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Analytical bias

from Lars Syll

Expectation vs reality concept business analysis Vector ImageThe world is made up of systems.  Our body is a system, or in fact a system of systems.  What we call “society” is another system of systems, as is the natural environment …

But these systems are very complex, difficult to explain or predict.  One successful strategy, which has had a revolutionary impact on how we live, is analysis …

By biting off chewable portions of a much larger world, science makes it possible to achieve progress in our understanding of how things work …

But this approach, for all its benefits, fails to capture most of the interactive effects that make a system a system.  It leads us to overstate the separateness of the things we study and observe and to understate their connectedness.  This is not an argument against thinking analytically, but for not being surprised by what this thinking fails to see so we can at least somewhat compensate for its shortcomings.

Peter Dorman

Using the ‘analytical’ method — “biting off chewable portions of a much larger world” — may indeed sound as a convincing and good scientific approach. But — as Dorman  notices — there is a snag!

The procedure only really works when you have a machine-like whole/system/economy where the parts appear in more or less fixed and stable configurations. And if there is anything we know about reality, it is that it is not a machine! The world we live in is not a ‘closed’ system. On the contrary. It is an essentially ‘open’ system. Things are uncertain, relational, interdependent, complex, and ever-changing.

Without assuming that the underlying structure of the economy that you try to analyze remains stable/invariant/constant, there is no chance the equations of the model remain constant. That’s the very rationale why economists use (often only implicitly) the assumption of ceteris paribus. But — nota bene — this can only be a hypothesis. You have to argue the case. If you cannot supply any sustainable justifications or warrants for the adequacy of making that assumption, then the whole analytical economic project becomes pointless non-informative nonsense. Not only have we to assume that we can shield off variables from each other analytically (external closure). We also have to assume that each and every variable themselves are amenable to be understood as stable and regularity producing machines (internal closure). Which, of course, we know is as a rule not possible. Some things, relations, and structures are not analytically graspable. Trying to analyse parenthood, marriage, employment, etc, piece by piece doesn’t make sense. To be a chieftain, a capital-owner, or a slave is not an individual property of an individual. It can come about only when individuals are integral parts of certain social structures and positions. Social relations and contexts cannot be reduced to individual phenomena. A cheque presupposes a banking system and being a tribe-member presupposes a tribe.  Not taking account of this in the ‘analytical’ approach, economic ‘analysis’ becomes rather uninformative nonsense.

  1. September 10, 2021 at 12:22 pm

    Nonetheless, that what bankers perceive as safe is bound to become more dangerous to bank systems than what bankers perceive as risky, is a prediction that should be able to pass the test of time.
    https://subprimeregulations.blogspot.com/2016/03/decreed-inequality.html

  2. mhartwig2015
    September 10, 2021 at 2:42 pm

    ‘And if there is anything we know about reality, it is that it is not a machine!’

    Indeed, but the view that it is a machine is fundamental to the worldview of the bourgeois enlightenment, which only the other day you seemed to be championing unreservedly. Roy Bhaskar’s reconceptualisation of nature as in open, creative and emergent process is his most fundamental move, and a radical departure from the enlightenment view of it as a giant machine where constant conjunctions obtain.

    If you follow through the logic of this move you will probably find yourself agreeing with Ilya Prigogine that: “A disenchanted world is, at the same time, a world liable to control and manipulation. Any science that conceives of the world as being governed according to a universal theoretical plan that reduces its various riches to the drab applications of [exceptionless] general laws thereby becomes an instrument of domination. And man, [now] a stranger to the world, sets himself up as its master.” Including, one might emphasise, of the human beings that are part of it.

    As Bhaskar argues in Dialectic, enlightenment thought is Janus-face (regressive as well as progessive). It gives ‘an ideologically saturated account of the form of the new science [and is] committed to the spread of its content AND that of the freedoms [of intellectual inquiry etc.] upon which it ultimately depended’.

    Btw, the notion that humans themselves are machines and that machines can be human seems to be becoming quite fashionable in CR circles today. See e.g. Margaret Archer and Andrea M. Maccarini, eds, What is Essential to Being Human? Can AI Robots Not Share It? (2021). We need to put some distance between ourselves and THAT whole aspect of the enlightenment.

  3. September 10, 2021 at 3:18 pm

    Lars makes excellent points. I would like to mention some excellent books about Systems thinking. When you look at the climate crises evolving as nature’s systems react to human economic activities pursuing unending growth on a finite planet, the systems approach makes more sense.

    Thinking in Systems: A Primer by Donella Meadows published in 2008 and edited by Diana Wright from the Sustainability Institute. Meadows was also one of the authors of Limits to Growth from the Club of Rome published in 1972. Hermann Daly and Kate Raworth appear to have picked up on the themes of that book. The authors of Limits had hoped economists would take their analysis seriously. Instead they were criticized and ridiculed. Meadows and others updated their original work in 2004 in Limits To Growth: A Thirty Year Update. Meadows died unexpectedly in 2001.

    Another very useful book on the topic is Systems Thinking for Social Change: A Practical Guide to Solving Complex Problems Avoiding Unintended Consequences and Achieving Lasting Results by David Peter Stroh published in 2015 from Chelsea Green Publishing. I liked how he portrayed “viscous identity conflicts” from a systems perspective. Part of my career was focused on conflict resolution in communities and families. For a period of several years I trained students in schools to mediate peer conflict because there were different dynamics and outcomes when students intervened — with permission of the disputants — than when authority figures intervened — without permission of the disputants.

    I first became interested in Systems Thinking when I was introduced to Chaos and Complexity Theory in the late-80s by my wife who was studying for her Ph.D. It was a sidebar mentioned in one of her courses. That took me to an interest in the work of the Santa Fe Institute after reading Chaos: A new Science by James Gleick published in 1988.

    When I more recently looked at the work of economist Professor Steve Keen, I recognized the similarity to Systems Theory in the software he developed — he named it Minsky — to show the non-linear dynamic systems of economics and money stocks and flows. He has pointed out the nonsensical analysis by Nordhaus et al in the economics chapter of the IPCC reports because of his understanding of fluid dynamics and the second law of thermodynamics. I am looking forward to receiving copies of his latest book on The New Economics: A Manifesto.

    And, last but not least, Fullbrook and Morgan wrote a book called Economics and the Ecosystem.

    The failure of many economists (who have often been in positions to consult to governments, business, fossil fuel companies and media) to take the systemic effects noted in Limits To Growth seriously after it was published in 1972 is a major part of the story about why climate crises are accelerating in numbers and degrees today. That in turn impacted and is impacting the field in which I worked my entire life as a social worker counselling people experiencing relationship and mental health issues.

    It was often said in response to why people were acting the way that they were, “It’s complicated.” Counselling unravelled the threads of their complex narratives and helped them see the feedback loops or threads that they were ignoring or unable to see. I retired after 48 years in 2016.

  4. Craig
    September 10, 2021 at 6:35 pm

    Science is important, wonderful and necessary, and it exists as a wholly contained set within the broader mindset of wisdom/paradigm perception which is the ability to simultaneously perceive particularity and essence of operant factors so as to solve problems that appear to be in even inevitable conflict.

    Chaos is likely an apparency ultimately resolved by contemplating the aspects of the natural philosophical concept of grace, like for instance unity and dynamism.

  5. Ikonoclast
    September 11, 2021 at 3:41 am

    Excerpt below of opening passages from “Real and Formal Systems – (Towards a Unified Ontology)”, an essay in progress by yours truly, the academically and formally unpublished author known as Ikonoclast, who posts on several economics blogs including this one. I am not writing this for any course or degree. I have unfortunately no teachers, no mentors nor any personal colleagues or confreres to assist me in this work. It is part of my autodidact research project. This project, I contend, is relevant to Real-World Economics and to this particular post’s topic. If I could move this essay on to a valid body and conclusion, I wonder if it could ever be considered for publication in Real-World Economics Review? Or is it prima facie on the draft opening passages irrelevant or patently unsatisfactory?

    1 – Introduction.

    As soon as I mention ontology, people begin to suspect me of religion, speculative metaphysics or postmodernism. Such responses have surprised me but on reflection they should not have. Ontology speaks to existence; what exists and how it exists. Stated like that the subject sounds vague. Many assume that ontology must consist only of religious and speculative metaphysics or else of relativism. Encountering ideas about “being” and “existents”, most people immediately leap to the most difficult end of the subject, making or rejecting assumptions about what exists or does not exist at undetectable or unknowable levels. However, there is no need to begin at that end of the subject or even to proceed so far. It is the wrong end of the field for commencing our investigations.

    The idea that there might be ontologies other than the dogmatic, speculative or relative seems to present itself too rarely. This demonstrates the degree to which even the modern mind is attuned to rating cherished beliefs over empirical knowledge. Either that or the assumption is made, from long and tedious experience, that other minds do so. Yet, empiricism primes us to see there is also what can be termed “Empirical Ontology”; the ontologies of empirical disciplines developed out as the categories and taxonomies of real objects and real processes dealt with by each discipline in question. Pragmatism also can orient us. Scientists and philosophers of science,as well as practical persons, are concerned with what can be known, to what level of confidence it can be known and what practical or ethical purposes or uses such knowledge can serve.

    The ostensibly audacious project of unifying ontology for real and formal systems must begin, as in all metaphysics, with a priori justification. “A priori justification is a type of epistemic (knowledge) justification that is, in some sense, independent of experience.” [1] The phrase “in some sense” may be taken here as implying that the claim “independent of experience” will carry certain caveats. It is a fact little attended to that progress towards genuine scientific knowledge ineluctably begins not just with observations, inductions and hypotheses but also with the assistance of a priori justification(s). This assertion may seem strange at this point but this matter should become clear as we proceed. The point of the assertion is to illustrate and prefigure that this kind of metaphysics, “near-empirical metaphysics”, is a form of scientific empiricism which strives for a unification of all the sciences, not only through a synthesis of scientific methods, but also through the unification of ontology itself.

    2 – The A priori Justification

    All that exists is best understood as a single, complex system as a system of sub-systems. Modern physics interprets the cosmos as a single physical system and this understanding informs its entire research program. Progress continues in discovering further dependable laws and relationships within the posited single system. Confirmation of the existence of the Higgs boson [2] , as hypothesized, and the detection of gravitational waves [3] from a spacetime distant cosmological event, are recent demonstrations of the predictive power and experimental reach of modern physics. The overarching and clearly monist principle in modern physics is that of Relational Theory. The positions and properties of any detectable object, process or field value can be determined only in relation to the positions and properties of other objects, processes and field values.

    Metaphysics must, I contend, take this lead from the relational system monism of modern physics and employ the thesis of a single connected system to resolve, in a specific manner, the central philosophical problems of ontology and epistemology; the problems of being and knowledge. The relational system monism of physics yields successful theoretical and applied results over much of its investigative domain. By extension, relational system monism may be used in metaphysics as an Occam’s Razor (simplest consistent explanation) to generate solutions for some of the most difficult problems in metaphysics and to dismiss philosophical “non-problems”, which are controversies arising solely from poorly justified suppositions. The mind-body problem, or consciousness-matter problem, for example, can be resolved pragmatically by a strict monistic conception of all existence, including those categories considered dualistic or mutually exclusive in other metaphysical systems. More importantly, the ontology of formal system / real system interactions can be logically systematized and empirically investigated, end to end, within a monist framework.

    3 – Definitions of Terms and Related Issues

    Exclusive of reference books and text books, people rarely read tables of contents, appendices or glossaries. Nevertheless, a glossary of terms is necessary, especially for an essay which attempts to break new ground. Rather than placing the glossary with appendices and leaving the reader to wonder what some of the terms might mean, where to find them and even if I define them, I have decided against custom to place the glossary and its discussion here, in its most fitting place. The terms must be introduced and defined before they are combined in logical sentences, just as the values of x and y must be given, before an equation containing them can be used to derive an answer. Nonetheless, the following definitions are deliberately concise. The extensive meaning of a term, with all its interrelations, can only be developed in a full system of thought: an observation consistent with the complex relational system thesis of the argument.

    Table 1 – Key Terms

    1. Emergence: A meta-process whereby the collective properties of a system or process arise from the properties of its “parts”, or sub-systems, in a more than additive fashion.

    2. Evolution: A sub-set of emergent phenomena, exhibited by living organisms and viruses, resulting in novel speciation via genetic mutation and natural selection.

    3. Model: A simplified representation of a more complex original.

    4. Monism: Attribution of oneness or singleness to a concept or system, e.g. all-existence.

    5. Priority Monism: The concrete monistic system (the cosmos) is primordially or historically existent prior to its emerged parts or sub-systems, which continue to emerge, evolve and demonstrate radical novelty. [4]

    6. Ontology: The study of existence, and emergence, in terms of categories and relations.

    7. Process: A set of transformations over a span of time and space (spacetime).

    8. System: A regularly interacting or interdependent group of items forming an integrated whole. Every system is delineated by its spatial and temporal boundaries, surrounded and influenced by its environment, described by its structure and purpose and expressed in its functioning.

    9. Real System: Any system which obeys the so-far discovered Laws of hard science.

    10. Formal System: Any system of signs based on or forming a language, including mathematics.

    Table 2 – Subsidiary Terms

    11. Additive – When the totality under consideration is wholly explained by summing the individual contributions, positive or negative, of each object.

    12. Downward causation – Causation exercised by the emergent properties of wholes upon their lower-level constituents in terms of properties and processes.

    Superficially, ontologies constructed by humans appear to be divisible into two basic categories:

    Table 3A – An Initial Pass at Ontological Categories.

    1. Physis: The objective, real, physical, material, corporeal world.
    2. Nomos: Prescriptive and descriptive models plus other formal systems developed by the (human) mind: most often developed socially, cooperatively and/or competitively.

    In classical Greek philosophy, debate arose around the terms physis (nature) and nomos (law or custom). In this essay, nomos is employed more expansively; including all of culture, custom, legal laws, regulations, etiquettes and so on as well as all axiomatic, formal, and scientific-empirical models developed in and used by human minds. It can be taken that, in general, customs, ethics, cultural precepts and legal laws are prescriptions (prescriptive models) and scientific-empirical models, at least, are descriptive models of claimed objective reality. It is notable that forms of native neurological modelling, as occur in the whole vision system including the visual cortex, for example, are systems which also descriptively model objective reality. However, they cannot be said, epistemologically speaking, to be nomos developed as they are evolutionarily, genetically and somatically developed. The above is all true if we accept the standard arguments for objective reality.

    The phrase “objective reality” means (and makes the supportable claim) that an objective reality exists independently of, and externally to, our minds. This is the realm of res extensa, literally “the extended” and usually translated as “extended and unthinking thing” in Cartesian dualism. In both everyday and classical scientific terms, we think of objects as being extended and existing in 3D space plus time. Contrasted to res extensa, Descartes postulated res cogitans, “a thinking” or thought as “a thinking and unextended thing”. That is the usual interpretation in Cartesian dualism. One presumes that a thought could not be visualized spatially by a 17th C thinker. Now, with brain imaging we can see “secondary” and “false colour” image renditions of thoughts, or at least of mental qualia which likely include thoughts, as spatiotemporally dynamic images. However, it perhaps ought to have been possible, even in the 17th C or at least 18th C to visualize a thought in its time context. I mean in the sense that thoughts can be conceived of as arising and being entertained in succession in the time dimension and thus ineluctably possessing time extension and/or time succession shared with that shown by the material objective world itself: a strong evidence for their shared monistic existence. Thus, the hint was there that res cogitans was part of res extensa, the latter even when perceived classically as 3D space plus time. [5] Today, we have less trouble visualizing thoughts spatiotemporally when considering neurology and its real time or time succession imaging tools and image rendtions.

    The ontological categories above, of physis and nomos, are provisional in a sense and they are to be used to enable us to take a bearing from Cartesian dualism and proceed towards the radically novel conceptions of a new monist ontology. It will become clear that the fundamental division between nomos and physis is epistemological and not ontological. Further, the true ontological division will be found to be between those realities which are primarily unalterable (by humans) meaning fundamental universal laws and those realities which are alterable by humans and which nascently are formations of ideas (ideational systems) and thence become formations of materials (material systems) which are altered by the combination and recombinatio of human thoughts, as models and prescriptions, and thence proceed to human actions acting out the ideational prescriptions and thence constructing materially according to the ideational models. In the final empirical analysis, thoughts will be found to be real brain-internal actions in any case.

    End of first draft of early introduction.

    Notes

    1. Stanford Encyclopedia of Philosophy – Online.
    2. Nobel Prize in Physics 2013, Englert and Higgs – “for …discovery of the predicted fundamental particle…”
    3. Sep 14 2015, LIGO (Laser Interferometer Gravitational-Wave Observatory) sensed distortions in spacetime caused by passing gravitational waves generated by two colliding black holes 1.3 billion light years distant.
    4. “Understanding emergence along the lines of self-organization has become so ubiquitous the two terms have just about become synonymous. However, the usual connotations of self-organization result in a misleading account of emergence by downplaying the radical novelty characterizing emergent phenomena. It is this radical novelty which generates the necessary explanatory gap between the antecedent, lower level properties of emergent substrates and the consequent, higher level properties of emergent phenomena. Without this explanatory gap, emergent phenomena are not unpredictable, are not non-deducible, are not irreducible, and thus are not truly emergent. For emergent phenomena to be genuinely emergent, processes of emergence must accomplish the seemingly paradoxical feat of producing an explanatory gap while simultaneously maintaining some degree of continuity with the substrate level.” – Professor Jeffrey A. Goldstein.
    5. One would think that George Berkeley as a monist philosopher, albeit an immaterialist not a materialist, would have conceived of thoughts as existing in time and in the same time dimension as all other phenomena in his posited monist system. I am still seeking evidence of this consistent deduction somewhere in Berkeley’s works.

    Afterword: The above is just a taste and intimation of where I am heading. I hold that it will prove to be of empirical and economic theoretic import. Have I raised any understanding and interest?

  6. Ken Zimmerman
    September 11, 2021 at 10:21 am

    Analysis omits or fails to notice much more. First, it fails to make the complexity of networks visible to researchers. Sometimes it so obscures a network’s complexity that the observer loses touch with it completely. Making research useless or worse still showing a false view of the network.

    Secondly, and more damaging to our research, in my view, analysis does not allow access for the researchers to the becoming of the network through emergence. Emergence is the manner in which all networks come to be and change. Without understanding emergence from one relevant context to another each network is an unopenable black box.

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