Home > Uncategorized > More is different: a redux

More is different: a redux

from Peter Radford

“Formation is the vanishing of being into nothing, and the vanishing of nothing into being”

Hegel loved his dialectics.  But it isn’t just contrasts that illuminate reality.  It is connections also. Connections matter.  Single things are interesting.  Perhaps even intriguing.  But it is the way in which things connect that leads us to the better understanding of our surroundings and of ourselves.

Our modern world rests largely on a web of technology that mediates our existence and removes us from our primitive origins.  We pride ourselves on this web.  Our ability to render nature compliant and exploit both our context and our intellect to produce comfortable lifestyles is the essence of modernity.  Any brief study of the past two hundred years will astonish us at the gulf in everyday existence between now and then.  We really do seem to have broken the Malthusian grip that nature held us within for so long.

A great part of that ability to break free consists in our imposition of reasoning on the problems previously preventing us from escape.  We learned to abstract.  We learned practical problem solving.  We learned both to reduce problems to solvable sizes and then to reconstitute solutions from those now-known component parts.  We created, to borrow from Brian Arthur, a reliance on modularity: we learned to build technologies from various parts.  And each part itself was itself modular.  The implied reductionism in this prompted the illusion that the method for superior knowledge was always through breaking things apart and re-assembling them once we knew what each part did.  

Economics took heed of this method and ran with it as if the economy was a technology comprised of parts easily assembled back into a whole.  Economics is justifiably proud of its internal logic.  But is it something that matches reality well?

We need to heed the words of Jorge Luis Borges, who warned us of “reasoning with an internal logic, where reality does not collaborate”. It is possible to fall for the efficacy of abstraction and to forget your purpose.  You can get stuck in a distant corner replete with an enormous library of logical components each of which is exemplary in its consistent splendor but each of which fails utterly to explain much. Except, perhaps, itself. Economics long ago, I am afraid, arrived in such a corner. It has become supremely good at explaining itself. It has become much less useful in explaining the economy. 

A major part of the problem comes straight from the “micro foundations” movement. This effort to explain all higher order phenomena as a simple extrapolation of lower order facts is a danger all scientific endeavor has faced. The problem for economics is that it has failed to re-invent itself subsequent to the modern realization that radical reductionism is a step too far. It soldiers on in defiance of the increasing understanding that the complexity of reality calls into being phenomena at higher levels that are not constructed of lower level parts. They exist only higher up. Connections matter. The hand of the likes of Prigogine is not felt strongly in mainstream economics. 

It may be true, to some extent, that a cloud is simply a bunch of raindrops, but there’s something profound being missed to imagine that “bunch of raindrops” is a sufficient understanding of a cloud. Yet that’s where economics totters along.  Aggregate phenomena are treated as just that, aggregations .  Even the name betrays the thought process.  As a result macroeconomics, once a venerable pursuit, is reduced to almost nothing with enormous policy and social implications. We are told that things “work in practice but not in theory”.  With a straight face. We are given presentations on such things as efficiency as if, at a higher order, it were possible to conceive of an efficient result.  What, exactly, is efficiency at a systemic level, when that system is an open flow subject to uncertain fluctuations and a near incomputable assemblage of information?  A trivial example is the feedback between supply and demand that sits at the center of economics.  Feedback is a connective and dynamic concept.  It says that the two components, in this case supply and demand, can never be thought of either as two separate phenomena and analyzed as such.  They can only be thought of as inextricably linked with neither having a separate existence.  When we iterate back and forth to explain how supply adjusts to demand or vice versa we lose our ability to analyze either by itself.  They now exist as a pair.  Any focus on either separately is rendered useless.  Supply and demand are functions of each other.  They bring each other into existence. Each relies on the other.  Studying either as if this was not true is to ignore the essence of the insight.  It is to fall for the reductionist illusion.  It is an abstraction too far.  It is to ignore Borges and to go somewhere where “reality does not collaborate”.

The result is not knowledge.  It is ignorance.  

A critique of reductionism is not some modern, novel, or radical phenomenon. The debate about complexity and its ramifications has raged for decades. As long ago as 1972 the Nobel winning physicist P.W Anderson could say the following, in an article titled “More is Different”:

“The main fallacy … is that the reductionist hypothesis does not by any means imply a ‘constructionist one’. The ability to reduce everything to simple fundamental laws does not imply the ability to start from those laws and reconstruct the universe”. 

Economics clearly paid no attention to Anderson. 

When we abstract for the purpose of elucidation we must be sure that the implied loss of information was worth the gain. We must be careful not to throw the baby out along with the bathwater. Or, put alternatively, we need to be truly humble about what we know when all we know is based upon the elimination of great swathes of information. 

Modernity is good at eliminating information. We do it all the time. We reduce the intensity of reality into more manageable pieces. We cast aside what we don’t need for the task at hand. We automate and thus eliminate the need for thought on the part of the production team. We rationalize and thereby smooth off the edges that might cause disturbance to the flow of thought. We gain deep insight this way, but at the loss of texture and context. We gain depth at the cost of breadth. 

Ever since the rise of industrialization we have narrowed the lens through which information passes. Our machines replace or amplify muscle power. So our contact with nature is removed from its immediacy and elevated into a more abstract realm governed by measurement, containment, and management. Each of which implies the elimination of information deemed unnecessary.  We engineer our surroundings and our workplaces rather than simply living in them. And each new technological advance adds to the removal of that direct contact. Layer by layer we lose contact with our origins and substitute in its place a mythic alternative with a far more limited information content. We steadily systematize the chaotic in order to extract value from it. We move more and more into a world of structured connections and away from the natural complexity in which we began. 

The steady accumulation of technology has resulted in a poverty of information even though we think of ourselves as living in an age of information.  Our rationalization of the natural world necessarily eliminates what we consider as irrelevant.  And by so doing we cast aside information.  The stimulus of the broad lens of nature is replaced by the narrow lens of constructed artificial reality. 

This steady loss of information, as we narrow the lens continually in order to overcome nature, leads us astray. We believe we are in control and are more knowledgeable when, in fact, we are increasing our ignorance. We begin to make leaps of thought that make sense in the confines of technological currency but which make little sense in the face of the unknown beyond. There is a great danger lurking in that lost information. And every so often it asserts itself and disrupts our so-called advance. Just when we think we are in control we realize we are not.  Such a circumstance reminds us of our deliberate ignorance.  It reminds us that our abstractions bring with them the risk that we stripped out information that might become relevant when we re-engage with the real world.  

Economics is a primary example of this process of casting aside information. 

It has reduced itself, by and large, the study of exchange, allocation, and distribution. It ignores any information not directly applicable to that study. So the needs of society become reduced only to those visible in such circumstances. Anything not involved in the process ending in exchange is stripped away. This abstraction opens the door to formal understanding of a very narrow facet of economic reality. It says nothing about social reality except that certain consumers are willing to pay price x for product y. Upon this simple matrix economics has built a host of observations that belie the simplicity of its basis. 

Economics has, in essence, taken the feedback mechanism between consumers and producers, called it grandiosely the market system and then imagined it has understood the relationship between human needs and the ability to satisfy them. It has not.

Then again, that feedback mechanism is about as good as we can hope for. To refine it further or improve upon it would require us all to be able to articulate our needs more clearly in ways that could be accumulated in to some sort of aggregate demand amenable both to study and satisfaction through organized production. Such an ability and the knowledge associated with it lie permanently beyond our cognitive capacity. The best we can do is to fudge. The best we can do is rely upon approximation and rely on the modest workings of the market to get what we can. 

Perhaps Hayek was right in his denial of the efficacy of central planning.  After all the complexity of reality means that a centrally arranged matching of supply and demand lies beyond our current ability.  But he was wrong to imagine that markets are in any way superior.  They, too, fail to match all needs with all possible solutions.  We simply have no way of knowing whether markets work well.  Any appearance that they do is simply an illusion.

And that’s the lesson of reality: a market is nothing more than a modest effort to meet what needs we can within the narrow scope of a limited flow of information. Is it the best we can do? Is it perfect? Is it better than anything else? Is it optimal? Is it efficient? We have no way of knowing. We lost the information to do those kinds of calculations along the way. And even if we had the information we wouldn’t be able to do the calculation. 

Pretending that such a modest mechanism as a market should dictate anything beyond its limited scope is a foolish error, which if we act upon it, imposes large costs on society as whole. Markets do what they do. Nothing more. Let’s leave it at that. Those connections matter.  Borges was right.  We should always ensure that reality collaborates with our efforts at logic.  The rest is fantasy.

  1. Gerald Holtham
    December 1, 2021 at 6:20 pm

    Radford’s points are true but the microfoundations movement in macroeconomics is guilty of greater intellectual crimes than merely attempted reductionism. It is not as if the foundations are built on extensive empirical study of the decision-making elements in an economy. We have a representative consumer who behaves according to the axioms of rational choice under conditions of certainty equivalence. Similarly there is a representative firm modelled in the same way. So we start with illegitimate aggregates, illegitimate because the behavioural reaction functions are not strictly linear so the aggregate would behave like an individual only if all individuals were identical. Spoiler alert: Elon Musk is not absolutely identical with the homeless guy in the doorway. Amazon is not identical with your corner shop. Moreover, there is no empirical basis for the supposed individual behaviour anyway, since empirical work from the Allais paradox on has often found the axioms of choice are violated in the case of the consumer.. And companies do not generally have a set of well defined strategies before them and know the consequences of each at least probabilistically. People do not operate under conditions of certainty equivalence and how they actually deal with uncertainty is not considered or explored. These are not microfoundations. They are not really micro and are themselves without any empirical foundation. Yet every macroeconomist who produces a theory or proposition is encouraged to jump through the pointless hoops of showing it is consistent with optimisation by non-existent representative agents. I wonder if there has ever been a greater distortion of a serious discipline. On top of that, Radford is right. Even if we had real microfoundations we should have to deal with emergent properties as the elements interacted to yield group behaviour. .

    But we cannot keep beating the dead horse. We have to do better. Agent-based models with diverse participants and reasonable behaviour based on empirical observation are one way forward. They can either be very detailed to apply to a particular question or highly stylized to try and get more general insights. They will not be solvable mathematically but their consquences and patterns have to be explored by computer simulation. Experiments can explore the effect of changing different factors. Empirical verification is extremely difficult since there will be many formulations that can be calibrated to resemble the available data. We must not let an inability to achieve perfection, though, stop us from doing the best we can..

  2. yoshinorishiozawa
    December 2, 2021 at 5:31 am

    Sorry! I forgot to put correctly a closing tag. Here is corrected version of my previous post.

    A story a little beyond the fantasy

    What Gerald said about the microfoundations movement in macroeconomics is right. But, as he put it, “we cannot keep beating the dead horse. We have to do better.”

    On this point I have an idea, which is closely related to what Peter has argued. Microfoundations of macroeconomics are possible, but in a very different way than mainstream ones. The new microfoundations do not certify the mainstream economists’ unreasonable trust in market system but explain how the economy can get stuck in an involuntary unemployment situation. Our theory does not rely on (1) rational expectations, (2) representative agent, or (3) one-good model.

    See our book. The methodological part is explained in Chapter 1 of the book. You can find a draft of the chapter which you can download freely here. Please buy the Chapter or the whole book here if you are a rich person.

    Here are some explanations for methodologies that I have adopted in the book in relations to Peter’s arguments:

    A trivial example is the feedback between supply and demand that sits at the center of economics. Feedback is a connective and dynamic concept. It says that the two components, in this case supply and demand, can never be thought of either as two separate phenomena and analyzed as such. They can only be thought of as inextricably linked with neither having a separate existence. (Peter Radford)

    Feedback is a process which works when the situation is our of stable state. Methodologically, we should abandon equilibrium as the framework of analysis and shift ourselves to process analysis. The notions of demand and supply functions depending on prices should be abolished.

    Modernity is good at eliminating information. We do it all the time. We reduce the intensity of reality into more manageable pieces. We cast aside what we don’t need for the task at hand. We automate and thus eliminate the need for thought on the part of the production team. We rationalize and thereby smooth off the edges that might cause disturbance to the flow of thought. We gain deep insight this way, but at the loss of texture and context. We gain depth at the cost of breadth. (Peter Radford)

    .

    Peter is right in pointing this, although it seems he still has some nostalgia to complete information utopia. What we should do as economics is not to wish for a complete information (and perfectly rational agent) model, but to construct a theory that shows how a system run by the human agents limited by narrow information capability, bounded rationality, and smallness of our capacity to change the world can still work. (There are many heterodox economists who want to say the economics system is doomed to fail. They may be right but, before claiming that, we should know how it works somehow.) Economic behaviors cannot be formulated as maximization (as mainstreams assume it), but should be formulated as patterned behaviors. We should learn from our experience and observation how we behave in a real world. This is the starting point of constructing a new theory, which is developed in the following chapters.

    • Meta Capitalism
      December 2, 2021 at 2:09 pm

      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 (Kindle 884-887). (….) 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…. This is the most primitive case of the definition of the situation. (Shiozawa et. al. 2019, Microfoundations of Evolutionary Economics (Evolutionary Economics and Social Complexity Science) (Kindle 900-933). Springer Japan. Kindle Edition. Emphasis added.)

      To make human behavior mathematically tractable ME turns humans into U-Max Infinite Calculating Machines. To make human behavior mathematically tractable Shiozawa turns humans into Fitness Climbing Ticks qua “if-then” Turing Machines, and then claims he is a “heterodox” economist. Perhaps he is, I will leave that debate to the economists. What I do know is these two extremes are simply two sides of the same coin.

      Spoofing biology a science does not make. Human reality and human behavior have many limitations, but human reality also includes insight, knowledge, foresight, and wisdom; we are not mere fitness climbing ticks or “if-then” Turning machines.

      Shiozawa claims to be providing the “microfoundations” for evolutionary economics. This overly simplified preoccupation with microfoundations is really no different than the standard approach used by mainstream economics; he just uses a different set of greed reductionist axiomatic assumptions. (Kirman 2018, 95, in Rethinking Economics: An Introduction to Pluralist Economics, Routledge.)

      Humans evolved from animals indeed, and we have also evolved capabilities our forebears lack; we can look and reflectively think before we leap. Reducing human beings to “social insects” and fitness climbing ticks or Turing machines is the flip-side of ME making them U-Max Infinite Calculating Machines. Like a cuckoo bird laying its egg the heterodox nest, this is just more of the same old quest for microfoundations that are a delusional chimera.

      Scientific theories are theories that ‘refer’ to the real-world, where axioms and definitions do not take us very far. To be of interest for an economist or social scientist that wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena. (RWER, Lars, 12/1/2021)

    • December 2, 2021 at 2:16 pm

      The overwhelming majority of employment and output in advanced economies is due to the creation of intangibles/services.
      Yet NOT ONE foundational or advanced text book seriously deals with economies where services are dominant.
      In fact all either
      1) ignore intangibles and focus only on tangibles or
      2) treat intangibles as if they are identical to tangibles (a conceptual nonsense since nothing can be more different to a tangible than a tangible).

      This huge hole in economic theory seems incomprehensible.
      How can economists attempting to influence government policies and the world ignore the dominant role of services/intangibles?
      Why do they persist with concepts and models where the only subject of study are things with physical characteristics?
      Have they failed to notice that the overwhelming majority in advanced economies not only don’t produce tangibles? They use almost no tangibles in their productive activities.

      Even heterodox economists fail to grapple with this issue (particularly Sraffraists who are fanatically physicalist).

      Don’t they see they have absolutely nothing to say about what most people are doing most of the time, which is creating intangibles and using almost no tangibles?

      I studied economics at the LSE, worked as a government economist, wrote about economics and applied it as a company director. But I could never find anything I learned helpful to the reality of how I made a living.

      Even an executive management course at the LBS was hopeless. All the teaching was based on businesses that produced tangibles.

      When the reality of creating and selling services was explained, the teachers (professors with doctorates in business studies) had nothing to say apart from supply and value chain analysis, which is of no practical use in a business that has no direct physical inputs or outputs.

      My conclusion is the reason the text books don’t deal with intangibles, universities have developed no coherent models of markets in intangibles and business schools are lost when dealing with them is that it is well understood that their analysis simply doesn’t work when applied to intangibles.

      They have no models, no explanations and no useful guidance. So the subject is unconsciously and yet deliberately ignored or obfuscated.

      I have a fuller exposition here; http://edmundosullivan.com/economics2030/about/

      • yoshinorishiozawa
        December 2, 2021 at 9:45 pm

        Dear Edward,

        I understand your frustration that economics (either mainstream or heterodox) normally lacks account of intangibles, where they occupy the major part (often majority of) of value-added. You are right in this claim, but it does imply that it is all right once you incorporate intangibles into the present neoclassical economics.

        Even the economics of tangibles needs major reconstruction. This is as difficult as (or even more difficult than) incorporating intangible in economics.

      • December 3, 2021 at 3:27 pm

        The failure to address intangibles substantiates the case that neoclassical/conventional economics is worthless. When you attempt to apply its logic to services, it clearly founders

  3. yoshinorishiozawa
    December 2, 2021 at 5:36 am

    Again there was a mistake but I do not repeat posting a corrected version. A paragraph should be this:

    See our book. The methodological part is explained in Chapter 1 of the book. You can find a draft of the chapter which you can download freely here. Please buy the Chapter or the whole book here if you are a rich person.

    • yoshinorishiozawa
      December 2, 2021 at 9:54 pm

      Another piece of correction:

      I wrote in my post above on December 2, 2021 at 5:31 am as follows:

      Feedback is a process which works when the situation is our of stable state. Methodologically, we should abandon equilibrium as the framework of analysis and shift ourselves to process analysis.

      our of stable state” makes no sense. It must be read “out of stable state”.

  4. dnosboj
    December 2, 2021 at 3:26 pm

    In a similar manner everyone reduces the study of climate change to the role of carbon dioxide!

  5. Gerald Holtham
    December 2, 2021 at 5:32 pm

    I am not sure I understand the point that MetaC is making. Is the point that human behaviour is inherently unpredictable? But the behaviour of large numbers of people is often quite predictable. Traffic engineers for example can forecast the effects on traffic flows of different one-way systems or speed limits. Individual drivers may write sonnets, have affairs or give money to charity but their individual complexity is not always relevant. If you know what they are trying to do in a given circumstance, e.g. get to work or school in the morning, you can predict their behaviour well in that narrow domain. “Their” behaviour means the aggregate behaviour. You won’t know what any individual will do but you don’t need to know what any molecule will do to know how a gas behaves.
    In commercial situations people generally have a more limited set of objectives than when we consider their lives as a whole. This makes aggregate behaviour to some extent predictable. People en masse do respond to financial incentives. And If incomes go up, people spend more. Individuals may hoard or give to charity but the aggregate relation between income and consumption is robust. Economics has to understand those robust patterns by exploring their limits. That is what theorising is all about – or should be. I don’t understand either Meta’s animosity to Yoshinori No-one is always right but you should get respect for serious constructive effort.

    • yoshinorishiozawa
      December 2, 2021 at 10:26 pm

      Gerald,

      Probably you knows this. I believe Ronald Heiner’s article that appeared in the American Economic Review is worth reading when one wants to consider predictable behaviors or more exactly when we reflect on predictability of behaviors and conditions or situations of when individual behavior becomes predictable:

      Ronald A. Heiner (1983) The Origin of Predictable Behavior. American Economic Review 73(4): 560-595.

    • Meta Capitalism
      December 3, 2021 at 12:15 am

      Perhaps (forgive the long citation) Keen can say it better:

      3.2 Complexity and the impossibility of microfoundations

      Do yourself a favour: read one of the best and most accessible thought pieces ever penned by a scientist: Physics Nobel Laureate Philip Anderson’s ‘More is Different’ (Anderson 1972).10 The paper itself arose in a methodological dispute within physics over the role of ‘reductionism’ in science. This is the practice of understanding a complicated field by breaking it down into its constituent parts, understanding them independently, and then building your knowledge of the whole from the parts. Anderson acknowledged the success of reductionism in enabling us to develop modern science, but he pointed out that reductionism does not imply ‘constructionism’:

      The ability to reduce everything to simple fundamental laws does not imply the ability to start from those laws and reconstruct the universe. (Anderson 1972, p. 393)

      Speaking as one of the original researchers who discovered complex systems phenomena in science, Anderson noted that while ‘constructionism’ works for simple systems with simple (often linear) relationships between their parts,

      The constructionist hypothesis breaks down when confronted with the twin difficulties of scale and complexity. The behavior of large and complex aggregates of elementary particles, it turns out, is not to be understood in terms of a simple extrapolation of the properties of a few particles. Instead, at each level of complexity entirely new properties appear, and the understanding of the new behaviors requires research which I think is as fundamental in its nature as any other. (Anderson 1972, p. 393) (Keen, Steve. The New Economics (pp. 126-127). Wiley. Kindle Edition. https://a.co/4fEDlGl )

      (Keen, Steve. The New Economics (pp. 125-126). Wiley. Kindle Edition.)

      Mainstream economists, however, are driven by the belief that macroeconomics should be ‘just applied microeconomics’: making it so has been their research agenda for the last thirty years.

      In general, this is foolhardy: imagine, for example, that the same belief took over biology, so that biologists believed that ‘Molecular Biology is just applied Chemistry’. Then a valid Molecular Biology laboratory project would be ‘Create life from its fundamental chemicals’. Of course, that’s impossible: despite all the knowledge chemists have of chemistry today, and biologists of biology, no-one knows how to turn chemicals into a life form, though clearly this happened in the distant past on Earth (Cornell et al. 2019). Therefore, Biology cannot be reduced to ‘Applied Chemistry’: if Chemists did in fact insist that Biology must meet this standard, then there would be no science of Biology at all.

      In particular in economics, economists have already shown that this objective – to reduce macroeconomics to applied microeconomics – is impossible. In a well-known but misleadingly interpreted result called the SonnenscheinMantelDebreu theorem (Arrow et al. 19811993; Gorman 1953; Kihlstrom et al. 1976; Shafer and Sonnenschein 1982; Sonnenschein 1973a, 1973b), mathematical economists posed the question ‘is it possible to derive a downward-sloping market demand curve by aggregating the demand curves of numerous individuals, all of whom have downward-sloping individual demand curves?’. Their answer was that it was not, unless you assumed, to quote the first economist to derive this result, that ‘the Engel curves for different individuals at the same prices are parallel straight lines’ (Gorman 1953, p. 63). Gorman unpacked his economic jargon with this telling assertion: (Keen 2022, 127)

      The necessary and sufficient condition quoted above is intuitively reasonable. It says, in effect, that an extra unit of purchasing power should be spent in the same way no matter to whom it is given. (Gorman 1953, p. 64)

      There is nothing ‘intuitively reasonable’ about that condition: it is saying that Elon Musk will spend an extra dollar buying the same things that a homeless person would buy with that dollar.11 This is obviously untrue, and intuitively unreasonable: why does Gorman claim the exact opposite? (Keen 2022, 127, https://a.co/gybIZQ1 )

      It is because, if the distribution of income does affect consumption – and it obviously does – then the market demand curve that can be derived by summing the downward-sloping individual demand curves of numerous individuals can have any shape at all:12 it does not have to be downward sloping. With that discovery, the whole theory of ‘supply and demand’ dies. As other researchers in this field put it, ‘The utility hypothesis tells us nothing about market demand unless it is augmented by additional requirements’ (Shafer and Sonnenschein 1982, p. 672).

      This is a classic ‘emergent property’. Not only can macroeconomics not be derived from microeconomics, even the model of a market demand curve can’t be derived – with the properties Neoclassical economists want it to have – from the model of a single consumer. The quest for a microeconomics foundation for macroeconomics is futile.

      But a quest for firm foundations does make sense: what might they be? (Keen 2022, https://a.co/fFC7YGI )

      (Keen, Steve. The New Economics (pp. 125-130). Wiley. Kindle Edition. )

      It seems, in my view, to take emergent properties of real-world complexity seriously requires taking _nontrivial intractability_ seriously:

      Deep Complexity suggests how social science theorizing might be more effective by taking phenomenal intractability more seriously. Unsurprisingly, this runs against profoundly ingrained beliefs and prejudices about good science in social science. One may then wonder what kind of science is a science that is unable to admit its own cognitive or epistemic limitations. Such a science is deprived of the means that would provide it with an incentive towards a more responsible, less hubristic practice. (Davis, John; Hands, Wade. Economic Philosophy: Complexities in Economics . WEA. Kindle Edition. https://a.co/8SyRV4z )

      The same issues have been taken seriously in biology and physics long ago.

    • Meta Capitalism
      December 5, 2021 at 5:08 am

      [B]ehaviour of large numbers of people is often quite predictable. Traffic engineers for example can forecast the effects on traffic flows of different one-way systems or speed limits. Individual drivers may write sonnets, have affairs or give money to charity but their individual complexity is not always relevant.

      This is again ignoring (aka eliding, by definition) that there is a difference between the traffic engineering problem which is trivial in complexity compared to the weightier issue of the real deeper causes of economic events that threaten us globally today, such as the deeper causes of the GFC or climate change. That drivers might write sonnets or give to charity is irrelevant rhetoric, little more than misdirecting red herrings, that lead us away from the more important question of the nature of nontrivial intractability (Davis, John; Hands, Wade. Economic Philosophy: Complexities in Economics . WEA. Kindle Edition. https://a.co/8SyRV4z ). Traffic engineers are dealing with knowable constraints (roads are only so wide, run in only certain places and directions, intersections are located at certain points, and traffic flows can be quantified and modeled). Not all problems are so constrained or trivial, especially the ones that are threatening our collective human survival such as climate change or the stability of democracy such as in the United States and elsewhere in the world.

      Gerald seeks to use statistics to find “proximate causes” while leaving “deeper causes” unexamined, yet they are the more relevant causes to the problems facing humanity today ( RWER, Gerald Holtham, Proximate vs. Deeper Causes, 1/30/2020). I think there are many problem domains where the use of “they law of large numbers” (a term Gerald has repeatedly used on this blog and a necessary condition for the use of his chosen methodology). But it seems these are trivial problems compared to the bigger problems facing humanity today that threaten our environment and civil society. If Gerald’s econometrics can only deal with, as he said himself, proximate causes and not the deeper causes, then it seems of limited use in a limited and constrained problem domain. It would foolish to limit oneself to only this way of acquiring knowledge when solving problems that entail nontrivial intractability like climate change, rising inequality that threatens to destabilize democracy, etc.

      Global warming, rising inequality, and descent into autocracy that threatens many Western nations today have been impacted in to small measure by economists who have for decades preached economic doctrines founded upon methodologies that have a very narrow definition of what science is and hence how economics should be practiced. If one examines closely all the cases where Gerald has provided his definition of economics a picture emerges of his underlying presuppositions (assumptions) and there his basic philosophical approach to science; exclusive methodical individualism that is statistically (big data) tractable, only aggregate behavior of individuals matter, not institutions, not legal frameworks, and certainly not qualitative information which he has characterized at best as mere “literature” or at worst “conspiracy theory (here).” If it isn’t mathematically quantifiable and statistically tractable (requiring big data) it tells us absolutely nothing and we might as well believe whatever we want as he once put it. This is hogwash. This is scientism. This ignores decades of empirical studies done in business schools around the world that provide insightful case studies that use both quantitative and qualitative practices.

      People en masse do respond to financial incentives. And If incomes go up, people spend more. Individuals may hoard or give to charity but the aggregate relation between income and consumption is robust. Economics has to understand those robust patterns by exploring their limits. That is what theorising is all about – or should be. (Gerald on Small World Problems)

      The people are like atoms in a gas analogy and therefore we can predict their behavior based on “the law of large numbers” only goes so far and is useful in only certain limited contexts. To make it the only method is a form of “scientism” that becomes self-blinding to deeper causes or simply ignores them, trotting out trivial traffic engineer problems, while simultaneously ignoring real-world problems of much weightier concern.

  6. yoshinorishiozawa
    December 3, 2021 at 10:04 am

    A short comment on Peter Radford’s pointing out.

    The problem for economics is that it has failed to re-invent itself subsequent to the modern realization that radical reductionism is a step too far. It soldiers on in defiance of the increasing understanding that the complexity of reality calls into being phenomena at higher levels that are not constructed of lower level parts. They exist only higher up. Connections matter. The hand of the likes of Prigogine is not felt strongly in mainstream economics. (Peter Radford)

    Progogine’s core idea was dissipative structure that can exists far from (thermal) equilibrium.
    Mainstream economics may have ignored it, but it was a continued hint for me. See here.

  7. Ken Zimmerman
    December 14, 2021 at 7:33 am

    As V. Gordon Childe pointed out over 70 years ago humans invent themselves. Specifically, humans invent societies as the place to live in groups more or less supporting though not always helping one another and often struggling with one another so much in the process that they harm or even kill one another. At the same time, humans invent rules and measures of merit (values) to tell themselves what actions members of the society should perform and beliefs, desires, and feelings are correct. Involving the same sorts of conflicts, of course. When humans look back on (reflected on) this work it is often difficult for many to view this clearly. Because there is a lot happening and humans often abridge explanations of invention after the fact to make communications easier. One of the reasons anthropology was invented.

    Humans have been inventing themselves for at least 200,000 years. Late in this period humans began to record their inventions physically. Still later certain humans began to collate these stories and write them down in language. For ancient Greeks, Prometheus created humans out of earth (mud), and the goddess Athena breathed life into his creation. Here we see a common pattern repeating in ancient creation myths – the spirit is given to the body so that it will become alive. Epimetheus was the one to whom Prometheus assigned the duty of giving all living creatures of the planet different qualities/skills; however, Epimetheus had already given all the good skills and qualities to other creatures, and nothing was left for humans. Consequently, Prometheus made humans stand upright—as only the gods had done—and gave humans fire. This made Zeus angry because he was not very fond of humans, though humans are Prometheus’ favorite creation. Zeus decreed that humans must present a portion of each animal they sacrificed to the gods, but Prometheus loved humans more than Zeus so he tricked Zeus and, as a result, Zeus took fire away from humans. Prometheus then stole fire back and returned it back to humans. For that, Zeus punished both humans and Prometheus.

    The punishment that Zeus inflicted on humans was to create Pandora (with the help of the god Hephaestus), the first woman. He gave Pandora a jar as a gift and told her that she was not allowed to open it. The jar was full of misfortune, disease, and plagues, but at the bottom there was also hope. Prometheus was condemned to be tormented on the Caucasus Mountain – where he was chained to a rock with unbreakable chains. Every night an eagle would appear and eat his liver. During the day the liver was reformed, but each night the eagle would return and eat it again. Eventually, a Centaur, Chiron, and a semi-god, Heracles, would release Prometheus from his torment.

    It is clear that Greek mythology contains parallels to other ancient mythologies and religions, such as water being the beginning of all life, the on-going fighting between gods, and, most importantly, the denial of knowledge to humans by the gods.

    Jean-Jacques Rousseau’s Discourse on the Origin and the Foundation of Inequality Among Mankind, which he wrote in 1754 tells a different story about human origins. Once upon a time, the story goes, we were hunter-gatherers, living in a prolonged state of childlike innocence, in tiny bands. These bands were egalitarian; they could be for the very reason that they were so small. It was only after the ‘Agricultural Revolution’, and then still more the rise of cities, that this happy condition came to an end, ushering in ‘civilization’ and ‘the state’ – which also meant the appearance of written literature, science and philosophy, but at the same time, almost everything bad in human life: patriarchy, standing armies, mass executions and annoying bureaucrats demanding that we spend much of our lives filling in forms.
    Of course, this is a crude simplification, but it really does seem to be the foundational story that rises to the surface whenever anyone, from industrial psychologists to revolutionary theorists, says something like ‘but of course human beings spent most of their evolutionary history living in groups of ten or twenty people,’ or ‘agriculture was perhaps humanity’s worst mistake.’ Many popular writers make the argument quite explicitly. The problem is that anyone seeking an alternative to this rather depressing view of history will quickly find that the only one on offer is actually even worse: if not Rousseau, then Thomas Hobbes.

    The evidence supporting any of these three stories as genuine human society and culture is minimal at best. But since culture and society are malleable inventions each of these stories has at least partially at times been a foundation of culture and society.

    Complexity is involved in this in every way. For example, the set up of human communities is both often unpredictable and emergent. Archeology indicates that some early communities were pre-planned for such purposes as security or food access. Many others were a mixed bag. Started out planned then became catch-as-catch-can for reasons known and unknown. Others were mostly accidental. For example, walking till exhaustion and settling at that spot. Settling when lost is another way communities are settled. And many others that archeologists have not yet identified and may never do so. The governance of communities is also complex. Sometimes communities have no formal leadership structure. While others have multi-level structures. Still other have heroic leaders.

    And nothing has changed in this today. Witness the unexpected collapse of democratic governance in the US after 250 years of relative effective democratic success. Complexity is created by the way humans ‘invent themselves.’ That process is unpredictable and can always open up unexpected knowledge and ways of life. Making human society and culture exciting and experimental.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: