promised to return to the discussion in a week or two. If you like to argue through e-mail, please give me you e-mail to y@shiozawa.net.

  7. Meta Capitalism
    November 27, 2020 at 7:12 am

    The empty “math phobia” ad hominem is the last refuge of cowards and ideologues which is what you are proving yourself to be sir. You, who presume you are an expert in logic lack the most basic skill in recognizing logical fallacies that a high school student is trained to recognize. All an ideologue is capable of is spewing ad hominem and hawking his book, that is the extent of Shiozawa’s use of this forum. He has proved my point in spades.

  8. November 27, 2020 at 11:35 am

    Craig, Norman and Gerald butting in have somewhat overshadowed my agreement with Mr T and Meta and what I said on Nov 25th about the origins of things like sex going back a long way. Norman is of course quite wrong to ridicule the only justifiable role of money being accountancy, ignoring the problems of it all things to all men and differentially scaleable, but so is Craig when not accepting that what is owed, though not money, is regeneration of Nature’s resources. Though I am neither so articulate nor decisive as Meta, I end to agree with what he says about Gerald and Yoshinori. Sadly, because they are both so articulate they should be helping others make sense rather than ridiculing them for (in their eyes) not doing so. As Meta rightly suggests: like Kate Raworth.

    In answer to Lars’ question, anyway, I say no. Going round in circles is not a Copernican revolution of viewpoint. My suggestion is that money should be valuing people, not goods.

  9. Meta Capitalism
    November 27, 2020 at 3:08 pm

    The choices we make between uncertain events are typically far more complex than those observed in elementary games of chance. The Viniar problem – the mistake of believing you have more knowledge than you do about the real world from the application of conclusions from artificial models – runs deep. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (p. 109). W. W. Norton & Company. Kindle Edition.)

    .
    Kay and Mervyn (2020) in their Chapter 7 Probability and Optimisation provide a brief history of the “extension of the axiomatic approach from the analysis of consumer choice to decision-making under uncertainty”:
    .

    This extension of the axiomatic approach from the analysis of consumer choice to decision-making under uncertainty was the result of the work of several US-based scholars. John von Neumann was a polymathic genius who worked on the Manhattan Project and subsequently helped to develop the hydrogen bomb. In their classic work The Theory of Games and Economic Behavior, von Neumann and his Princeton colleague Oskar Morgenstern sought to establish that probabilistic reasoning could provide a coherent and rigorous framework for rational decision-making in a world of uncertainty. Jimmie Savage, who had been a research assistant to von Neumann, went to Chicago in 1946 and held a chair of statistics there from 1954 to 1960. He developed most fully the conditions under which axiomatic reasoning could be equated with the maximisation of expected utility, conditions which rely heavily on the analogy with a world of certainty. As a young academic at Chicago he met the equally youthful Milton Friedman and together they authored an article, described as written by Friedman on the basis of ideas generated by Savage, which is seminal in the treatment of uncertainty in economics. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (pp. 111-112). W. W. Norton & Company. Kindle Edition.)
    .
    In Savage’s world we are invited to see the future as a collection of gambles, or lottery tickets. But the lotteries were not just private wagers or games of chance. Whether the decision-maker is anticipating next week’s weather, the progress of a career, the economic rise of China, or the advance of technology, he or she visualises all possible outcomes and attaches probabilities to them. _Savage knew that, as a description of behaviour in real worlds, this was absurd._ In his own classic work The Foundations of Statistics published in 1954, he described such analysis of the future as the ‘look before you leap’ principle and wrote:
    .
    Carried to its logical extreme, the ‘look before you leap’ principle demands that one envisage every conceivable policy for the government of his own life (at least from now on) in its most minute details, in the light of a vast number of unknown states of the world, and decide here and now on one policy. This is _utterly ridiculous_ . . . because the task implied in making such a decision is not even remotely resembled by human possibility. It is even utterly beyond our power to plan a picnic or to play a game of chess in accordance with the principle, even when the world of states and the set of available sets to be envisaged are artificially reduced to the narrowest reasonable limits. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (p. 112). W. W. Norton & Company. Kindle Edition.)

    (….) Savage went on to explain that he believed his approach might be used ‘to attack relatively simple problems of decision by artificially confining attention to so small a world that the “look before you leap” principle can be applied there’.

    (….) Savage was careful not to claim that his analysis could be applied outside the narrow confines of his ‘small worlds’. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (pp. 112-113). W. W. Norton & Company. Kindle Edition.)

    .
    Sometimes very intelligent people succumb to hubris and become afflicted with mathematical pride and statistical egotism, not to mention moral, ethical, and spiritual blindness. “Logic is valid in the material world, and mathematics is reliable when limited in its application to physical things; but neither is to be regarded as wholly dependable or infallible when applied to life problems. Life embraces phenomena which are not wholly material…. Quantity may be identified as a fact, thus becoming a scientific uniformity. Quality, being a matter of mind interpretation, represents an estimate of values, and must, therefore, remain an experience of the individual. And forget not, the mind which can alone perceive the presence of apparent realities is itself also real. True philosophy grows out of the wisdom which does its best to correlate these quantitative and qualitative observations. (UB Kindle Locations 41067-41089, 1955).”
    .
    Kay et. al. go on and tell an insightful bit about Savage and Friedman’s view of “the appropriate tools for analysing risk and uncertainty”:
    .

    The collaboration with Savage defined Friedman’s views on the appropriate tools for analysing risk and uncertainty, views which proved influential among his colleagues and students. While Savage was initially modest about the scope of his approach, Friedman had few doubts on this – or almost any other – matter. We have described Friedman’s Price Theory – a Provisional Text as the primer of the doctrines of the Chicago School. Friedman went on to explain there: ‘just as we can suppose that an individual acts as if he attached a definite utility to every possible event if it were to occur, so we can suppose that he acts as if he attached a definite probability to each such event. These “personal probabilities” are assumed to obey the usual laws of the mathematics of probability.’
    .
    _But Friedman was following neither the letter nor the spirit of Savage’s analysis, which employed restrictive assumptions relevant only to ‘small worlds’. Yet Savage himself must share responsibility. In his own writings Savage was clear about the limitations of probabilistic reasoning, but in dealing with his colleagues he pushed subjective probabilities and Bayesian analysis to the point where ‘if one were not in substantial agreement with him, one was inimical, or stupid, or at the least inattentive to an important scientific development’. Personal relationships between Savage and his colleagues deteriorated and in 1960 he left Chicago for Michigan. And Friedman’s followers distanced themselves – at least in this respect – from Savage’s reservations._ (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (pp. 113-114). W. W. Norton & Company. Kindle Edition.)
    .
    When Milton Friedman retired from Chicago in 1976, Gary Becker acquired the mantle of academic leader of the Chicago School. And Becker’s aspirations for the application of his ideas were as ambitious as Friedman’s. ‘All human behavior’, he wrote, ‘can be regarded as involving participants who maximize their utility from a stable set of preferences and accumulate an optimal amount of information and other inputs in a variety of markets. If this argument is correct, the economic approach provides a unified framework for understanding behavior that has long been sought by and eluded Bentham, Comte, Marx, and others.’11 This was ambitious indeed. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (p. 114). W. W. Norton & Company. Kindle Edition.)

    .
    How a little success leads to excess. Savage knew the limitations of his probabilistic reasoning born of his axiomatic approach, but pride prevented him seeing his own limitations. For Savage anyone who didn’t agree his hubris could only see as ‘stupid, or at the least inattentive to an important scientific development’; sounds familiar, even a lot like Shiozawa to me. Just because you slap lipstick (mathiness) on a pig (axiomatic deductive theory) doesn’t make it a beauty queen in the real world where reality rules.

    • Craig
      November 27, 2020 at 4:36 pm

      Dave,

      “…but so is Craig when not accepting that what is owed, though not money, is regeneration of Nature’s resources.”

      Your heart is right but apparently you don’t read many of my posts, as I am the only person here who has shown how monetary and financial policy can be utilized to make profit making systems align with and synergize a rapid move toward ecological sanity.

      “My suggestion is that money should be valuing people, not goods.”

      Well if you want to make your suggestion come true you should start a religious movement, or better still get on the bandwagon to implement monetary policies that continually dramatize and serve to self actualize the impetus behind every one of the world’s major wisdom traditions, namely grace as in love in action.

      • November 27, 2020 at 5:47 pm

        But so what? I wrote “Norman is of course quite wrong to ridicule … but so is Craig when not accepting that what is owed, though not money, is regeneration of Nature’s resources”.

        Here, he hasn’t shown ME how “monetary and financial policy can be utilized to make profit making systems align with … ecological sanity” or “grace as in love in action”. As I see it, profit-making is precisely NOT giving, nor is depending on it wise.

        Meta, you quote Kay saying “Savage was careful not to claim that his analysis could be applied outside the narrow confines of his ‘small worlds’.” Exactly. “Small is Beautiful”. Or as I put it, over a short section of one’s voyage, compass steering usually suffices.

      • Craig
        November 28, 2020 at 3:29 am

        Well, doing away with profit making economic systems is not only reactionary it’s also a complete non-starter politically (and everything ultimately gets down to politics, that is, if you want to live in the real world of the temporal universe)

        I suggest we inhabit and operate in both the heights of wisdom and the temporal universe. And grace being the ultimate unifying of opposites concept, spiritual reality and affirmation of the Good…is precisely what is needed. That and monetary, financial and economic policies like I have posted here many, many times that align with it. Grace after all is not only high it is equally mighty and pragmatic…otherwise there wouldn’t be a book entitled Proverbs and paradigms changes would be mere theory instead of the deep pattern changing simplicities that they have historically proven to be.

      • November 28, 2020 at 10:02 pm

        Craig, you characterise doing away with monetary profit-making as “reactionary”. Is it reactionary to recognise and try to correct one’s mistakes?

        The point anyway is that the understanding of money has changed from it being seen as storing wealth as a valuable durable to it having become a mere number, creatable and erasable at the touch of a keypad but (quantities being always positive) liable to misrepresent directions of value flow.

      • Craig
        November 29, 2020 at 2:13 am

        “Craig, you characterise doing away with monetary profit-making as “reactionary”. Is it reactionary to recognise and try to correct one’s mistakes?”

        You questioned profit making, seemingly as a whole in your prior post. I took that as reactionary and too general.

        I indeed have questioned and shown how for-profit finance violates the economic convention that every legitimate commercial agent obeys, namely that no one has a right to charge additional costs beyond the point of consumption, i.e. retail sale.

        “The point anyway is that the understanding of money has changed from it being seen as storing wealth as a valuable durable to it having become a mere number, creatable and erasable at the touch of a keypad but (quantities being always positive) liable to misrepresent directions of value flow.”

        Obsession with storing wealth easily devolves into your frequent criticism regarding the love of money. As for both value of purchasing power and applying actual human values to the economic system I’m the only one here who has shown how the new monetary and financial mega-paradigm concept of grace as in Gifting and its policies transfer seamlessly and evolutionarily into the areas of the ecology and of human ethics.

  10. ghholtham
    November 27, 2020 at 5:16 pm

    Meta. I think the “real issue” is that in your long and prolix replies you never provide any positive indication as to how economics should be done. If your view is that economic theory is impossible and empirical corroboration is equally possible you may be right but it would save a lot of time if you just said so. Perhaps we should all forget social science and go and write novels that reflected all the nuances and complexity of human nature and culture.
    Getting out the quote blunderbuss repetitively to blast every school of economics, orthodox or heterodox is all very well but where do we go from there?
    You are a true disciple of Lars Syll. I agree with at least 90 per cent of his criticisms of orthodox economic theory. But reading them repeated with no hint of a positive alternative gets a bit tiresome. Shiozawa is at least trying to make progress and his efforts are not without value. The heat in your comments I find mystifying.

    • Meta Capitalism
      November 28, 2020 at 1:26 am

      ghholtham
      November 27, 2020 at 5:16 pmReply
      Meta. I think the “real issue” is that in your long and prolix replies you never provide any positive indication as to how economics should be done. If your view is that economic theory is impossible and empirical corroboration is equally possible you may be right but it would save a lot of time if you just said so. Perhaps we should all forget social science and go and write novels that reflected all the nuances and complexity of human nature and culture.
      Getting out the quote blunderbuss repetitively to blast every school of economics, orthodox or heterodox is all very well but where do we go from there?
      .
      You are a true disciple of Lars Syll. I agree with at least 90 per cent of his criticisms of orthodox economic theory. But reading them repeated with no hint of a positive alternative gets a bit tiresome. Shiozawa is at least trying to make progress and his efforts are not without value. The heat in your comments I find mystifying.
      .
      Gerald, you whine an awful lot:
      .
      You whine and moan a lot about how Lars “never provid[ing] any positive indication as to how economics should be done.” Stop your useless whining and provide the specific cases where economists are “applying themselves to real problems.” We both know they exist, I have even posted about several on this blog (which you apparently overlook) one such example being David Weil’s Fissured Workplace; there are many others. But I could also post examples, very recent and dealing with COVID and non-mask-wearers in the US in which a PBS interviewer interviewed and “expert” behavioral economists and the nonsense he spewed was exactly the kind of malarkey that needs to be called out as utterly useless economics. So it seems there are both. Kind of a mixed bag
      .
      I come to this site to read the books on the right hand side; some have been enlightening and some even offer reasonable solutions, but seldom does trolls like Shiozawa ever engage the content of the books published on this site. Seldom if ever have seen you read one of the books and then comment on it or its content. Why is that?
      .
      You state, “I propose all criticisms in future instead of moaning about ‘economists’ name names and preferably cite instances.” I just did and you whined anyway; now you are being plane disingenuous. The example of Savage and Friedman are concrete historical examples of how and when economics goes wrong. It is as important to learn how a so-called “science” goes wrong as much as how it goes right. Why don’t you do less whining and more surgery and provide that scalpel you are whining about above Gerald? You are it seems trained to do just that so why not make yourself useful and provide those positive cases where economists are doing some right and being of real use instead of whining about others.
      .
      I have laid my cards on the table; I don’t believe it is crisis of methodology so much as a crisis of values and ideals; an inability to engage real-world problems in meaningful ways. A good post can be found here that argues it is lack of vision not lack of methodology or data so much:
      .
      https://weapedagogy.wordpress.com/2020/10/27/is-the-crisis-of-economics-a-crisis-of-vision/
      .
      That is not to say some economists are not putting their values on the table and engaging in trying to solve real-world problems, for I have said at other times that in my readings I have seen economists that are engaging real-world problems and offering valuable insights and solutions (no single one may be THE answer, but there is good work being done).
      .
      You say, “If your view is that economic theory is impossible and empirical corroboration is equally possible.” I think you meant to say, “”If your view is that economic theory is impossible and empirical corroboration is equally [im]possible.” No, that is not my view at all. I recognize nothing in this silly caricature.
      .
      You go on, “Perhaps we should all forget social science and go and write novels that reflected all the nuances and complexity of human nature and culture.” Please, stop whining. Perhaps we should consider that economics needs a new Vision (see link above) and that it is not so much a crisis of the tools in the scientific toolbox, but more a warped vision of humans, society and humanity that leads some, not all, economists to misuse the tools and fail to see the bigger picture, the Vision of what we are doing, why we are doing it, and what kind of society and ergo economics do we really want? We are watching in real time as the US civilization’s social fabric disintegrates as Trump tears the warp and woof asunder with malicious demagogic lies. I think it is fair to say that one contributing factor to the reason why so many follow this dangerous demagogue is because the fruits of economic theory over the last 50 years and the incessant emphasis on ‘self-interest’ and ‘profit motivation’ and illusionary ‘free markets’ (all markets are rigged, the only question being by whom and for whom) etc. I personally think it is time to step and ask the question, “What is economics? What should it be doing? What is its role in a good, healthy, society?”
      .
      You whine more, “Getting out the quote blunderbuss repetitively to blast every school of economics, orthodox or heterodox is all very well but where do we go from there?” It has become obvious to me that just because someone calls themselves “heterodox” does not make them so. It also has become clear to me that just because they reject certain attributes of ME (equilibrium, all knowing, etc.) doesn’t mean they don’t repeat the same mistakes and create equally silly caricatures built upon equally silly axioms and proceed down the path of FWUTV:
      .
      “In practice, what math does is let macroeconomists locate the FWUTV’s [facts with unknown truth values] farther away from the discussion of identification. The Keynesians tended to say “Assume P is true. Then the model is identified.” Relying on a micro-foundation lets an author can say, “Assume A, assume B, … blah blah blah …. And so we have proven that P is true. Then the model is identified.” (Paul Romer, The Trouble With Macroeconomics, Stern School of Business, New York University,Wednesday 14th September, 2016)
      .
      You continue, “You are a true disciple of Lars Syll.” How childish Gerald. Are you a true disciple of Shiozawa? Why to you debase yourself with such childish comments? You continue, “But reading them repeated with no hint of a positive alternative gets a bit tiresome.” Then why do you bother reading them? Why do you insist Lars change when it is fully within your power to simply stop reading his posts and use your time in a more fruitful manner? I am asking myself that question right now ;-)

      I don’t think it is progress to repeat the same mistakes over and over. And that is in my view just what Shiozawa’s greedy reductionism does; it simply trades one caricature for another simple because the caricature is mathematically tractable. In limited contexts addressing specific cases that may well be useful, but when it is claimed to be the microfoundations for an entire world economy (which he has said on this blog) and the reformation of economics I think we are witnessing an entirely different phenomena more akin to what Kay wrote,

      When Milton Friedman retired from Chicago in 1976, Gary Becker acquired the mantle of academic leader of the Chicago School. And Becker’s aspirations for the application of his ideas were as ambitious as Friedman’s. ‘All human behavior’, he wrote, ‘can be regarded as involving participants who maximize their utility from a stable set of preferences and accumulate an optimal amount of information and other inputs in a variety of markets. If this argument is correct, the economic approach provides a unified framework for understanding behavior that has long been sought by and eluded Bentham, Comte, Marx, and others.’11 This was ambitious indeed. (Kay, John. Radical Uncertainty: Decision-Making Beyond the Numbers (p. 114). W. W. Norton & Company. Kindle Edition.)

      The human behavior and decision making that counts in life and business and ergo economic decision making is neither people “maximizing their utility from a stable set of preferences” nor blindly following “if then rules” like fitness climbing ticks or Turing machines. Both are extreme caricatures useful only in “small world” toy models. The reason for these caricatures is simple; they are mathematically tractable, not because they are valid in the real world. That is a fact that there is no avoiding.

    • Yoshinori Shiozawa
      November 29, 2020 at 8:01 am

      Here are what Steve Keen and John Davis, two authors each of whom has written a book on the right side of this thread, have written in a book What is neoclassical Economics? Debating the origins, meaning and significance edited by Jamie Morgan who also has published and edited several books which appear on the right side:

      Citation from Steve Keen

      Lawson’s critique of mathematical methods in economics is thus valid if confined to critiquing linear models, but it is invalid when extended to mathematics in general, especially since the major strides in modelling in the last 50 years have come from the development of techniques to handle nonlinear systems.

      What economics needs is not to abandon mathematical methods, but to catch up with the last half-century of progress in mathematics and computing that has made it possible to model non-atomistic, emergent, complex systems. (Morgan (ed.) 2016 p.252.)

      Citation from John Davis

      Lawson uses this emphasis to essentially rule out all mathematical modeling and include any event regularities in the domain of social ontology. For many heterodox economists, who are otherwise quite sympathetic to much of his argument, and who in many instances also hold an evolutionary understanding of social reality, this move ultimately renders Lawson’s critique of the mainstream ineffective. (Morgan (ed.) 2016 p.141.)

      Let me note that I could not find any other contributors (chapter writers) to the book edited by Morgan who have written or edited books that appear on the right hand of this thread, except of course Jamie Morgan who is the editor of the book and has written the Introduction to the book.

      • Meta Capitalism
        November 30, 2020 at 1:00 am

        Microeconomics, Macroeconomics and Complexity

        Since 1976, Robert Lucas – he of the confidence that the ‘problem of depression prevention has been solved’ – has dominated the development of mainstream macroeconomics with the proposition that good macroeconomic theory could only be developed from microeconomic foundations. Arguing that ‘the structure of an econometric model consists of optimal decision rules of economic agents’ (1976, p. 13), Lucas insisted that, to be valid, a macroeconomic model had to be derived from the microeconomic theory of the behaviour of utility-maximising consumers and profit-maximising firms. (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (p. 25). Wiley. Kindle Edition.)
        .
        In fact, Lucas’s methodological precept – that macro-level phenomena can and in fact must be derived from micro-level foundations – had been invalidated before he stated it. As long ago as 1953 (Gorman, 1953), mathematical economists posed the question of whether what microeconomic theory predicted about the behaviour of an isolated consumer applied at the level of the market. They concluded, reluctantly, that it did not:
        .
        market demand functions need not satisfy in any way the classical restrictions which characterize consumer demand functions . . . The importance of the above results is clear: strong restrictions are needed in order to justify the hypothesis that a market demand function has the characteristics of a consumer demand function. Only in special cases can an economy be expected to act as an ‘idealized consumer’. The utility hypothesis tells us nothing about market demand unless it is augmented by additional requirements. (Shafer & Sonnenschein, 1993, pp. 671–2) (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (pp. 25-26). Wiley. Kindle Edition.)
        .
        (….) The textbooks from which mainstream economists learn their craft shielded students from the absurdity of these responses, and thus set them up to unconsciously make inane rationalisations themselves when they later constructed what they believed were microeconomically sound models of macroeconomics, based on the fiction of ‘a representative consumer’. Hal Varian’s advanced mainstream text Microeconomic Analysis (first published in 1978) reassured Master’s and PhD students that this procedure was valid – ‘it is sometimes convenient to think of the aggregate demand as the demand of some “representative consumer” . . . The conditions under which this can be done are rather stringent, but a discussion of this issue is beyond the scope of this book’ (Varian, 1984, p. 268) – and portrayed Gorman’s intuitively ridiculous rationalisation as reasonable:
        .
        Suppose that all individual consumers’ indirect utility functions take the Gorman form . . . [where] . . . the marginal propensity to consume good j is independent of the level of income of any consumer and also constant across consumers . . . This demand function can in fact be generated by a representative consumer. (Varian, 1992, pp. 153–4, emphasis added. Curiously the innocuous word ‘generated’ in this edition replaced the more loaded word ‘rationalized’ in the 1984 edition.) It’s then little wonder that, decades later, macro-economic models, painstakingly derived from microeconomic foundations – in the false belief that it was legitimate to scale the individual up to the level of society, and thus to ignore the distribution of income – failed to foresee the biggest economic event since the Great Depression. (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (pp. 30-31). Wiley. Kindle Edition.)
        .
        So macroeconomics cannot be derived from microeconomics. But this does not mean that ‘The pursuit of a widely accepted analytical macro-economic core, in which to locate discussions and extensions, may be a pipe dream’, as Blanchard put it. There is a way to derive macroeconomic models by starting from foundations that all economists must agree upon. But to actually do this, economists have to embrace a concept that to date the mainstream has avoided: complexity. (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (p. 31). Wiley. Kindle Edition.)
        .
        The discovery that higher-order phenomena cannot be directly extrapolated from lower-order systems is a commonplace conclusion in genuine sciences today: it’s known as the ‘emergence’ issue in complex systems (Nicolis and Prigogine, 1971; Ramos-Martin, 2003). The dominant ?characteristics of a complex system come from the interactions between its entities, rather than from the properties of a single entity considered in isolation. (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (pp. 31-32). Wiley. Kindle Edition.)
        .
        My favourite instance of this is the behaviour of water. If one had to derive macroscopic behaviour from microscopic principles, then weather forecasters would have to derive the myriad properties of the weather from the characteristics of a single molecule of H2O. This would entail showing how, under appropriate conditions, a ‘water molecule’ could become an ‘ice molecule’, a ‘steam molecule’, or – my personal favourite – a ‘snowflake molecule’. In fact, the wonderful properties of water occur, not because of the properties of individual H2O molecules themselves, but because of interactions between lots of (identical) H2O molecules. (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (p. 32). Wiley. Kindle Edition.)
        .
        The fallacy in the belief that higher-level phenomena (like macroeconomics) have to be, or even could be, derived from lower-level phenomena (like microeconomics) was pointed out clearly in 1972 – again, before Lucas wrote – by the Physics Nobel Laureate Philip Anderson: (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (p. 32). Wiley. Kindle Edition.)
        .
        The main fallacy in this kind of thinking is that the reductionist hypothesis does not by any means imply a ‘constructionist’ one: The ability to reduce ?everything to simple fundamental laws does not imply the ability to start from those laws and reconstruct the universe. (Anderson, 1972, p. 393, emphasis added) (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (pp. 32-33). Wiley. Kindle Edition.)
        .
        Anderson specifically rejected the approach of extrapolating from the ‘micro’ to the ‘macro’ within physics. If this rejection applies to the behaviour of fundamental particles, how much more so does it apply to the behaviour of people?
        .
        The behavior of large and complex aggregates of elementary particles, it turns out, is not to be understood in terms of a simple extrapolation of the properties of a few particles. Instead, at each level of complexity entirely new properties appear, and the understanding of the new behaviors requires research which I think is as fundamental in its nature as any other. (Anderson, 1972, p. 393) (Keen, Steve. Can We Avoid Another Financial Crisis? (The Future of Capitalism) (p. 33). Wiley. Kindle Edition.)
        .
        (Keen, Steve. Developing an economics for the post-crisis world. UK: College Publications for World Economics Association; 2016; p. 1. (Developing an economics for the post-crisis world; v. 3).)

        .
        It is very clear above that what Keen is doing is NOT what Shiozawa is doing. The title of Shiozawa’s book is refuted by Keen: “Microfoundations of Evolutionary Economics.” Shiozawa is arguing he has found the microfoundations for evolutionary economics. Clearly, keen is arguing above is a different animal alltogether: “The fallacy in the belief that higher-level phenomena (like macroeconomics) have to be, or even could be, derived from lower-level phenomena (like microeconomics) … (Keen)” vs. “This book explicitly provides microfoundations of evolutionary economics that have been absent thus far in evolutionary economics…. It is clear that without microfoundations of its own, evolutionary economics will not become an academic discipline independent of neoclassical economics. Evolutionary economics needs theoretical foundations…. We believe that our results serve as microfoundations for both evolutionary and Post-Keynesian economics. (Shiozawa)”
        .
        What now, is Shiozawa trying to spoof Keen?

      • Craig
        November 30, 2020 at 3:27 am

        The problem is neither Keen nor Shiozawa, nor any other economist for that matter have cognited on the one chink in the paradigmatic armor of Finance. That chink is the fact that money and its creation are most basically accounting and thus must follow its conventions like equal debits and credits must sum to zero. Hence the efficacy of an equal debit and credit monetary and price policy at the point of retail sale. For the umpteenth time that single policy is paradigm changing. Just look at it and its immediate and continuous effects.

        Most people probably consider accounting mere bean counting, but it and its conventions are actually a powerful underlying infrastructure of the entire economy. Keen, who IS brilliant, has come to understand some of the importance of accounting and even remarks to that effect. I know I’ve listened to every one of his youtube and patreon videos for the last 10+ years, and yet missing the strategic power of the point of retail sale, also misses the problem and paradigm resolving potentials of the equal debit-credit-accounting convention policy at that point.

      • Craig
        November 30, 2020 at 4:01 am

        Another way of looking at it is there is macro-economics, economic micro-foundations and the even deeper and more underlying facts and effects of accounting.

        It’s kind of like Newtonian physics, quantum mechanics and the present search for a new physics (like string theory or a way to explain why the cosmos apparently lacks sufficient mass and is accelerating and thus there must be dark energy/dark matter causing it)

  11. ghholtham
    November 27, 2020 at 5:30 pm

    And of course in the books I cited I was not suggesting they should have used DSGE – which is useless, we all agree. They were rebuttals of the identification on this blog of “economics” with one particular school that dominates the text books. I was pointing out that a lot of useful work is done by economists applying themselves to real problems. Something you would never suspect from reading most contributions here.
    I propose all criticisms in future instead of moaning about “economists” name names and preferably cite instances. A bit more scalpel and a bit less blunderbuss might move the discussion along from its current stagnation.

    • November 27, 2020 at 6:23 pm

      Gerald points out “that a lot of useful work is done by economists applying themselves to real problems”. I accept that, but suggest that he accept Lars’ Critical Realist point about the need in economics for Lockean under-labouring – or what I call basic theory. Moving on from balancing the old-fashioned grocer’s scales, given the name “equilibrium” to sell barometers as scientific instruments, to a non-gravitational basis such as information science, is analogous to medicine moving on from the bad smell to the germ theory of infection.

  12. ghholtham
    November 27, 2020 at 10:25 pm

    Dave, we don’t disagree. At the level of theory we require equations of motion, if you like, based on plausible aggregation properties of plausible views of human behaviour in particular circumstances. There is no expectation that these would have a “solution” in the form of a stable equilibrium. We need to acknowledge not only the incompleteness of information that makes optimisation not only impossible but actually meaningless and the importance of feasible information flows in the system. And because the economic system is evolutionary conclusions will always be bounded and conditional on particular circumstances. I must have acknowledged many times that I agree with most of Lars criticisms. My frustration is that basic theory of the sort we need will not be constructed by endlessly rehearsing the failings of current text-book orthodoxy.
    In my opinion some of the building blocks of a more useful theory are to be found in the work of Herb Simon. See Models of Man, Essays in memory of Herbert A Simon ed Augier and March, MIT Press, available on kindle, for a gentle introduction. At the applied level you can do useful work with a few basic notions and a readiness to get your hands dirty with data but I agree better basic theory is highly desirable.

    • November 28, 2020 at 10:28 am

      Gerald, I am glad we are agreed on the need for basic theory, but you – just as much as Lars and Yoshinori – give no indication of having understood or even read the basic theory I have been putting forward in bite-size lumps these last several years.

      To explain that again, it starts with equations of motion, but these are of electromagnetic energy rather than of humans: requiring cartesian (complex) geometry rather than numerical mathematics to eventually explain growing up and diversity in humans. Nor am I proposing the human race as a whole seeks equilibrium in PID control theory. I am suggesting that every individual navigates his way with it towards his own particular aims, learning how to apply first P then I then D feedback as he grows up, but relying on others co-operating by giving way (“following the rules of the road”). On my way I’ve discovered Ruskin and G K Chesterton and J M Keynes and K E Boulding and Amartya Sen contributing significantly to this theory, and Adam Smith et al going off on the wrong tack of mass production and marketing “because they could”: because Francis Bacon’s “Advancement of Learning” made it possible. Since reading Ruskin on a little credit enabling a clergyman to do his work, I’ve discovered lots of others have ventured similar opinions, right up to money-trees and MMT. From what I’ve discovered of Herb Simon’s policy of “satisficing” I would be happy to join you in commending him. The policy recommendation I’ve drawn from all this, the environmental crisis and now Covid is that we need to relocalise production, distribution and innovation, only mass-producing what on rational rather than utilitarian grounds it is appropriate and safe to do so; and to finance it on credit, to be written off once the jobs it provided for are done.

    • November 28, 2020 at 12:36 pm

      Ken on “Reforming Economics says “[Adam] Smith attempted to show that individuals acting in their own self-interest could, as if guided by an “invisible hand,” create social and economic stability and prosperity for all. But it is virtually useless if we assume the purpose of the discipline of is to describe how and for what purposes the people involved in economic activities create and perform these activities”. Isn’t that what I’ve just said, but substituting information-mediated PID control for the “invisible hand”?

      Ken had previously said “Smith believed that competition was self-regulating, and governments should take no part in business through tariffs, taxes, or other means unless it was to protect free market competition”. That raises the question of how government fits into my picture? If government employees are given credit for their work, taxes are not needed to pay for them, tariffs restrain resource use in private rather than international trade, and a Keynesian employer of last resort is not needed. What still is needed is local government advising on what needs to be done and passing a fatherly eye over the wisdom of local developments. Whether to extend these to meet wider needs requires similar evaluation in regional, national and ultimately world governments, i.e. of what needs to be done and ways and means of doing it. That includes our doing regeneration Nature can no longer do for itself.

    • Craig
      November 28, 2020 at 6:23 pm

      ghholtham,

      “At the level of theory we require equations of motion, if you like, based on plausible aggregation properties of plausible views of human behaviour in particular circumstances. There is no expectation that these would have a “solution” in the form of a stable equilibrium.”

      Precisely. As has already been researched by Steve Keen with his Minsky software which dynamically relates the various relevant variables and flows of money. The only thing he’s failed to perceive is the concept of the new paradigm which will invert the present realities of individual monetary scarcity/systemic austerity, namely grace as in abundance and flow/free flowingness.

      Once one “grocs” the new concept all they need to do is find the best way to implement and regulate it so as to prevent the other intentioned/anti-social from attempting to de-stabilize it. Its helio-centrism which resolved 99% of the emergent problems of terra-centrism and then the discovery of the ellipse which polished off the new concept.

      So, the monopolistic present paradigm of Debt and Loan Only (terra-centrism) is broken up by integrating Monetary Gifting into the system, and then the rest of the edifice of the mentally thwarting, indirect and obsessive complexities of macro-economics drop back into their actual data point nature with the discovery of the strategically significant points of policy implementation, namely retail sale and note signing. Voila! We can get on with the existential problems of climate change and trying to game the second law of thermo-dynamics by off-planeting the most energy intensive means of production and colonizing the moon.

      And while we’re at it we can also realize that “small is beautiful” is really just an aspect and technique for the self actualization of grace as in higher self awareness/consciousness. The better to transition to the potential zeitgeist of Arcadia from Faustian civilization.

      • Craig
        November 28, 2020 at 7:53 pm

        “And because the economic system is evolutionary conclusions will always be bounded and conditional on particular circumstances. I must have acknowledged many times that I agree with most of Lars criticisms. My frustration is that basic theory of the sort we need will not be constructed by endlessly rehearsing the failings of current text-book orthodoxy.”

        Completely agree. But what we need is a theory of the new paradigm concept in money and finance….that will alter virtually all of the problematic economic issues people on this blog “endlessly rehearse” the failings of current text-book orthodoxy.

  13. Yoshinori Shiozawa
    November 28, 2020 at 4:48 am

    As Meta continues to add pointless presentation of our book and Chapter 1 (which has the same title as the book itself) in particular, readers must have wondered why I questioned the behavior of a tick and how it is related to economics. In order to answer this point, let me show here the structure of Chapter 1 and cite two brief citations from the chapter that counts more than 50 pages. Chapter 2 presents an explanation how, in concrete formulations, a large system as big as the world economy works by the agency of boundedly rational and myopic humans. Combined with the results of Taniguchi and Morioka (main theorem is presented in Chapter 4 by Morioka), we are proud of stating this:

    The new findings have the most important significance for the economics of the market economy, because this is probably the first result after Arrow and Debreu’s model. It means we have found that “a social system moved by independent actions in pursuit different values (Arrow and Hahn, General Competitive Analysis, 1971, p.1)” can work without assuming the unrealistic capabilities for economic agents. (Preface, p.ix)

    This may be sufficient for readers to know who is presenting saner claims. Subsections that seem irrelevant for the “discussion”(?) are omitted. Lines with # are my comments. If a reader wants to know more in detail, I can send him/ her the PDF of Chapter 1. He or she can also read Uexküll’s leaflet in English translation.

    Structure of Chapter 1 Microfoundantions of Evolutionary Economics
    1.1 Introduction
    1.2 Ubiquity of Intractable Problems
     1.2.4 Some Economic Consequences of the Ubiquity of NP-Hard Problems
      # I explained that many optimization problems are in fact inoperative
      because of intractability, in this case, by exponentially increasing
      computing time of calculation.
    1.3 Myopic Agents and the Structure of Human Behavior
    1.3.2 Üxküll’s Biosemiotics and Human Behavior
      # Jakob von Üxküll thought to be the “starter and pioneer” of biosemiotics.
      # Tick’s egg laying behavior is an illustration given by him.
     1.3.3 The Structure of Animal and Human Behavior
      #See the citation B below that is the conclusive paragraph.
     1.3.4 The Nature of Human Skilled Work
      #See the citation A from the conclusion of this section.
    1.4 Environment of Economic Activities
     1.4.2 What determines Effectiveness of Human Behavior?
    1.5 Methodology of analysis
     1.5.1 Some Notes on Process Analysis
     1.5.2 Hierarchy of Time Spans and Controls
     1.5.3 Micro-Macro Loop and a New Methodology

    Citation A

    We have also arrived at an important conclusion. Observing what we can do and investigating how our behaviors are organized, we found, without the intention to do so, how our own behavior evolves. Normally we have a pool of behaviors, and we choose them not by rational calculation but by observing and comparing the average result of a behavior with other comparable behaviors. This is an evolution of our behaviors. The selection of behavior works on the second level that we have examined above. Although we use minimal rationality, this selection, repeated many times, produces a result that was unimaginable at the beginning. This is the core mechanism of economic evolution.

    The main purpose of this book is to show that a worldwide network of economic transactions can work with these limited assumptions. However, before we go to a concrete discussion of how the economic processes work, it is necessary to examine in what kinds of situation our behavior can be effective. This is the task of the next section.
    (Emphasis in this citation)

    Citation B

    My encounter with Üxküll was lucky. I did not know that he was the father of biosemiotics. The tick’s egg-laying story not only impressed me, but it told me many things. When I stayed 1 year in Cambridge, UK, 1986–1987, Roberto Scazzieri taught me of the existence of Heiner (1983). This was saying that a big C-D gap (or competence-difficulty gap) conditions predictable, regular behavior. This paper was enlightening. In economics, we normally assumed optimization. When we know that optimization is impossible, the second best method was to approximate the optimization. However, as I have told it above, this causes various problems for the equilibrium formulation, especially for the definition of demand functions. We had to think from the opposite direction. We had to search how an efficient behavior can be organized when we have a big gap between our competence in selecting alternatives and the difficulty of the problem. This is the way that less competent animals were successful in promoting their survival. Humans are much more competent and are capable of more complicated calculation, but, in view of the complexity of the real world, we are also in the same situation as animals. We are not sufficiently competent as to have the ability to solve any maximization problem. In this regard, we must therefore be acting in the same ways as animals do. This was really a revelation. During the following year, when I visited the USA, I went to Provo, Utah, to meet Heiner as he was working for Brigham Young University at that time.

    • November 29, 2020 at 6:55 am

      Yoshinori’s ‘tick’ is reminiscent of John von Neumann’s ‘cellular automata, as described in Mirowski;s “Machine Dreams”.

      • Meta Capitalism
        November 29, 2020 at 2:34 pm

        Yoshinori’s ‘tick’ is reminiscent of John von Neumann’s ‘cellular automata, as described in Mirowski;s “Machine Dreams”. ~ Dave Taylor

        And it is a gross and misleading distortion of Jacob von Uexkull’s biological theories and writings. It is spoof that engages in epistemic trespassing for rhetorical-only self-serving purposes to create a misleading caricature of what Uexkull’s biological theories were really illuminating and what his real contributions to biology were all about. He would not in the least agree with Shiozawa’s distorted use of this theories.
        .

        Uexkull is among the first cybernetic biologists, ethologists, and theoretical biologists, as well as being a forerunner to biosemiotics, and a neo-Kantian philosopher.6 (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 62-63). Kindle Edition. )

        (….) Uexkiull is divided: on the one hand he reserves in his neo-Kantianism a transcendental dimension beyond space and time that seems quite anachronistic in terms of modern science, and yet on the other he catalogs details of animal behavior deducing the reality of their perceptual life—worlds in a manner more naturalistic than that of behaviorists, mechanists, and materialists who treat the inner worlds of animals (for functional reasons of scientific investigation!) as if they don’t exist. A systemic view, which gives some causal agency to the whole over the parts, is not only consonant with modern thoughts of emergence, systems biology, and thermodynamics, but vindicates Uexkall’s dogged persistence against natural selection as a sufficient explanation for the extremely nuanced, functionally oriented life-forms covering our planet. One need not embrace a transcendental master plan or nature moving toward a unified single goal (e.g., God, or the end of history) to see purposeful activity deeply embedded in living things, and emerging often in diverse, unpredictable ways. (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 97-102). Kindle Edition. )
        .
        Pre-Uexkullian ignorance of animal Umwelten should be seen in terms of the history and methodology of science: focusing on one aspect of the environment, as science does to isolate objects for study, presents an abstracted, truncated version of the elements under study that eventually comes back to haunt those who overgeneralized on the basis of an incomplete sample. For example, Max Delbruck’s decision to investigate life’s molecular mechanism by studying bacteriophages (bacterial viruses that do not have their own metabolism, making them easier to study) helped lead to an overemphasis on genes as the all-explanatory secret of life.” So, too, particle physics discovered the necessity of including the observer, her apparatus, and measurements to fully account for observed behavior. And in thermodynamics, the initial simplified studies of matter and energy in thermally sealed systems were prematurely extrapolated to suggest that all natural systems inevitably become more disordered, even though most systems in the universe, including those of life, are not isolated in experimental boxes but open to material and energy transfer. (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 102-108). Kindle Edition. )
        .
        The phenomenon might be described as the return of the scientifically repressed: what is excluded for the sake of experimental mental simplicity eventually shows itself to be relevant after all. Behaviorism, explaining animals in terms only of their external behavior, is a logical development of the expeditious exclusion of the dimension of living perception, methodologically bracketed by a church-savvy Descartes, and swept under the rug by a Faustian science drunk on the dream of an all-encompassing materialistic monism.17 With Uexkull the inner real comes back in the realization that not only do we sense and feel, but so do other sentient organisms; and that our interactions and signaling perceptions have consequences beyond the deterministic oversimplifications of a modern science that has bracketed all causes that are not immediate and mechanical. (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 108-113). Kindle Edition.)
        .
        Defying the rise of biological reductionism epitomized by natural selection as an explanatory principle, Uexkull emphasized the influence of the whole….
        .
        Uexkull’s view here is holistic, anticipating systems biology and cybernetics. Ironically, considering the ascendance of Gala science (or “Earth systems science” as it has been appropriated priated in geology departments) as “geophysiology,” Uexkull identified physiology as the life science challenged by its focus only on parts, whereas biology proper was for him the life science of the whole. (However, Uexkull tended to focus more on individuals than ecosystems.) The scientific trend against which Uexkull was reacting, of explaining everything in terms of local cause and effect, stimulus and response, the material interaction of connected parts, he identified with physiology: “In the introduction to his first book about the experimental biology of water animals, Uexkull distinguished between physiology, which organizes the knowledge about organic systems on the basis of causality, and biology, which does it on the basis of purposefulness (Zweckmessigkeit).”22 (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 145-153). Kindle Edition.)
        .
        (….) Uexkull’s scientific formulation of the Umwelt can and should be developed within an evolutionary-semiotic context. As Uexkull suggests in the final section of his essay, where he discusses the worldviews of the astronomer, the chemist, and the physicist, science also has its Umwelten. Forming scientific pictures of the universe with the aid of instruments and the cross-checking and peer reviews of scientists, despite political and corporate corruption of scientists, can be seen as the development of a metahuman neural network adding another powerful eye to the evolving Net of Indra. Uexkull’s pioneering investigations focus our attention on the perceptions of nonhuman others, some of whose perspectives, as profound as they are alien, we will probably never understand, nor get the chance to, given the present epoch of human-generated mass extinction. (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 306-311). Kindle Edition. )
        .
        In the opinion of Deely, Uexkull’s work, while not fully developed, provides an opening onto the most important revolution in intellectual history since the origin of science.44 Uexkiill gives the lie to the idea of scientific objectivity divorced from the perspectival, perceptual subjectivity of the observers themselves selves and the signs they use. The idea of an independently existing external reality divorced from minds occurs only within minds.45 Following an illustrious intellectual history that does not shirk medieval jaunts through scholastic ontology or religious philosophy, Deely argues the world is intelligible. We have, you might say, a sense of being: just as the primary datum of the sense of vision is light, and hearing sound, so the human instrument receives, via the intellect, the basic knowledge that the universe exists. We are alive and know we are alive, whatever that may mean. Following Heidegger (who calls animals “benumbed”46) to a certain extent, Deely however doubts that this knowledge of the world as world exists for animals, who are semiotically underdeveloped compared to us. According to Deely, while animals may and do communicate, they do not have language as such, which he defines not just as the ability to use signs (like Butler’s dog, signaling with his eyes), but understanding of those real, but nonetheless invisible, linguistically constructed relations among signified things. (Jakob von Uexkull. A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities) (Kindle Locations 311-318). Kindle Edition. )

        .
        A spoof is a fake, a fraud, a rip-off and cheap knockoff.

      • Meta Capitalism
        November 29, 2020 at 3:11 pm

        I thought of you when I read this quote from “A Foray into the Worlds of Animals and Humans: with A Theory of Meaning (Posthumanities)” by Jakob von Uexkull, Dorian Sagan, Joseph D. O’Neil –

        “Uexkull’s reemergence over the last decades-be it his promotion to a pioneer of biosemiotics, his puckish cameo performances in the works of Gilles Deleuze and Giorgio Agamben, or his growing prominence in post-humanism and critical animal studies-is at first glance a sequence of loosely connected stories, of frequently unrelated, if not downright incompatible discoveries and appropriations in the course of which very different approaches perceive and act upon those particular features of Uexkull’s work that strike them as significant.”

        Start reading this book for free: https://a.co/d5sKyk9

      • Craig
        November 29, 2020 at 4:55 pm

        An excellent post on the dynamic, interactive, integrative and emergent qualities of the natural philosophical concept of grace. That concept is also the humanly perceptible state of the temporal universe. All one need do is walk around and touch a few walls and ACTUALLY look at objects and their individual characteristics and all of a sudden…satori! Space and objects are an experience not an abstraction and even more enlightening YOU are much more real than just a chattering voice inside your head. It’s the direct integration and experience of the seeming opposite ends of the evolutionary reality except there’s no top or bottom, real or unreal just a unitary flowing natural and cosmic isness.

        Do we want an economy that flows freely and is dynamic, interactive, integrative and natural? Well then, model it after the ACTUAL temporal universe reality of grace by taking two of humanity’s greatest tools, money and double entry bookkeeping and creating abundance, including the self reflective balancing proclivities of wisdom and ethics to consciously guide the necessary randomness which is part and parcel of the natural state of temporal reality.

        Ah, may we have the serenity of the present moment in the economy….as quickly as possible. :)

      • Yoshinori Shiozawa
        November 30, 2020 at 5:26 am

        David, you taught me a good point for me to explain myself.

        Humans and firms are in a very broad sense an automaton and the economy is a network of automata and as such is an automaton. However, there is an essential difference between von Neumann’s cellular automata and human agents or firms.

        A cellular automaton is a finite set of rules that determines the next state of a cell by the state of neighboring cells. Each cell can take a finite number of states and the state of neighboring cells is finite. Each rule is a function from a finite set to a set of a cell. Therefore, the whole state is clearly defined and it changes step by step, although it can display an astonishing variety . In this scheme there is no environment or what we may call agents.

        Animals, humans and firms are an entity that is a coherent unity distinct from the environment (here I skip the question of “internal environment”). If we call each entity agent here (you may also call it a “subject” if you like), each agent and the environment are a complex entity that nobody knows to date its true details. As I have noted at the top of this post, an agent can be seen as an automaton in a very broad sense: it has its own set of behavioral rules. In Subsection 1.3.3 The Structure of Animal and Human Behavior (see my above post on November 28, 2020 at 4:48 am), I have explored the structure of an agent’s behaviors. Uexküll’s story of tick’s egg laying is very illuminating and shows the prototype of all agents’ behaviors. 

        The only difference between lower animals like a tick and higher animals like a human lies in the fact that the former has a very limited capability in sensory organ (receptor) and motor organ(effector), whereas humans have much varied sensory and motor organs. Another important difference is that a tick has only a few number of behaviors (almost a unique series of actions), whereas humans have a big pool of behaviors and choose one among it according to the occasion. In this way, humans have much bigger flexibility of behaviors (i.e. capable to increase their pool).

        However, each behavior has no meaning by itself, because it is an interaction with its environment that matters. Uexküll explained that each species has its own “lived” environment (Umwelt) specified by its  sensory and motor organs. He explained by various examples how each species is living in its environment. A tick has a very limited sensing capability: a vague photosensitivity (a tick is blind but can know where the light comes), sensing of butyric acid, fine sense of the heat. It has very limited motor organs: it cannot run fast as a spider, nor jump high as a flea. Using these extremely poor sensory and motor organs, a female tick succeeds in catching a warm-blooded animal. It we know the difficulty of the task (egg laying in our case) and the poorness of tick’s capabilities, it is really amazing that a tick succeeds in such a difficult task as catching a mammal (Uexküll expressed it as “something quite wonderful happens”, p.325 in the linked paper [older translation in 1957] in my post above). 

        Big gap between the difficulty (D) and competence (C) of an agent is the theme of R. A. Heiner’s paper in the AER (1983) that I referred in Citation B in my above post. His ingenious idea is that the big gap between D and C i.e. C-D gap can be an origin of predictable behavior. It gives us a hint for considering how we behave in the truly uncertain world and hence to observe how we are actually behaving in such an environment.

        As a consequence, my Chapter 1 does not end by the structure of behaviors. It must be complemented by the arguments on the environment and the interactions between agents and the environment. This composes the topic of Section 1.4. In Subsection 1.4.2 I have argued “What determines Effectiveness of Human Behavior?”.  I hope Dave has understood how my arguments are organized and how my agents are essentially different from cellular automata.

      • Yoshinori Shiozawa
        November 30, 2020 at 5:40 am

        I am sorry that I have forgotten to insert after “my above post on November 28, 2020 at 4:48 am”. The large blue area links to my previous post. The second link on “R. A. Heiner’s paper in the AER (1983)” is still alive but it may be difficult to find it. You can also find the paper by clicking here.

      • Yoshinori Shiozawa
        November 30, 2020 at 5:58 am

        It is sometimes difficult to show in one-byte characters. Does someone know how to insert </a> in one-byte characters in this blog?

        In my above post on November 30, 2020 at 5:40 am, I wanted it be displayed as “I have forgotten to insert </a>” in 1-byte characters.

  14. ghholtham
    November 28, 2020 at 6:18 pm

    Meta, you ask me to check my emotions. I have never used words like coward, ideologue, spewing nor accused anyone of whining. It is perfectly clear who is not in control of their emotions. Why are you getting so angry?
    Dave I haven’ read your basic theory. I am not sure I would understand it if I did but where can I find it?

    • November 28, 2020 at 9:29 pm

      “Dave I haven’t read your basic theory. I am not sure I would understand it if I did but where can I find it?

      Gerald, you will find most of it in G K Chesterton’s “Orthodoxy”, (rated one of the 1000 best books and “without any doubt the greatest work of English literature in the twentieth century”) including this from the chapter called “The Paradoxes of Christianity” (republished by Martin Gardner of the “Scientific American” in “Great Essays in Science”).

      “There is, therefore, about all conviction a kind of huge helplessness. The belief is so big that it takes a long time to get it into action. And this hesitation chiefly arises, oddly enough, from an indifference about where one should begin”.

      Chesterton succeeded in stringing his thoughts together here as an intellectual autobiography, but you need to understand that he trained as an artist and turned down the Chair in Literature at Glasgow in order to present ideas as images that ordinary people could understand. He was a brilliant writer, but his criticisms and seminal ideas are therefore still scattered throughout a hundred books and thousands of articles. I likewise am a visual thinker, but one trained to evaluate ideas rather than articulate them, so my theory too is mainly scattered through relatively short presentations, articles and blog comments. A book needs to be about 70% familiar, which it appears mine would not be. I might be able to hang the theory on my biography, or (like Chesterton’s, or Watson’s account of “The Double Helix”) the development of the idea; but I haven’t, and at my age I am unlikely to be able to so without some help. So perhaps the best I can offer you is “Complex Truth and Honest Money”, a diagrammatic presentation of the evolution of economics. You can ask Yoshinori for that: I doubt he’s read it.

    • Meta Capitalism
      November 29, 2020 at 12:49 am

      Whining aptly describes your griping about Lars not providing “blah, blah, blah.” Get real Gerald.

    • Meta Capitalism
      November 29, 2020 at 1:05 am

      Gerald, you have a blind spot. If I was to rerun the tape of your and Shiozawa’s comments we can observe an interesting pattern emerge. I can rerun this tape in many ways, for I have long record of them (AI is a wonderful tool). What you will see is Shiozawa engaging in nasty ad hominem attacks on Lars repeatedly whilst arrogantly hawking his book. Shall I rerun that tape? You ignore this reality because it suits your needs it seems. It is a fact you made false claims about Shiozawa’s work, such as he is solving “practical problems” while he explicitly claims that is not the nature of his work, and when I point it out you admit this fact. Yet, you overlook his nasty arrogant ad hominem attacks on Lars raising not even a peep. You are more subtle, and make your attacks via (supposed jokes) and then pretend you were only being funny. That is called passive aggressive Gerald.
      .
      I am not a disciple of Lars anymore than you are a disciple of Shiozawa, but this I know for sure. Your repetitious whining and complaining (and that is exactly what you are doing when you complain of Lars repetition of similar critiques) is not any more productive than what you are complaining about.
      .
      I for one will not sit silent while you engage in passive aggressive personal attacks or Shiozawa engages in them either. I am going to call them just what they are. So, why don’t you stop complaining and whining and start bring out those fine examples you speak so much of but provide so little evidence of?

  15. ghholtham
    November 29, 2020 at 7:02 pm

    I have always thought criticisms I made were straightforward enough and neither passive nor aggressive- but that is for others to judge. Lars has been writing the same article on this blog making the same points for about eight years to my knowledge. The points are largely correct but most readers of this blog will agree with them anyway. He is a capable economist of some standing so I think it is a shame he doesn’t move on. The blog is supposed to be about real world or heterodox economics but we seldom discuss that. What do we think of the institutional school of economics of people like Douglas North? What do we make of evolutionary economics following on from Nelson and Winter? What about people following Georgescu-Rogen who try and introduce thermodynamics into economics to distinguish which aggregate effects are purely random; there is a whole econophysics school. Which of these schools is potentially useful – and for what sorts of question? In financial economics there is the emergence of cross-disciplinary work involving psychologists like Tversky and Kahneman and also the use of econophysics. We have a behavioural school. This is not happening in other areas of economics. Why not? Should it? There is a host of questions to be put and discussions to be had. How do we achieve consilience in economics so that, production theory, for example is more clearly embedded in physical reality and processes? This is a live issue in ecological economics, it seems to me. Lars opinions or critiques of any, of these would be interesting. There are a lot of clever people out there trying to do something different and interesting. Yet we ignore them to spend our time repetitively denouncing the neo-classical school. And you get cross because one heterodox operator, Shiozawa keeps shouting for attention.
    I don’t think you have the same definition of ad hominem as I do. To criticise what someone writes is not ad hominem if you engage with the arguments. My perception is Shiozawa tries to do that. Ad hominem is when you misconstrue the argument and are rude about the people themselves. Get your AI program to search for personally abusive words in posts. It will find a high proportion in yours.

  16. November 29, 2020 at 9:00 pm

    Gerald, I can agree with you that Meta too often goes “over the top”, although he introduces us to interesting thoughts we might otherwise never hear of. But you say you “engage with the arguments”? Let is go back to your saying “Dave, I haven’t read your basic theory. I am not sure I would understand it if I did but where can I find it?” I didn’t help myself by trying to answer your question, but go back further (to my two comments on November 28) . The first of these offered you the gist of my basic theory, but now you tell readers that you haven’t read it! That may not be “ad hominem” in your literal sense, but it feels “ad hominem” in the sense that you are diverting attention from my argument by pretending it doesn’t exist. I bring this up because it seems to be your usual strategy. Craig is another using the same trick. He says (without evidence) that no-one (thereby including me) ever reads what he writes, diverting attention from the fact that I must have, since I have just (partially) disagreed with him. Meta by contrast just dives in without thinking, having long been stirred up by you and Yoshinori doing the same to Lars. Here on Nov 29 I offered a two-line von Neumann slant on what Yoshinori was saying, which Meta proceeded to swamp unconsidered by continuing his diatribe against Yoshinori and irritating everybody!

    On “Mathiness in Economics” you asked “Are we mixing up prescriptive analysis and descriptive analysis here?” No! In the first comment here, Ikonoclast gave much the same answer as I did:

    “If conventional economics will not own up to its prescriptive foundations, as it in fact does not, then it is revealed as dishonest and merely an ideology dressed up in the trappings of false mathematico-deductivist justifications”.

    Lars asked us a question which we have barely managed to address, but perhaps in his conclusion he answered it himself:

    “Heterodox critics are not ill-informed about the development of mainstream economics. Its methodology is still the same basic neoclassical one. It’s still non-pluralist. And although more and more economists work within the field of ’empirical’ economics, the foundation and ‘self-evident’ bench-mark is still of the neoclassical deductive-axiomatic ilk”. So no, he says.

    But this is where his not joining in our discussion by asking leading questions leaves him open to criticism. “Sad to say”, he says, “but we still have to wait for the revolution that will make economics an empirical and truly pluralist and relevant science”.

    Perhaps he doesn’t join in because he is not actually writing for us but being quoted by our own Editor; but he will have to wait a long time if he wasn’t listening when we offered him the necessary Copernican revolution.

    • Craig
      November 29, 2020 at 11:27 pm

      Unfortunately no one here ACTUALLY talks about and analyzes economics and finance from a paradigmatic perspective…at least with any conscious knowledge of the imminent and accomplished signatures of historical paradigm changes, the logical and relevant comparisons of which to the direct and immediate effects of Direct and Reciprocal Monetary Gifting are rife…and which I have also posted many times. The well known saying: “There are none so blind as those who WILL NOT see” it seems, unfortunately applies.

  17. ghholtham
    November 30, 2020 at 4:07 pm

    Dave, I engage with arguments I understand. If I don’t understand what you are saying, I had better shut up about it. I can’t comment on its validity one way or the other. There are two elements in what you write that I think I understand and agree with – one that economic theorising needs to take more account of the cost and accessibility of information and has things to learn from information theory; two, theory should be dynamic, taking account of time and path dependency and not focusing on stationary equilibria. But I guess you are saying more than that and I’m afraid I don’t get a lot of it. Much of what you say appears to pertain to philosophy and a general world view rather than the operation of the economy as it is. At that level we do agree about the gravity of the ecological crisis.
    There are lots of different questions in economics, some big some small, some more important than others. I do think it helps to isolate the question you are addressing and take questions one at a time. To take the example you cite, if I am trying to assess the transfer problem involved in government debt, the ecological crisis is not what I am talking about. Yes, that is a much more important question and I am happy to discuss it. I am not denying it in writing about something else; but things get too complicated if we refuse to compartmentalise.

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