Chen's Manifesto

CSGnet Archive CSG2004
1

From[Peter Small 30th April 2004]

Sorry Bill. Chen's papers contain some interesting comments and
observations, but the theory is based upon a false premise. Chen
writes:

" Living systems, as non-equilibrium systems, need to extract
low entropy from the environment to compensate for continuous dissipation.
This process is the most fundamental property of life. It can be represented
mathematically by geometric Brownian motion. From the entropy law, the
thermodynamic diffusion of an organic or economic system is spontaneous. The
extraction of low entropy from the environment, however, depends on specific
biological or institutional structures that incur fixed or maintenance
costs"

The idea that you can represent the extraction of low entropy
mathematically, from geometric Brownian motion is absolute nonsense.

Brownian motion is about randomness. There is no way you can explain
a decrease in entropy through considering randomness. The "extraction
of low entropy" by living systems is based upon CHAOS and not
randomness.

Chaos is a phased space that describes all the possible states that a
dynamic system can be in. Most of the states are unstable, but within
this space there are many states that are stable (called attractors).
Evolution is about jumping between these stable states.

Evolution (extracting low entropy) is about a strategy that causes
these jumps to proceed in a direction that decreases the entropy of a
system. This is arranged by allowing a system to be easily disturbed
so that it will jump out of stable states from time to time. A
selection process (survival of the fittest) ensures that the system
is allowed to resettle only into new stable states that have lower
entropy.

Any economic theory that isn't based upon the concept of chaos and
attractors is doomed to failure. In other words, the idea of
describing the economy by means of deterministic formulae is "pie in
the sky" because it is not possible to predict the behavior of
complex dynamic systems using mathematical formulae.

Peter Small

Author of: Lingo Sorcery, Magical A-Life Avatars, The Entrepreneurial
Web, The Ultimate Game of Strategy and Web Presence
http://www.stigmergicsystems.com

···

--

2

[From Boss Man (2004.04.30)]

Peter Small 30th April 2004

I sincerely pray that both Chen and Small keep their day-time jobs. The thought of either teaching
physics boggles the mind.

3

From[Bill Williams 30 April 2004 6:50 PM CST]

From[Peter Small 30th April 2004]

Sorry Bill. Chen's papers contain some interesting comments and
observations, but the theory is based upon a false premise. Chen
writes:

" Living systems, as non-equilibrium systems, need to extract
low entropy from the environment to compensate for continuous dissipation.
This process is the most fundamental property of life. It can be

represented

mathematically by geometric Brownian motion. From the entropy law, the
thermodynamic diffusion of an organic or economic system is spontaneous.

The

extraction of low entropy from the environment, however, depends on

specific

biological or institutional structures that incur fixed or maintenance
costs"

The idea that you can represent the extraction of low entropy
mathematically, from geometric Brownian motion is absolute nonsense.

Of course it is. But, this is not as I understand it what Chen said.

Brownian motion is about randomness. There is no way you can explain
a decrease in entropy through considering randomness. The "extraction
of low entropy" by living systems is based upon CHAOS and not
randomness.

Again, of course not.

Chaos is a phased space that describes all the possible states that a
dynamic system can be in. Most of the states are unstable, but within
this space there are many states that are stable (called attractors).
Evolution is about jumping between these stable states.

This is, or may be, one way of talking about it.

Evolution (extracting low entropy) is about a strategy that causes
these jumps to proceed in a direction that decreases the entropy of a
system. This is arranged by allowing a system to be easily disturbed
so that it will jump out of stable states from time to time. A
selection process (survival of the fittest) ensures that the system
is allowed to resettle only into new stable states that have lower
entropy.

Any economic theory that isn't based upon the concept of chaos and
attractors is doomed to failure.

So you say.

In other words, the idea of

describing the economy by means of deterministic formulae is "pie in
the sky" because it is not possible to predict the behavior of
complex dynamic systems using mathematical formulae.

Supposing that economic systems conform to the Santa Fe way of thought.

By-the-Way there is a guy here from Aberdeen giving a talk to day on Gentis
and his Walrasian project.

Chen seems to me to understand some things about the economy based upon
information theory. And, Chen seemed to understand control theory quite
well. He has a Ph.D. in mathematics from the University of Michigan which
should provide him with the skills to carryout the work he is presenting.
I don't see any fundamental flaws in his work, but then I've never thought
about information theory.

If Chen's work is based upon some fundamental misunderstanding, I would
certainly like to know where and what the flaw consists of. I am confident
the defect is not the one Peter alleges.

Bill Williams

4

From[Bill Williams 30 April 2004 7:00 PM CST]

[From Boss Man (2004.04.30)]

Peter Small 30th April 2004

I sincerely pray that both Chen and Small keep their day-time jobs. The

thought of either teaching

physics boggles the mind.

Perhaps you see an obvious flaw in what Chen said. Since I don't see that
Chen actually said what Peter supposes him to have said, I am still looking
for a fundamental error in Chen's approach. There may be one, but some of
the economics that Chen does appeals to me.

If you can point out a defect, or defects I'd be in your debt.

Bill Williams

5

From[Bill Williams 30 April 2004 6:50 PM CST]

Chen seems to me to understand some things about the economy based upon
information theory. And, Chen seemed to understand control theory quite
well. He has a Ph.D. in mathematics from the University of Michigan which
should provide him with the skills to carryout the work he is presenting.
I don't see any fundamental flaws in his work, but then I've never thought
about information theory.

If Chen's work is based upon some fundamental misunderstanding, I would
certainly like to know where and what the flaw consists of. I am confident
the defect is not the one Peter alleges.

Bill Williams

Bill,

My objection to Chen's manifesto is based upon this statement of his:

" This analytical representation of
various factors in production processes enables us to directly compute and
analyze the returns of different production systems under different kinds of
environment in a simple and systematic way."

I don't think this is possible. The following paper will explain why
(you might connect with it because the author refers to some of
Keynes' work)

EPISTEMOLOGICAL IMPLICATIONS OF ECONOMIC COMPLEXITY by J. Barkley
Rosser, Jr., Professor of Economics, James Madison University,
Harrisonburg, VA 22807 USA
January, 2004
http://cob.jmu.edu/rosserjb/EPISTEMOLOGy.eco.complex.doc

It starts:

       "Over the last several decades the view that economic reality
is somehow fundamentally complex has increasingly taken hold among
economists, not only those focused on abstract theory but even
policymakers as well (Greenspan, 2004). Consequently such economists
have been forced to wrestle with the problem not only of how to
forecast, which has always been difficult, but even how to understand
the apparently most simple economic phenomena in principle as well.
More to the point, even how to think about how to understand such
phenomena has become a serious challenge. In short, economists
increasingly must grapple with fundamental problems of epistemology,
how to know what they know in a complex economic reality.

       This paper will consider three foundational aspects of this
problem. The first involves to what extent the source of the problem
is endogenous to nonlinear dynamics. The second involves to what
extent it is logical and computational. The third will consider
whether or not the epistemological problem is really an ontological
problem."

I should be interested in your comments on this paper.

Peter Small

Author of: Lingo Sorcery, Magical A-Life Avatars, The Entrepreneurial
Web, The Ultimate Game of Strategy and Web Presence
http://www.stigmergicsystems.com

···

--

6

From[Bill Williams 30 April 2004 8:50 AM CST]

Peter appears to be shifting his objection, to Chen's work. Chen's English
has its own peculiar charm, but I don't find it plausible to read what Chen
said as indicating what Peter originally thought he said.

But, on to new objections, in which Peter says,

" This analytical representation of
various factors in production processes enables us to directly compute and
analyze the returns of different production systems under different kinds

of

environment in a simple and systematic way."

I don't think this is possible.

One way to evaluate the question might be to examine Chen's work and see if
he has managed to do the impossible.

However, Peter suggests that Rosser's reading Rossers' paper (below) might
convince one of something. What I am not certain, but OK. I read the
paper. Peter says,

I should be interested in your comments on this paper.

EPISTEMOLOGICAL IMPLICATIONS OF ECONOMIC COMPLEXITY by J. Barkley
Rosser, Jr., Professor of Economics,

Well, it certainly evokes most of the prominent and current buzzwords. And,
the discussion of the behavior that seems to drive speculative bubbles and
crashes is familiar. Keynes' solution was to drain the pool of speculative
money and that would remove the source of economic instability based upon
speculation. This would also save us academics a lot of bother as a result
of attempting figure out how a game of what is in effect musical chairs
works.

Rosser does mention Mandalebroit in the paper, but doesn't cite his work in
the bibliography. I like happen to like Mandalebroit work.

Of hand, I can't see why Rosser's paper should be considered to be a
conclusive refutation of what Chen is attempting to do. I think to see if
Chen's work has any merit it might be a good idea to examine what Chen has
been doing. I have never, myself taken any interest in information theory,
and Chen has, not been interested in control theory. But, we have talked
about how information theory and control theory may have a connection in the
paradox of Maxwell's demon.

Keynes' solution to the sort of problems that Rosser considers is like
Alexander's solution to the problem presented by Gordon's knot-- rather than
attempt to untie it he hacked it apart with his sword.

Bill Williams

···

From: "Peter Small" <peter@PETERSMALL.NET>

7

[From Boss Man (2004.04.30)]

Bill Williams 30 April 2004 7:00 PM CST

Perhaps you see an obvious flaw in what Chen said. Since I don't see that
Chen actually said what Peter supposes him to have said, I am still looking
for a fundamental error in Chen's approach. There may be one, but some of
the economics that Chen does appeals to me.

If you can point out a defect, or defects I'd be in your debt.

I am not competent to judge Chen's economics. His exposition of physics, however, leaves much
to be desired. For example,

"The entropy law states that systems tend toward higher entropy states
spontaneously. Living systems, as non-equilibrium systems, need to extract
low entropy from the environment to compensate for continuous dissipation.
This process is the most fundamental property of life. It can be represented
mathematically by geometric Brownian motion. "

The first three sentences are both clear and accurate. The last sentence is unintelligible as far as I
can tell. Exactly what is 'geometric Brownian motion"? Brownian motion, as Einstein first explained
in one of his three papers in the miracle year of 1905, is the result of random molecular impacts
on small particles suspended in a fluid. How this is geometric or demonstrates the second law of
thermodynamics is at best not obvious. At worst, it is nonsense.

8

From[Bill Williams 30 April 2004 7:30 PM CST]

[From Boss Man (2004.04.30)]

Bill Williams 30 April 2004 7:00 PM CST

>If you can point out a defect, or defects I'd be in your debt.

I am not competent to judge Chen's economics. His exposition of physics,

however, leaves much

to be desired. For example,

Boss Man, indicates that Chen's statement,

It can be represented

mathematically by geometric Brownian motion. "

And, says,

How this is geometric or demonstrates the second law of

thermodynamics is at best not obvious. At worst, it is nonsense.

I don't have any doubt that Chen understands thermodynamics. His English can
however be challenging. I would think what he intended to say was that
"concentrations of neg-entropy tend to diffuse into the environment where
the end point can be represented by the random distribution of energy
represented by Brownian motion. " ( I hope I haven't introduced totally
new confusions. )

If this is the worst of Chen's problem regarding the exposition of his
position, then some of us should be able to re-work his attempts to write in
English.

While I am interested in _any_ perceived flaws, I am more concerned with the
possibility that there may be fundamental concept problems in Chen's
approach. I find the conclusions Chen reaches appealing, but I can't speak
for the soundness of the path by which he reaches these conclusions.

Bill Williams

9

[Martin Taylor 2004.05.05.0030]

From[Bill Williams 30 April 2004 6:50 PM CST]
Chen seems to me to understand some things about the economy based upon
information theory. And, Chen seemed to understand control theory quite
well. He has a Ph.D. in mathematics from the University of Michigan which
should provide him with the skills to carryout the work he is presenting.
I don't see any fundamental flaws in his work, but then I've never thought
about information theory.

You talked a bit about it when we discussed the papers by Bagno and
me from the 1950's on my Web site. At the time, I thought you thought
about it. <http://www.mmtaylor.net/Economics/index.html&gt;

I've just got back from a few days away and am catching up on a
couple of hundred e-mails, but that caught my eye. If you can, before
I get a chance to read Chen, could you give a brief synopsis of what
he saus that Bagno didn't already say, or where Chen disagrees with
Bagno or me?

Actually, from Chen's manifesto, I do see some differences, at least
with my own version. In my version, it's the information value, which
is a value to a person, as distinct from the physically determined
entropy, that matters. As an example, I discuss a person using a
block of metal to hold a window ajar. The fact that the block was
machined to micrometer precision as a test block matters when it
comes to physical entropy, but is of no interest to the person who
cares only that it allows the window to let in a small draft but not
a big gale.

By the way, other contributors to the thread have taken Chen to task
for saying that low entropy can come out of Brownian motion. As I
read the manifesto, he is saying that degradation and entropy
increase come from Brownian motion, the action of many molecules on
small particles. I see nothing in principle wrong with that.

Martin

10

From[Bill Williams 5 May 2004 1:00 AM CST]

[Martin Taylor 2004.05.05.0030]

>From[Bill Williams 30 April 2004 6:50 PM CST]
>Chen seems to me to understand some things about the economy based upon
>information theory. And, Chen seemed to understand control theory quite
>well. He has a Ph.D. in mathematics from the University of Michigan

which

>should provide him with the skills to carryout the work he is presenting.
>I don't see any fundamental flaws in his work, but then I've never

thought

>about information theory.

You talked a bit about it when we discussed the papers by Bagno and
me from the 1950's on my Web site. At the time, I thought you thought
about it. <http://www.mmtaylor.net/Economics/index.html&gt;

Yes. I did think about it. But, my background in information theory is not
to be relied upon. If I concentrate upon one issue at a time I get the
impression that I _may_ understand a bit of what is going on. However, for
me to have any confidence at all in regard to information theory I wold have
to stop what I am doing an concentrate for some time on information theory.

I've just got back from a few days away and am catching up on a
couple of hundred e-mails, but that caught my eye. If you can, before
I get a chance to read Chen, could you give a brief synopsis of what
he saus that Bagno didn't already say, or where Chen disagrees with
Bagno or me?

I think at this point my attempting to do so would create more confusion
that clarification. I found the principle conclusions that you came to--
that a mild government deficit and inflation were to be preferred-- agreed
with the conclusions I reach on other grounds confidence inspiring. However,
if I ever undestood how you reached these conclusions, that understanding
has evaporated.

Actually, from Chen's manifesto, I do see some differences, at least
with my own version. In my version, it's the information value, which
is a value to a person, as distinct from the physically determined
entropy, that matters. As an example, I discuss a person using a
block of metal to hold a window ajar. The fact that the block was
machined to micrometer precision as a test block matters when it
comes to physical entropy, but is of no interest to the person who
cares only that it allows the window to let in a small draft but not
a big gale.

By the way, other contributors to the thread have taken Chen to task
for saying that low entropy can come out of Brownian motion. As I
read the manifesto, he is saying that degradation and entropy
increase come from Brownian motion, the action of many molecules on
small particles. I see nothing in principle wrong with that.

I was confident that Chen's understanding of the entropy process was
correct, but the statement appeared to me to be too concise to be readily
intelligible. I thought he was referring to Brownian motion as the end point
of an entopic process of the diffusion of energy-- which seemed OK to me.
Chen on considering the comments, said there wasn't any conceptual
difficulty, but was appreciative of the comments, and planned to modify how
he expressed what he intended to covey.

Bill Williams

11

From[Bill Williams 5 May 2004 1:01 AM CST]

Please disregard my post under the "lattice thread"

[Martin Taylor 2004.05.05.0030]

From[Bill Williams 30 April 2004 6:50 PM CST]
Chen seems to me to understand some things about the economy based upon
information theory. And, Chen seemed to understand control theory quite
well. He has a Ph.D. in mathematics from the University of Michigan which
should provide him with the skills to carryout the work he is presenting.
I don't see any fundamental flaws in his work, but then I've never thought
about information theory.

You talked a bit about it when we discussed the papers by Bagno and
me from the 1950's on my Web site. At the time, I thought you thought
about it. <http://www.mmtaylor.net/Economics/index.html&gt;
Well, I thought about for a bit. But, for me to have any confidence in my

understanding of information theory I would have to stop what I am doing

and spend some time really studying it. What I do now is examine the

conclusions to see if they are interesting and agree with what I think that

I know based upon other sources. So, I thought your conclusion that

mild deficits and inflation was correct-- but I didn't really follow the

logic by which you reached these conclusions. In Chen's case the

examples of his work that I've studied are one in which the conclusions

he reaches seem to me to depend upon relatively simple implications

following the examination of the concept of information and economic

decision making.
I've just got back from a few days away and am catching up on a
couple of hundred e-mails, but that caught my eye. If you can, before
I get a chance to read Chen, could you give a brief synopsis of what
he says that Bagno didn't already say, or where Chen disagrees with
Bagno or me?

As far as I know Chen hasn't examined macro economic implication

of information theory-- I could be mistaken about this. And, even so

my discussion, even supposing I had the time to dive into it, might be

more likely to cause confusion that clarify the issues.

Actually, from Chen's manifesto, I do see some differences, at least
with my own version. In my version, it's the information value, which
is a value to a person, as distinct from the physically determined
entropy, that matters. As an example, I discuss a person using a
block of metal to hold a window ajar. The fact that the block was
machined to micrometer precision as a test block matters when it
comes to physical entropy, but is of no interest to the person who
cares only that it allows the window to let in a small draft but not
a big gale.

By the way, other contributors to the thread have taken Chen to task
for saying that low entropy can come out of Brownian motion. As I
read the manifesto, he is saying that degradation and entropy
increase come from Brownian motion, the action of many molecules on
small particles. I see nothing in principle wrong with that.

I didn't believe there was a conceptual mistake involve in what Chen had

said. But, the way he said it was probably overly concise.

Bill Williams