Has mainstream economics — really — gone through a pluralist and empirical revolution?
from Lars Syll
In 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. 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.
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.
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?
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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:
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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.
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
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!!!
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
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.
“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.
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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.
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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?
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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?
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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.
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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.
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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.
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Time for economists to put their values right out in the open on the table I think.
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.
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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.
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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.”
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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).
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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.
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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.
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* 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.
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** 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.
The Martians must be laughing.
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:
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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!
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.
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.
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)
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?
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.
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.
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.
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.
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.
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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”:
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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).”
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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”:
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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.
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.
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.
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.
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, 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.
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.
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?
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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.
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Gerald, you whine an awful lot:
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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
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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?
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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.
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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:
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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).
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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.
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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?”
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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:
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“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)
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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.
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
Citation from John Davis
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.
Microeconomics, Macroeconomics and Complexity
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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)”
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What now, is Shiozawa trying to spoof Keen?
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.
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)
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.
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.
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.
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.
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.
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.
“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.
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:
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.
Citation A
Citation B
Yoshinori’s ‘tick’ is reminiscent of John von Neumann’s ‘cellular automata, as described in Mirowski;s “Machine Dreams”.
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.
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A spoof is a fake, a fraud, a rip-off and cheap knockoff.
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
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. :)
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.
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.
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.
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?
“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.
Whining aptly describes your griping about Lars not providing “blah, blah, blah.” Get real Gerald.
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.
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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.
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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?
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.
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.
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.
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.