From[Bill Williams 17 May 2004 7:30 PM CST]
Half a year ago when the disputes on the economic thread began,
one of the passages I posted to the CSGnet was a section
from Bronislaw Malionowski's 1948 _Magic, Science and
Religion_. In the section Malinowski says,
"...any drawing of conclusions, or arguing by the
law of logical contradiction, is absolutely futile
in the realm of belief, belief savage or civilized.
Two beliefs, quite contradictory to each other on
logical grounds may coexist, while a perfectly
obvious inference from a very firm tenant may be
simplify ignored." p. 220
Economics and economic theory are topics that for some people
are associated with intense emotions. Theoretical economics
has in a materialistic culture taken on somewhat of the role that
religion once exercised. And, in the realm of theoretical economics
belief is a commodity that fuels much of what takes place. But, there
are limits to what even belief can do. And, the orthodoxy that has
been dominant in economics for two and a quarter century may
be coming close to the end of the period in which it can sustain
itself. For one thing the model of Economic Man which is a critical
part of the orthodox scheme is too simplistic to be plausible and
too inflexible to be modified. However, orthodoxy economics
expresses a conception of the economic process that has many
uses. Keynes expounded upon this feature of orthodox economic
theory saying, that Ricardo, the foremost economist of his day,
had,
"... conquered England as completely as the
Holy Inquisition conquered Spain. Not only was his
theory accepted by the city, by statesman and by the
academic world. But controversy ceased; the other point
of view completely disappeared; it ceased to be discussed.
The completeness of the Ricardian victory is something
of a curiosity and a mystery. It must have been due to a
complex of suitabilies in the doctrine to the environment
into which it was projected. That it reached conclusions
quite different from what the ordinary uninstructed person
would expect, added, I suppose, to its intellectual prestige.
That its teaching, translated into practice, was austere and
often unpalatable, lent it virtue. That it was adapted to
carry a vast and consistent logical superstructure, gave it
beauty. That it could explain much social injustice and
apparent cruelty as an inevitable incident in the scheme
of progress, and the attempt to change such things as likely
on the whole to do more harm than good, commended it to
authority. that it afforded a measure of justification to
the free activities of the individual capitalist, attracted
to it the support of the dominant social force behind
authority. p. 33.
John Maynard Keynes 1936 _The General Theory_
Still almost seven decades later the dominant theorical conception in
economics continues to be the orthodoxy that Ricardo had once been
a representative. The orthodox system has been around so long now
that many people are of the opinion that rather than a contingent
theoretical scheme, the theory _is_ economic reality itself. Most
economists are very narrowly trained, and not themselves inclined to
look outside their specialty. So, they are almost completely unaware
that Physics was for two centuries in thrall to Newtonian's system with
little or no expectation that anything new remained to be discovered.
Most economists today are of the opinion that all there is to be known
about economic behavior has been known for quite some time. There
a very few heterodox economists who for one reason or another do not
find orthodox economics and its faulty conception of human behavior
plausible. But, almost all that this heterodox contingent has been able
to do for the past century has been to criticize the orthodox position.
The one significant exception to this was provoked by the economic
crash of 1929, and the following depression that lasted well into the
boom created by military orders for World War Two. The exception,
to the dominance of orthodox economic theory was created by Keynes
as a theoretical explanation of how the crash and the great depression
were possible in a market system that was thought to be self-adjusting.
But, Keynes' work was an exception that has very few even slightly
comparable competitors on the heterodox side of academic economics.
Still the understanding of the macro-economic properties of the economic
system has provided enough guidance to government policy so that
the crashes, the panics and depressions of the pre-Keynesian era have
not been repeated-- not at least in the first world that is in control of
worldwide economic conditions through trade and banking policy.
For the most part the heterodox economists , while they have a
modest familiarity with mathematics, have little acquaintanceship
with the sciences. Not having had more than a course or two in biology,
physics or chemistry, they tend to confuse science with technology, and
then to conflate technology with the world of large corporations or the
military. These are not, some blindspots aside, unsophisticated people.
However, for the most part they are trapped by an intellectual mistake
in which they perceive orthodox economic theory which makes
extensive use of mathematics as representative of science. Viewed
from a distance this is an extremely elementary mistake. But, these
people do not have the advantage of a perspective from which they
might recognize that the sham use of mathematics by orthodox
economic theorists has nothing to do with the use of mathematics in
the genuine sciences. So, there has been a stable configuration in
economics for more than a century between an orthodoxy that has the
support of some powerful sectors of the society, and a heterodoxy that
has been unable by criticism to defeat the dominant orthodoxy, and
has been unable to generate a more plausible conception of the
economic process. One of the most important explanation for the
failure of the heterodox economists failure to generate a more
convincing conception of the economy has been the lack of an
adequate model of human behavior.
Control theory in my opinion supplies the conception that heterodox
economic theorists have needed to construct an alternative-- a
theoretical alternative to economic orthodoxy. And, there is some
evidence that control theory applications in economics can in a
sense pay its way by providing explanations of well know economic
phenomena-- that can not otherwise be satisfactorily explained.
Reports I get indicate that the control theory analysis of the Giffen
paradox is received well in classrooms. And, I hear from time to
time that other applications of control theory are being used. But,
there is also a great deal of resistance-- mainly, as I understand it,
because of a very considerable anti-science animus on the part of
people who are politically very left of center.
What has happen during the last quarter century has been that the
Keynesian system has become a sort of cloak for people who other
wise would have become Marxists. Whether or not they are still
Marxists may be open to question, but when they spell "capital" as
"kapital" I at least am rather confident as to what sort of convictions
provide direction for their efforts. That and the talk by students who
have not yet learned a bit of discretion.
Consider the effect in this context of an effort to introduce a new
conception of human behavior that is genuinely based upon
science. The conception is implemented through the use of
computers. Now combine this with a side issue that T.C. Powers
completely mistaken conceptions regarding Keynes have been
displayed on the CSGnet under the caption of "The best of the
webb." I could go on to list in detail the attack by Bill Powers and
Rick. Rick at one point claimed that none of the economists
understood the notion of a macro-economy. And, this followed
Bill Powers' dad's claim that Keynes treated the economy like a
very large family rather as a macro phenomena. Bill Powers
grumbles from time to time about supposed shady dealings that
Keynes is imagined to have pulled. It is all the most absurd
paranoid nonsense. Sometimes it has comic results-- as when
Rick attempted to copy Bill Powers' dad's Leakages thesis, and
speculated about using control theory to bring what is an
accounting identity into equation. Controlling an identity so that
it comes into equation is I would admit a very sophisticated use
of a control loop. I've never I will admit made such an innovative
use of a control loop. But, then Bill Powers inquiry that ended in
his discovery that rather than Y = C + S, in reality it was
entirely obvious that Y = C + S + I ,
And, going to Mars? Since it isn't going to cost anything, why not
take a busload? Maybe we could send all those 100 percent
natives from Honolulu, so they wouldn't need, for the time being,
to convert old refrigerators into weapons of discriminating
destruction. Maybe this would be the solution to the plot problem
that I have been having with my "Running Naked in the Forest"
fable.
And, how is the good profesor Bruun these days?
But, I really ought to keep in mind that Bill Powers might actually
pull of his test bed effort. The twist in the plot, however, would be
that to make it work he would have to discard every last bit of
his dad's leakages scheme.
Bill Williams