Modeling the Economy (Re: Why PCT is on the fringe despite its success)

CSGnet Archive CSG2015
1

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)
FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers' idea as well and he started doing some of the modeling. I'm afraid that approach never really captured my fancy because it left out what I (and Adam Smith -- the real one) thought is a particularly important aspect of an economy -- the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too "aggregate". I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I'm working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.
RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way -- as a closed loop rather than an open loop system.
Best
Rick

···

--
Richard S. Marken
<Mind Readings.com
Author of <https://urldefense.proofpoint.com/v2/url?u=http-3A__www.amazon.com_Doing-2DResearch-2DPurpose-2DExperimental-2DPsychology_dp_0944337554_ref-3Dsr-5F1-5F1-3Fie-3DUTF8-26qid-3D1407342866-26sr-3D8-2D1-26keywords-3Ddoing-2Bresearch-2Bon-2Bpurpose&d=AwMFaQ&c=8hUWFZcy2Z-Za5rBPlktOQ&r=-dJBNItYEMOLt6aj_KjGi2LMO_Q8QB-ZzxIZIF8DGyQ&m=CJse8qdQ_2DVeoBLZAJCgZ3Fd7ehSRk94j8DU1hgMb0&s=wPCvr3MJt-irxaZpJutNhyuV6tmWkMUAU8WUBLp2XHU&e=&gt;Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

2

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Cheers

Tim

···

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

–

3

[From Rick Marken (2015.07.17.2220)]

···

On Fri, Jul 17, 2015 at 12:21 PM, COOMB TIMOTHY tim.coomb@ntlworld.com wrote:

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Thanks Tim. I will have to go through it slowly to see if I can figure out what the model actually is. But I think it will be useful. I don’t suppose you could give a quick, simplified summary of the model?

Best

Rick

Cheers

Tim

–

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

Now available from Amazon or Barnes & Noble

www.mindreadings.com
Author of Doing Research on Purpose.

–

Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

4

Hi Rick,

Here is a PDF of Steve Keen’s Debunking Economics (Oh how I wish I’d had this when I was an economics undergraduate!)

http://www.debunkingeconomics.com/an-introduction-to-the-minsky-model/

Chapter 14 explains his monetary model of capitalism (pp 357-377) and here’s the video he’s done on using Minsky (which I haven’t downloaded & used by the way)

http://www.debunkingeconomics.com/an-introduction-to-the-minsky-model/

Also he’s another brief interview with him explaining his model.

https://www.youtube.com/watch?v=WODCdSnN7u8

Hope this is of some use

Cheers

Tim

···

On 18 July 2015 at 06:18, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.17.2220)]

On Fri, Jul 17, 2015 at 12:21 PM, COOMB TIMOTHY tim.coomb@ntlworld.com wrote:

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Thanks Tim. I will have to go through it slowly to see if I can figure out what the model actually is. But I think it will be useful. I don’t suppose you could give a quick, simplified summary of the model?

Best

Rick

Cheers

Tim

–
Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

Now available from Amazon or Barnes & Noble

www.mindreadings.com
Author of Doing Research on Purpose.

–

5

Rick,

Here is the debunking economics PDF

http://www.debunkingeconomics.com/debunking-economics-download/

Cheers

Tim

···

On 18 July 2015 at 06:18, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.17.2220)]

On Fri, Jul 17, 2015 at 12:21 PM, COOMB TIMOTHY tim.coomb@ntlworld.com wrote:

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Thanks Tim. I will have to go through it slowly to see if I can figure out what the model actually is. But I think it will be useful. I don’t suppose you could give a quick, simplified summary of the model?

Best

Rick

Cheers

Tim

–
Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

Now available from Amazon or Barnes & Noble

www.mindreadings.com
Author of Doing Research on Purpose.

–

6

Here’s a classic in economy about the individual’s valuing process as the basis of economy, lots of similarity with PCT as a person’s values are basically the same as his/her reference states…

Book available free here, the first 3 or 4 chapter explain the basic of the model → “Human action” by Ludwig Von Mises : https://mises.org/library/human-action-0

By the way, Mises’s motto was “Do not give in into evil but proceed even more boldly against it.”, again a teleological idea… :slight_smile:

Nicolas

···

On 18 July 2015 at 06:18, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.17.2220)]

On Fri, Jul 17, 2015 at 12:21 PM, COOMB TIMOTHY tim.coomb@ntlworld.com wrote:

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Thanks Tim. I will have to go through it slowly to see if I can figure out what the model actually is. But I think it will be useful. I don’t suppose you could give a quick, simplified summary of the model?

Best

Rick

Cheers

Tim

–
Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

Now available from Amazon or Barnes & Noble

www.mindreadings.com
Author of Doing Research on Purpose.

–

7

[From Rick Marken (2015.07.18.1810)]

···

On Sat, Jul 18, 2015 at 10:39 AM, Nicolas M. Kirchberger oberon.nmk@gmail.com wrote:

NK: Here’s a classic in economy about the individual’s valuing process as the basis of economy, lots of similarity with PCT as a person’s values are basically the same as his/her reference states…

NK: Book available free here, the first 3 or 4 chapter explain the basic of the model → “Human action” by Ludwig Von Mises : https://mises.org/library/human-action-0

RM: Thanks Nicolas. I skimmed through it and didn’t see anything that looked to me like a model of an economy. Maybe you could give us a quick summary of the model?

Best

Rick

By the way, Mises’s motto was “Do not give in into evil but proceed even more boldly against it.”, again a teleological idea… :slight_smile:

Nicolas

Le 2015-07-18 à 12:49, COOMB TIMOTHY (tim.coomb@ntlworld.com via csgnet Mailing List) csgnet@lists.illinois.edu a écrit :

Rick,

Here is the debunking economics PDF

http://www.debunkingeconomics.com/debunking-economics-download/

Cheers

Tim

–

On 18 July 2015 at 06:18, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.17.2220)]

On Fri, Jul 17, 2015 at 12:21 PM, COOMB TIMOTHY tim.coomb@ntlworld.com wrote:

Hi Rick,

A good starting place to look at what other economists are doing with modelling is the work of Professor Steve Keen of Kingston University in London here is the link to his Minsky model

http://www.debtdeflation.com/blogs/minsky/

Hope you find it useful

Thanks Tim. I will have to go through it slowly to see if I can figure out what the model actually is. But I think it will be useful. I don’t suppose you could give a quick, simplified summary of the model?

Best

Rick

Cheers

Tim

–
Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

On 16 July 2015 at 23:00, Richard Marken csgnet@lists.illinois.edu wrote:

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce aircraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people. So the economy is a closed loop system where people (control systems) are producing (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

Richard S. Marken

Now available from Amazon or Barnes & Noble

www.mindreadings.com
Author of Doing Research on Purpose.

–

Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

8

Yes, basically it says that individuals make decisions based on their evaluations and based their evaluations on their informations. The thing is that information is not distributed evenly across the economy (and can’t), so that different people will invariably make different evaluations and decisions given the same offer or demand. This make the accurate modeling of the economy an impossible task and only greatly approximate models can be conceived.

Here’s an article explaining the crux of the problem → https://mises.org/library/use-knowledge-society

Sincerely,

Nicolas

···

On Sat, Jul 18, 2015 at 10:39 AM, Nicolas M. Kirchberger oberon.nmk@gmail.com wrote:

NK: Here’s a classic in economy about the individual’s valuing process as the basis of economy, lots of similarity with PCT as a person’s values are basically the same as his/her reference states…

NK: Book available free here, the first 3 or 4 chapter explain the basic of the model → “Human action” by Ludwig Von Mises : https://mises.org/library/human-action-0

RM: Thanks Nicolas. I skimmed through it and didn’t see anything that looked to me like a model of an economy. Maybe you could give us a quick summary of the model?

Best

Rick

9

[From Rick Marken (2015.07.19.1230)]

···

On Sun, Jul 19, 2015 at 11:22 AM, oberon.nmk@gmail.com wrote:

NK: Yes, basically it says that individuals make decisions based on their evaluations and based their evaluations on their informations.

RM: I think we have very different ideas about what constitutes a model. And the first thing to do when developing a model is to understand what we are modeling. If von Mises has a model of the economy the first thing I would like to know is what does he think an economy is. If he thinks its a bunch of people making decisions based on information then his idea of what an economy is is completely different than mine.

Best

Rick

The thing is that information is not distributed evenly across the economy (and can’t), so that different people will invariably make different evaluations and decisions given the same offer or demand. This make the accurate modeling of the economy an impossible task and only greatly approximate models can be conceived.

Here’s an article explaining the crux of the problem → https://mises.org/library/use-knowledge-society

Sincerely,

Nicolas

–

RM: Thanks Nicolas. I skimmed through it and didn’t see anything that looked to me like a model of an economy. Maybe you could give us a quick summary of the model?

Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

10

Well, it’s not as simple as offer and demand and equilibrium, it’s not like filling a rational need in a one way way. The exchange takes place because of different evaluations from the seller and buyer, the seller values more the money than the item and the buyer values more the item than all the others items he could buy with the money instead.

The transactions are not always 100% rational so we can’t model them easily. A millionaire might buy one hundred thousand stocks of a company because he threw some I-Ching or saw an astrologer and thought it was the time to buy…

Nothing to do with the price of the stock or with reality. About risk management in complex system like this, I recommend mathematician Nassim Taleb’s book “Antifragile”, an easily readable book on models about risk and their limitations. Basically those models are all fragile as Nassim call them and exposed to very big risks in misevaluations when applied. He explains the fact that systems such as the economy have a lots of distribution which are Mandelbrotian as opposed to Gaussian and applying Gaussian reduction to the Mandelbrotian distribution leads to major errors. This make risk inevitable, but there are ways to reduce our exposure to some risks and they are explained in his book… :slight_smile:

Nicolas

···

On Sun, Jul 19, 2015 at 11:22 AM, oberon.nmk@gmail.com wrote:

NK: Yes, basically it says that individuals make decisions based on their evaluations and based their evaluations on their informations.

RM: I think we have very different ideas about what constitutes a model. And the first thing to do when developing a model is to understand what we are modeling. If von Mises has a model of the economy the first thing I would like to know is what does he think an economy is. If he thinks its a bunch of people making decisions based on information then his idea of what an economy is is completely different than mine.

Best

Rick

RM: Thanks Nicolas. I skimmed through it and didn’t see anything that looked to me like a model of an economy. Maybe you could give us a quick summary of the model?

The thing is that information is not distributed evenly across the economy (and can’t), so that different people will invariably make different evaluations and decisions given the same offer or demand. This make the accurate modeling of the economy an impossible task and only greatly approximate models can be conceived.

Here’s an article explaining the crux of the problem → https://mises.org/library/use-knowledge-society

Sincerely,

Nicolas

–

Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
Now available from Amazon or Barnes & Noble

11

[From Frank Lenk (2015.07.21.0940 CDT]

Rick – I agree with you wholeheartedly that one of the problems in standard economic theory is that it defined its agents as consumers and firms rather than people who are parts of both. For me though, it is precisely the part you identify as “hard to capture” that is the most interesting. How people, trying to control food on the table and a roof over their heads, engage semi-autonomously in highly disaggregate specialized production and still largely succeed in controlling what is necessary or desirable for living is what I would hope a PCT-based version of the economy would illuminate. (How those references for what is desirable are generated and change over time is also of key interest to me
.)

Essentially, such a model would make visible Adam Smith’s invisible hand. My hope would be that such a model could demonstrate how markets emerge from such a system of interacting control processes and so be shown not to be semi–omnicient forces outside of human control, but rather functions of humans exerting control.

My views, for what they are worth.

Frank

···

[From Rick Marken (2015.07.16.1500)]

Frank Lenk (2015.07.16.0738)

FL: Rick, I re-read your H. Economicus article. My criticism of it would be that it attempts to model the macro economy directly, and it would be much more convincing if we could model the economy as emerging from the control of perception going on by the individual agents that compose it.

RM: That was Bill Powers’ idea as well and he started doing some of the modeling. I’m afraid that approach never really captured my fancy because it left out what I (and Adam Smith – the real one) thought is a particularly important aspect of an economy – the fact that the goods and services people control for are the result of specialized production. And the specialized producing is a result of many people working together. So there are people who produce food, others who produce ai
rcraft, others who make clothing, others who provide childcare, etc. But the individuals involved in the specialized production want not only the stuff that they produce but stuff that others produce as well. So people who produce produce/service A are also controlling for some amount of product/service B, C, D, etc that are produced by others. This is hard to capture when you model the economy as a set of individual control systems.

FL: I think much of what we call economics is simply what results from people trying
to control the amount of food on the table for their families. It goes beyond that, of course, but maybe that is a better starting point for an economic model based on PCT.

RM: Yes, I think the main problem with my H. Economicus model was that it was too “aggregate”. I think a good model of the economy will lie between the individual agent approach and the totally aggregate approach. I was starting to work on such a model but I got diverted. If I can ever finish what I’m working on now I will go back to it so any discussion of economic issues that goes on now will certainly be useful.

RM: I think the most fundamental thing that should be taken into account in a theory of the economy that is not taken into account by current economic theory is the fact that consumers and producers are the same people . So the economy is a closed loop system where people (control systems) are producin
g (output) goods/services for themselves (input). I developed the H. Economicus model as a start at representing the economy this way – as a closed loop rather than an open loop system.

Best

Rick

–
Richard S. Marken

www.mindreadings.com
Author of Doing Research on Purpose.
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