Of Blind Men, Elephants and the Economy

CSGnet Archive CSG2011
41

Rick Marken [(2011.05.03.1650)]

bob hintz (2011.05.02)--

BH: Below is a brief article that I believe Rick could have written. The first
myth is documented the other 12 are asserted. I am wondering if this might
help refocus the topic on economics.

Rick Marken (2011.05.03.0830)--

RM: This article is terrific. It does describe facts about the economy
(facts that are inconsistent with the "conservative", which is
basically the conventional, view of the economy) that I have known for
some time... The problem is that, in economics, ideology trumps facts.
So it doesn't really matter what the facts say; it's what _should_ happen
that matters in economics.

Martin Lewitt (3 May 2011 1307 MDT)--

ML: Sorry, even the first myth isn't "documented"...

RM: QED

Best

Rick

···

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

42

bob hintz 2011.05.05

Where would we account for “imagined value”? I pay $X for a house or a stock or whatever at T-1. At T someone pays $X+Y for a similar house in my neighborhood, or the same stock from someone else. I now think that my house or stock is worth $X+Y. At T+1 someone buys a house similar to mine in my neighborhood or the stock for $X-Y. My house and stock are still valued at what I paid for them, but I feel like I have lost money (value). I lived in my house the whole time so my “use” value never changed, but my house as an investment is a big disappointment at T+1. Stock has no “use” value for the buyer (my impression, but I could be wrong).

I remember reading about people complaining (I did too in regard to 401k) about where did all the money go in the great recession and finding out that it was never there is first place. They did not describe it as “imaginary” but could have.

Is the value of stock included in GNP or GNI or whatever measure might used for “aggregate production” or “aggregate consumption”. Where does inventory fit into the model proposed at the beginning of this thread.

bob

···

On Wed, May 4, 2011 at 7:49 AM, Richard Marken rsmarken@gmail.com wrote:

Rick Marken [(2011.05.03.1650)]

bob hintz (2011.05.02)–

BH: Below is a brief article that I believe Rick could have written. The first
myth is documented the other 12 are asserted. I am wondering if this might

help refocus the topic on economics.

Rick Marken (2011.05.03.0830)–

RM: This article is terrific. It does describe facts about the economy
(facts that are inconsistent with the “conservative”, which is

basically the conventional, view of the economy) that I have known for

some time… The problem is that, in economics, ideology trumps facts.
So it doesn’t really matter what the facts say; it’s what should happen

that matters in economics.

Martin Lewitt (3 May 2011 1307 MDT)–

ML: Sorry, even the first myth isn’t “documented”…

RM: QED

Best

Rick

–

Richard S. Marken PhD

rsmarken@gmail.com

www.mindreadings.com

43

[From Rick Marken (2011.05.08.0800)]

bob hintz 2011.05.05
Where would we account for "imagined value"?

I'm on vacation. I'll try to get back to you on this is a couple days.

Best

Rick

I pay $X for a house or a

···

stock or whatever at T-1. �At T someone pays $X+Y for a similar house in my
neighborhood, or the same stock from someone else. �I now think that my
house or stock is worth $X+Y. �At T+1 someone buys a house similar to mine
in my neighborhood or the stock for $X-Y. �My house and stock are still
valued at what I paid for them, but I feel like I have lost money (value).
�I lived in my house the whole time so my "use" value never changed, but my
house as an investment is a big disappointment at T+1. �Stock has no "use"
value for the buyer (my impression, but I could be wrong).
I remember reading about people complaining (I did too in regard to 401k)
about where did all the money go in the great recession and finding out that
it was never there is first place. �They did not describe it as "imaginary"
but could have.
Is the value of stock included in GNP or GNI or whatever measure might used
for "aggregate production" or "aggregate consumption". � Where does
inventory fit into the model proposed at the beginning of this thread.
bob

On Wed, May 4, 2011 at 7:49 AM, Richard Marken <rsmarken@gmail.com> wrote:

Rick Marken [(2011.05.03.1650)]

�bob hintz (2011.05.02)--
>
> BH: Below is a brief article that I believe Rick could have written.
> �The first
> myth is documented the other 12 are asserted. �I am wondering if this
> might
> help refocus the topic on economics.

Rick Marken (2011.05.03.0830)--

> RM: This article is terrific. It does describe facts about the economy
> (facts that are inconsistent with the "conservative", which is
> basically the conventional, view of the economy) that I have known for
> some time... �The problem is that, in economics, ideology trumps facts.
> So it doesn't really matter what the facts say; it's what _should_
> happen
> that matters in economics.

Martin Lewitt (3 May 2011 1307 MDT)--

>ML: Sorry, even the first myth isn't "documented"...

RM: QED

Best

Rick
--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

44

[From Bill Powers (2011.05.08.0915 MDT)]

Rick Marken (2011.05.08.0800)

RM: The problem is that, in economics, ideology trumps facts.
So it doesn't really matter what the facts say; it's what _should_
happen that matters in economics.

BP: I think this is the central problem in economics (and many other areas of data-free theorizing). It's the difference between belief-based reasoning and knowledge-based reasoning -- between faith and science.

Science is always at a disadvantage in clashes between these two approaches to understanding. The scientist often has to say "I don't know" where data or reasoning are incomplete or absent; the believer needs only to assert whatever facts are needed to support the belief -- they don't have to be real facts. So the believer can present a facade of competence and confidence as if there can be no doubt whatsover, convincing naive listeners simply by force of sincerity, charisma, threat of humiliation, or verbal skill.

In the long run, science always wins. But the length of the run can be a lifetime, and the opposition can lengthen it even more. This may be simply a result of keeping the argument at too low a level. We should not question anyone's beliefs; beliefs are defended, and criticism or attack only makes the defense more rigid. It's perfectly obvious why a person might defend faith against science: science doesn't care what we wish were true; it insists on acceptance of what we can demonstrate is true (to the degree possible) whether we like it or not. But wishes are reference signals and they have immense power. To deny a wish is to disturb something at a level higher than a mere statement of theory. That's what arouses the opposition.

Theories are a dime a dozen. It's the reasons for accepting them that are important. This is where I think we should focus. Whether we're talking about economics or psychology, the effective challenge to a statement of belief is not "That's not true," it's " How do you know that?" After all, any particular belief might turn out to be true, and the traditions of science require that we accept statements for which the evidence against is far weaker than the evidence for them. If there can be found convincing evidence or unassailable logic behind a belief, it can be accepted as scientific knowledge, too. Some have faith that the earth is round; that doesn't mean they are wrong, it just means they have accepted this statement of fact without being able to defend it.

Even scientists accept facts on faith without scientific knowledge. They can't test every theory in every branch of knowledge. They have to base their acceptance on the track record of those who have found the consistent reasoning or factual basis for a theory. When one scientist asks another one, "How do you know that?", it is not necessarily in the mode of a challenge; it is likely to be a simple request for information. Each scientist wants to understand how a conclusion was reached before agreeing with the conclusion; that's the only way to accumulate real understanding. The question is a challenge only when the other party can't answer it.

So I suggest that questions of economic theory be addressed not by offering opposing ideas but simply by trying to understand how the proponent of that theory knows the assertions behind the theory are true. If the first tier of facts rests on another layer of facts, the question can be asked again: "How do you know that?" At some point it will become clear whether there is any coherent reason to accept a fact other than the need for it to be true in order to maintain a belief.

Whatever the answer, we will have learned something useful. And of course, we should be prepared to hear that question being addressed to us, too.

Best,

Bill P.

···

>>
>> Martin Lewitt (3 May 2011 1307 MDT)--
>>
>> >ML: Sorry, even the first myth isn't "documented"...
>>
>> RM: QED
>>
>> Best
>>
>> Rick
>> --
>> Richard S. Marken PhD
>> rsmarken@gmail.com
>> www.mindreadings.com
>

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

45

[From Rick Marken (2011.05.10.1220)]

bob hintz (2011.05.05)--

Where would we account for "imagined value"?

I'm interested in developing a macroeconomic model of the economy. I
don't see how "imagined value" would be an important consideration in
such a model.

Is the value of stock included in GNP or GNI or whatever measure might used
for "aggregate production" or "aggregate consumption".

I don't think so.

Where does
inventory fit into the model proposed at the beginning of this thread.

Inventory is the difference, at any instant, between aggregate
production and consumption

Best

Rick

···

bob

On Wed, May 4, 2011 at 7:49 AM, Richard Marken <rsmarken@gmail.com> wrote:

Rick Marken [(2011.05.03.1650)]

�bob hintz (2011.05.02)--
>
> BH: Below is a brief article that I believe Rick could have written.
> �The first
> myth is documented the other 12 are asserted. �I am wondering if this
> might
> help refocus the topic on economics.

Rick Marken (2011.05.03.0830)--

> RM: This article is terrific. It does describe facts about the economy
> (facts that are inconsistent with the "conservative", which is
> basically the conventional, view of the economy) that I have known for
> some time... �The problem is that, in economics, ideology trumps facts.
> So it doesn't really matter what the facts say; it's what _should_
> happen
> that matters in economics.

Martin Lewitt (3 May 2011 1307 MDT)--

>ML: Sorry, even the first myth isn't "documented"...

RM: QED

Best

Rick
--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

--
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

46

[From Rick Marken (2011.04.24.2130)]
[…]

This way of looking at an economy suggests a new way of looking at

Adam Smith’s invisible hand that guides the market: the invisible hand

is the control system surrounding the market (in the diagram). The

control system instantiates the two main components of this invisible

hand: self-interest and supply and demand. The aggregate controller

is interested only in producing goods and services for itself. It does

this by producing goods and services (supply) to match its reference

for consumption (demand) of these goods and services. The market is

“driven” by the supply and demand that is the output and input

(respectively) of the aggregate control system.

So what do you think? Possible start for a model economy or way too general?

AM: I was thinking along similar lines - I’d start with an individual producer/consumer,

and just put a bunch of them to interact and see what happens. The invisible hand would

be the interactions of control systems.

I’d start with something basic. Producing two or three kinds of food and trading.

Perhaps a two level system would be adequate -

top level one would control the amount of calories. There would be a loop controling

the amount of meat (input), by investing labor (output) in meat-production,

a loop controling the amount of vegetables the same way, and two loops controling the

amount of money (input), one by buying or selling (output) meat, the other by buying or

selling vegetables.

Buying could be implemented by always choosing the lowest const product on the market

and selling by offering to sell at some “average” or random price, and lowering it every time

someone does not buy because that means there is a lower price somewhere else.

Not quite sure about the buying and selling part. There are probably better ways to do it.

Everyone would by doing equal amount of labor to produce vegetables and meat, having

equal amount of money and not selling or buying, just trying to produce as much calories

as possible. In order to start reorganisation, the amount of calories produced in this way

would not be addequate. The calorie controler would change reference levels for the

amount of meat and vegetables sold/bought or produced.

Perhaps loop gains for production could be ranomised, simulating different “skill” of

producing.

My hypothesis is that this would lead to a division of labor and that everyone would

have enough calories to consume.

So, that’s the basic idea. I haven’t started programming it, I have to study LCSIII programs

for examples of multy level control and, well, who knows what else I’ll need to study.

Any good so far?

Best

Adam

···

On Mon, Apr 25, 2011 at 6:31 AM, Richard Marken rsmarken@gmail.com wrote:

47

[Martin Lewitt 12 May 2011 2242 MDT]

It seems you are missing enough surplus in production to enable some

controllers to defer some consumption in order to purchase capital
equipment and increase the productivity of labor. There should be a
diversity of controlled variables among the producer/consumers.
Some of those variables should be in the willingness to defer
consumption in order to control some other variables. In order to
be realistic, these controlled variables should be typical of those
controlled by humans. Why is starvation needed to cause
reorganization? Big corporations are rather infamous for going
through reorgs every year, while starving countries stagnate. If
you need starvation to motivate reorganization, you
producer/consumers are too similar. Remember, no two people were
ever created equal. Human diversity in controlled variables should
naturally result in reorganization.

regards,

     Martin L
···

On 5/12/2011 11:42 AM, Adam Matić wrote:

    On Mon, Apr 25, 2011 at 6:31 AM, Richard > Marken <rsmarken@gmail.com> >         wrote:

[From Rick Marken (2011.04.24.2130)]
[…]

      This way of looking at an economy suggests

a new way of looking at

      Adam Smith's invisible hand that guides the market: the

invisible hand

      is the control system surrounding the market (in the diagram).

The

      control system instantiates the two main components of this

invisible

      hand: self-interest and supply and demand.  The aggregate

controller

      is interested only in producing goods and services for itself.

It does

      this by producing goods and services (supply) to match its

reference

      for consumption (demand) of these goods and services. The

market is

      "driven" by the supply and demand that is the output and input

      (respectively) of the aggregate control system.



      So what do you think? Possible start for a model economy or

way too general?

      AM: I  was thinking along similar lines - I'd start with an

individual producer/consumer,

      and just put a bunch of them to interact and see what happens.

The invisible hand would

be the interactions of control systems.

      I'd start with something basic. Producing two or three

kinds of food and trading.

Perhaps a two level system would be adequate -

      top level one would control the amount of calories. There

would be a loop controling

      the amount of meat (input), by investing labor (output) in

meat-production,

      a loop controling the amount of vegetables the same way,

and two loops controling the

      amount of money (input), one by buying or selling (output)

meat, the other by buying or

selling vegetables.

      Buying could be implemented by always choosing the lowest

const product on the market

      and selling by offering to sell at some "average" or random

price, and lowering it every time

      someone does not buy because that means there is a lower

price somewhere else.

      Not quite sure about the buying and selling part. There are

probably better ways to do it.

      Everyone would by doing equal amount of labor to produce

vegetables and meat, having

      equal amount of money and not selling or buying, just

trying to produce as much calories

      as possible. In order to start reorganisation, the amount

of calories produced in this way

      would not be addequate. The calorie controler would change

reference levels for the

amount of meat and vegetables sold/bought or produced.

      Perhaps loop gains for production could be ranomised,

simulating different “skill” of

producing.

      My hypothesis is that this would lead to a division of

labor and that everyone would

have enough calories to consume.

      So, that's the basic idea. I haven't started programming

it, I have to study LCSIII programs

      for examples of multy level control and, well, who knows

what else I’ll need to study.

Any good so far?

Best

Adam

48

[Martin Lewitt 12 May 2011 2242
MDT]

It seems you are missing enough surplus in production to enable some
controllers to defer some consumption in order to purchase capital
equipment and increase the productivity of labor. There should be a
diversity of controlled variables among the producer/consumers.
Some of those variables should be in the willingness to defer consumption
in order to control some other variables. In order to be
realistic, these controlled variables should be typical of those
controlled by humans. Why is starvation needed to cause
reorganization? Big corporations are rather infamous for going
through reorgs every year, while starving countries stagnate. If
you need starvation to motivate reorganization, you producer/consumers
are too similar. Remember, no two people were ever created
equal. Human diversity in controlled variables should naturally
result in reorganization.

Sounds like a good proposal. Let us see your model doing those
things.

Starvation is not necessary to cause reorganization except the first
time. After that there are systematic ways of solving the problems,
created through the initial reorganizations. Unfortunately, there is no
guarantee that the first solution will be the best one.

Best,

Bill P.

···

At 10:55 PM 5/12/2011 -0600, you wrote:

regards,

 Martin L

On 5/12/2011 11:42 AM, Adam Mati wrote:

On Mon, Apr 25, 2011 at 6:31 AM, > > Richard Marken > > rsmarken@gmail.com > > wrote:
[From Rick Marken (2011.04.24.2130)]

[…]
This way of looking at an economy suggests a new way of looking
at
Adam Smith’s invisible hand that guides the market: the invisible
hand
is the control system surrounding the market (in the diagram).
The
control system instantiates the two main components of this
invisible
hand: self-interest and supply and demand. The aggregate
controller
is interested only in producing goods and services for itself. It
does
this by producing goods and services (supply) to match its
reference
for consumption (demand) of these goods and services. The market
is
“driven” by the supply and demand that is the output and
input
(respectively) of the aggregate control system.

So what do you think? Possible start for a model economy or way too
general?

AM: I was thinking along similar lines - I’d start with an
individual producer/consumer,

and just put a bunch of them to interact and see what happens. The
invisible hand would

be the interactions of control systems.

I’d start with something basic. Producing two or three kinds of food and
trading.

Perhaps a two level system would be adequate -

top level one would control the amount of calories. There would be a loop
controling

the amount of meat (input), by investing labor (output) in
meat-production,

a loop controling the amount of vegetables the same way, and two loops
controling the

amount of money (input), one by buying or selling (output) meat, the
other by buying or

selling vegetables.

Buying could be implemented by always choosing the lowest const product
on the market

and selling by offering to sell at some “average” or random
price, and lowering it every time

someone does not buy because that means there is a lower price somewhere
else.

Not quite sure about the buying and selling part. There are probably
better ways to do it.

Everyone would by doing equal amount of labor to produce vegetables and
meat, having

equal amount of money and not selling or buying, just trying to produce
as much calories

as possible. In order to start reorganisation, the amount of calories
produced in this way

would not be addequate. The calorie controler would change reference
levels for the

amount of meat and vegetables sold/bought or produced.

Perhaps loop gains for production could be ranomised, simulating
different “skill” of

producing.

My hypothesis is that this would lead to a division of labor and that
everyone would

have enough calories to consume.

So, that’s the basic idea. I haven’t started programming it, I have to
study LCSIII programs

for examples of multy level control and, well, who knows what else I’ll
need to study.

Any good so far?

Best

Adam

49

[Martin Lewitt 12 May 2011 2242 MDT]

It seems you are missing enough surplus in production to enable some

controllers to defer some consumption in order to purchase capital
equipment and increase the productivity of labor.

AM:

Thanks for the comment.

The increase in productivity can come simply from the division of labor. It’s more productive to just do what you do best and trade the surplus for everything else than to make all you need yourself. To further increase productivity, capital goods should be somehow put into the equation, you’re right, but I guess I should just start with the basics.

ML: There should be a

diversity of controlled variables among the producer/consumers.
Some of those variables should be in the willingness to defer
consumption in order to control some other variables. In order to
be realistic, these controlled variables should be typical of those
controlled by humans. Why is starvation needed to cause reorganization? Big corporations are rather infamous for going through reorgs every year, while starving countries stagnate. If you need starvation to motivate reorganization, you producer/consumers are too similar. Remember, no two people were ever created equal. Human diversity in controlled variables should naturally result in reorganization.

AM:

In order to simulate differences, ‘agents’ will have different skills (and I still need to figure out how exactly that will be implemented). Reorganisation is triggered by not having enough food - if there is enough, then there is no need to change what they’re doing. If there isn’t, change while the change leads to more. So, by reorganising the effort involved in producing something or trading (or reorganising the amount of time invested), an agent can stumble upon a solution that gives him the highest amount of returned value, ie. calories. Variety in “the things people do” will come from random trying out things and seeing which ones return the investment, and that depends, at least in part, on their skills.

Anyway, I’ll be having fun with this, trying out and testing.

Best,

Adam

···

On Fri, May 13, 2011 at 6:55 AM, Martin Lewitt mlewitt@comcast.net wrote:

50

[Martin Lewitt 18 May 2011 16:16]

        [Martin Lewitt 12 May

2011 2242 MDT]

        It seems you are missing enough surplus in production to

enable some controllers to defer some consumption in order
to purchase capital equipment and increase the productivity
of labor.

AM:

Thanks for the comment.

      The increase in productivity can come simply from the

division of labor. It’s more productive to just do what you do
best and trade the surplus for everything else than to make
all you need yourself. To further increase productivity,
capital goods should be somehow put into the equation, you’re
right, but I guess I should just start with the basics.

        ML: There should be a

diversity of controlled variables among the
producer/consumers. Some of those variables should be in
the willingness to defer consumption in order to control
some other variables. In order to be realistic, these
controlled variables should be typical of those controlled
by humans. Why is starvation needed to cause
reorganization? Big corporations are rather infamous for
going through reorgs every year, while starving countries
stagnate. If you need starvation to motivate
reorganization, you producer/consumers are too similar.
Remember, no two people were ever created equal. Human
diversity in controlled variables should naturally result in
reorganization.

AM:

      In order to simulate differences, 'agents' will have

different skills (and I still need to figure out how exactly
that will be implemented). Reorganisation is triggered by not
having enough food - if there is enough, then there is no need
to change what they’re doing. If there isn’t, change while the
change leads to more.

That doesn't seem very human of these agents.  If humans hadn't

strived for more then we’d all still be stuck having sex parties
like the bonobos. Starvation among humans is almost always due to
war or some climatic event than mere scarcity. Perhaps a way to
represent this striving is to have reorganizing be a controlled
variable. Humans are always checking for the need, opportunity or
excuse to reorganize.

Martin L
···

On 5/18/2011 3:10 PM, Adam Matić wrote:

    On Fri, May 13, 2011 at 6:55 AM, Martin > Lewitt <mlewitt@comcast.net> >         wrote:

      So, by reorganising the effort involved in producing

something or trading (or reorganising the amount of time
invested), an agent can stumble upon a solution that gives him
the highest amount of returned value, ie. calories. Variety in
“the things people do” will come from random trying out things
and seeing which ones return the investment, and that depends,
at least in part, on their skills.

      Anyway, I'll be having fun with this, trying out and

testing.

Best,

Adam

51

(Gavin Ritz 2011.05.19.11.30NZT)
That doesn’t seem very human of these agents. If humans hadn’t strived
for more then we’d all still be stuck having sex parties like the
bonobos.

Starvation among humans
is almost always due to war or some climatic event than mere scarcity.
Perhaps a way to represent this striving is to have reorganizing be a
controlled variable.

Hence my question about mapping multiple units,
how would these maps look? What are the rules between multiple disturbances and
controlled variables and output units?

This is a critical question and once the
maps have been agreed on then the mathematics will flow from that. MCT allows
us to go from any mathematical discipline freely from e.g. topology to algebra.

The economy flows from this mapping.

Regards

Gavin

Humans are always
checking for the need, opportunity or excuse to reorganize.

52

[From Adam Matic 2011.5.19 9.30 GMT+1]

MODERATOR:

  1. Are you picturing a society without organized businesses already in existence? It sounds as if you’re starting with every individual working for himself, being a producer as well as a consumer, with no places of manufacture or service except what each individual owns. This doesn’t sound like what Martin L is talking about. Can you be more explicit?

AM:

Yes, I’m picturing a society where at first everyone produce all they need and then consume it. Similar to a hunter-gatherer society where some are more skilled in hunting, and some in gathering; or a village where some people are more skilled in growing plants, and others in growing animals. At first they all grow both plants and animals and consume all they produce. Then, some start producing more of one and less of the other and trading a part from what they produce.

Perhaps money is not yet needed in the picture, but simple barter would do the job.

···

On Thu, May 19, 2011 at 12:28 AM, Martin Lewitt mlewitt@comcast.net wrote:

That doesn't seem very human of these agents.  If humans hadn't

strived for more then we’d all still be stuck having sex parties
like the bonobos. Starvation among humans is almost always due to
war or some climatic event than mere scarcity. Perhaps a way to
represent this striving is to have reorganizing be a controlled
variable. Humans are always checking for the need, opportunity or
excuse to reorganize.

Martin L

AM:

I agree that reorganisation can come before starvation happens. Initial conditions don’t have to include starvation as in “almost dead”, but a condition of producing “enough to survive, not enough to satisfy hunger”. Then reorganisation starts right away. There is always striving for more food (because there is a shortage of it, the reference value for ‘hunger’ is set high), so there is always reorganisation.

Best

Adam

53

[From Bill Powers (2011.05.19.0835 MDT)]

ANSWER: from Adam Matic 2011.5.19 9.30 GMT+1]

AM:

Yes, I’m picturing a society where at first everyone produce all they
need and then consume it.

MODERATOR:

How would you verify that a working model of that kind of society is
behaving correctly – that is, in the same way the real society of that
kind would behave?

bill

54

[From Adam Matic]

[Bill Powers (2011.05.19.0835 MDT)]

MODERATOR:

How would you verify that a working model of that kind of society is
behaving correctly – that is, in the same way the real society of that
kind would behave?

AM:

Basically, if the division of labor between human-like agents happens, that means the model of the society fits the general facts.

First, I’d have to make sure that a single agent behaves reasonably similar to a human being. His main purpose is to create enough food for himself. If there isn’t enough food, he’ll change what he’s doing. That seems like a reasonable assumption to me.

Since the means are restricted to producing two kinds of food and trading, the model would have to behave in a way that maximizes the amount of food by investing different amounts of time into each of three activities. That is another assumption that seems reasonable to me.

Next, I’d have to make sure that production, consumption and trading happen like in the real word. I can see that the basic sketch of the model I made will probably not do the job. I would need something that does time allocation and a mechanism for trading, and, as I see it, that means finding the most reasonable assumptions.

Best

Adam

55

bob hintz 2011.05.19

When we are thinking about trade, it is important to notice that both agents must have more of something than he needs and that the surplus items of one must be different from the surplus items of the other so that one’s own surplus has less value to its owner than the other’s surplus and vise versa.

bob

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On Thu, May 19, 2011 at 1:32 PM, Adam Matić adam.matic@gmail.com wrote:

[From Adam Matic]

[Bill Powers (2011.05.19.0835 MDT)]

MODERATOR:

How would you verify that a working model of that kind of society is
behaving correctly – that is, in the same way the real society of that
kind would behave?

AM:

Basically, if the division of labor between human-like agents happens, that means the model of the society fits the general facts.

First, I’d have to make sure that a single agent behaves reasonably similar to a human being. His main purpose is to create enough food for himself. If there isn’t enough food, he’ll change what he’s doing. That seems like a reasonable assumption to me.

Since the means are restricted to producing two kinds of food and trading, the model would have to behave in a way that maximizes the amount of food by investing different amounts of time into each of three activities. That is another assumption that seems reasonable to me.

Next, I’d have to make sure that production, consumption and trading happen like in the real word. I can see that the basic sketch of the model I made will probably not do the job. I would need something that does time allocation and a mechanism for trading, and, as I see it, that means finding the most reasonable assumptions.

Best

Adam