From [Marc Abrams (2006.08.14.1608)]
[From Bill Powers (2006.08.14.0830 KMDT)]
Marc Abrams (2006.08.14.0637)–
But it seems that this is a one
way street here. That is, both Bill and Rick want, and expect economists
to >>read and understand B:CP but both seem to be unwilling to familiarize
themselves with just some of the >>most basic tenants of the
discipline.
Here is a basic tenet from the cited wiki page:
Austrian economists reject
observation as a tool applicable to economics, saying that while it is
appropriate in the natural sciences where factors can be isolated in
laboratory conditions, acting human beings are too complex for this
treatment. Instead one should >isolate the logical processes of human
action - a discipline named “praxeology” by Alfred Espinas.
Ludwig von Mises is commonly >miscredited as coining the term
‘praxeology.’ >This is very Greek, of course. Arisotle declared that men have more
teeth than women, and apparently he >never actually counted them because
the ancient Greeks considered experimentation and observation to be >inferior way of arriving at Truth.
Yes.
I have done some studying of economic texts, of a modest sort (more than
economists have studied PCT >texts, for sure). I remain unconvinced that
the secrets of human interactions in the economic mode have >been
successfully described or understood by anybody – Marx, Keynes, Mises,
Samuelson, or anyone else >who claims the title of economist.
I agree with you.
There seems
to be a great deal of self-interest in economic theory; that is, theories
are proposed that seem >designed specifically to justify whatever status
quo the author already supports, or to demolish what the >author already
rejects.
I don’t agree with this. I think any theory by its very nature must contain the biases of the individual who formulated it. After all a theory is nothing more than an idea or set of ideas about the nature of something. We can only theorize about we believe we know.
Much of your initial work with PCT was done introspectively. Could it have been done any other way? I don’t think so.
The spirit of exploration and discovery is hard to find.
Again, can you really apply such a broad brush to an entire discipline? I’m sure you have your reasons but I can’t see any reason to believe this. Not from my work in the field.
I think economics suffers from the same fate the other social sciences do and that is a desire to replicate the success of physics and the scientific model.
I
remember a letter from Galbraith to my father in which he admitted that
while TCP may have made a few >good points, Galbraith simply loved the
capitalistic system and was not about to give it up because of what >any
theory or data said.
If you are referring to John Kenneth Galbraith than I’m afraid you are badly mistaken. Galbraith was no capitalist. His book The Affluent Society was very much a Marxian dialectic. Although a major influence in the Kennedy administration he was no friend of capitalism. You might want to see a critique of his book; http://www.mises.org/web/2793
His conclusions, in other words, had already been
selected, so even if TCP was right about something, >Galbraith was not
about to change his mind. I’m sure others felt the same way but he’s the
only one whosaid> it.
I don’t know who said what but it really does not matter. You have been walking around with bad data for a very long time
One common thread I have found is what economists consider to be the
community whose interests guide >economic processes. In the paragraph
following the one cited above, we find:
Austrians view
entrepreneurship as the driving force in economic development, see
private property as essential to the efficient use of resources, and
often see government interference in market processes as
counterproductive.You are a bit mistaken here and your interpretation is faulty. The Austrians believe the consumers guide the economic processes. It is the entrepreneurs who take the risk and bring the goods to market. It is the consumers who ultimately determine by their buying patterns and habits which products actually survive., and it is competition that keeps everyone honest.
This is exactly the point of view one would expect an
entrepreneur – but not a consumer – to defend.
And what data do you have to back up this claim?
Judging from what
entrepreneurs complain about, the entrepreneur does not want to be
hampered by any >precepts of honesty, fairness, compassion, or integrity:
he just wants to be left alone to do what he thinks >will work to make
more money.
Maybe, but whether or not he makes any money is up to the consumer. not him. If he is dishonest he will be found out soon enough and if he does not provide what people want he will not make any money because people will not buy his goods.
What about a politician who makes campaign promises and than goes back on them? Why do you feel any person is more likely to be honest in their dealings with anyone else? If I cheat you, you will not do business with me again. Its called incentives Bill and there is a great deal more incentive for a politician to lie to you than there is for a business man to try and cheat you.
This is called letting “market forces” determine
the outcome.
Nonsense. The “market forces” are simply the consumer choices and yes, market forces will always determine the “winners” and “losers” in the marketplace. EWven in a planned economic system.
Of course from the standpoint of the entrepreneur that is
only reasonable, but from the standpoint of the >consumer who bought a
driveway installation last week only to find that it is crumbling away
this week, this >lack of accountability is far from desirable
And if that entrepreneur is honest and does not make good on that driveway how many people are you going to recommend to him for future work? And if he committed fraud he stands a chance of being imprisoned. It is not in the best interest of an honest business man to rip you off.
Unfortunately you seem to confuse crooks with legit business people. There are crooked doctors, lawyers, scientists, nurses, politicians and they exist in every profession. Why focus on the entrepreneur?
What kind of accountability does a government bureaucrat have to you. Have you ever gone to a SS admin office? How about your state motor vehicle office?
I much prefer dealing with folks who want me as a customer and treat me that way.
– it
negates the very reason for having an economic system, from the
consumer’s point of view.
Economic systems exist if more than one person does. Economics is about describing what is not prescribing what should be
It is the consumers who bring about the
regulations that entrepreneurs try to escape from, and consumers >call for
regulations because all too often entrepreneurs come across as
sociopaths.
This makes little sense. As an entrepreneur I cannot exist by ripping people off. The accountability is extremely high. Why do you feel any politician is any better than any other person? If I’m a crook, I will be a crooked doctor, lawyer, or politician. why limit it to the business man.
It is unfortunate that people do not understand the true cost of regulation and how it reduces their standard of living and provides politicians with a great deal of power. Very rarely does regulations help the consumer. The intent is to do so but the actual results are often monopolization with higher prices, less selection, and a lower quality of goods.
From the standpoint of PCT, the only basic driving force in any economy
is the set of all reference conditions >that people seek. Mises admits
that some of these reference conditions may pertain to survival, or to
the >manner in which one survives. In fact he sounds very PCTish in
places:
When applied to the means chosen
for the attainment of ends, the terms rational and irrational imply
a judgment about the expediency and adequacy of the procedure employed.
The critic approves or
disapproves of the method from the point of view of whether or not it is
best suited to attain the end
in question. It is a fact that human reason is not infallible and that
man very often errs in selecting and
applying means. An action unsuited to the end sought falls short of
expectation. It is contrary to
purpose, but it is rational, i.e., the outcome of a reasonable–although
faulty–deliberation and an
attempt–although an ineffectual attempt–to attain a definite goal. The
doctors who a hundred years
ago employed certain methods for the treatment of cancer which our
contemporary doctors reject
were–from the point of view of present-day pathology–badly instructed
and therefore inefficient.
But they did not act irrationally; they did their best. It is probable
that in a hundred years more
doctors will have more efficient methods at hand for the treatment of
this disease. They will be more
efficient but not more rational than our physicians.>For Mises, “rationality” is a catchword for all
higher mental processes, what we in PCT would call higher-level
perceptions with their associated control systems. But the emphasis is on
logic, not principles or system >concepts.
Rationality is a hollow concept, and it is a meaningless concept. We are controllers, we are neither rational or irrational, we control.
What is a “principle”? What is “logic”? What is a “system” ? How is a "principal "control system different from a “program” control system? And how are these different from a “system” control process?
How can one identify one or the other and by what means do you measure each?
By “higher” level you both mean cognitive elements and neither one of you delves into them. Mises believes the province of why we do what we do is the province of psychology and not economics. The passage you quoted above is from his book Human Action and is the axiomatic basis of his theory in economics. Indeed you were correct in seeing the convergence between Austrian economics and PCT. But as you also noted he did not quite get the full picture.
If there are economists who
employ different principles or support different system concepts, to
Mises they >are simply irrational, because they fail to use the logical
processes he uses. This self-centered view negates >a lot of what is
PCTish in Mises’ writings, by eliminating perceptions higher than those
of logic.
You are mistaken. Mises does not get into any cognition. That humans act is self-evident, That they act purposefully is accounted for by their desire to correct for error. He does not venture beyond this.
It may be that installing a driveway using cheap materials and
then moving on to the next city or state is a >rational means of
maximizing return on investment, but that is only under a certain set of
principles (If you >get away with it, it must be OK) or system concepts
(nature red in tooth and claw). Mises does not discuss >these principles
or system concepts; he simply acts out the ones that happen to determine
the premises he >uses in his own view of what is logical.
I’m not sure how you came to this story from that passage above but since your premise was incorrect your deductions from that premise are also false
If Mises had been acquainted with HPCT, he would realize that what is a
purpose at one level is a means at >the next level up.
Mises was not concerned with the cognitive components. He felt that this was in the realm of psychology and not economics, so Mises would not have been interested in the higher levels.
It seems so far that a large portion of Mises you do not fully understand and the negation you spoke off had to do with incorrect assumptions on your part so maybe a great deal of Mises thought should not be negated.
A particular set of
premises might determine the course of logical reasoning, but why choose
that set of >premises instead of another?
Again Mises was not interested nor did he attempt to answer this question. It is a question I hope to address.
The answer lies in the
principles one is controlling for at a higher level.
And how do our principles come about? What is a principle and does it differ from a belief? If so what are the differences? If not, why the distinction?
I don’t find these designations helpful or useful. To me they are all simply perceptions and I am unconvinced that higher and lower levels of dependences exist among them. I am more apt to believe that there is a network of influences, but they would differ from person to person and from perception to perception. Do you have any ideas on how we might go about testing some of these ideas?
What about the MOL? What have found there? Any consistency between people in the type or number of levels they use in a session?
Different >principles
lead to the choice of different premises. And why those principles? They
too, are means >to an end, the system concepts that make up one’s picture
of the kind of self, social, or inellectual system >one admires and tries
to help create.
And where do the “means” come from? This is not an infinite regression Bill.
Here, more or less, is Mises’ system concept of Economic Man:
In every living being there works
an inexplicable and nonanalyzable Id. This Id is the impulsion of
all
impulses, the force that drives man into life and action, the original
and ineradicable craving for a
fuller and happier existence. It works as long as man lives and stops
only with the extinction of life.
Human reason serves this vital impulse. Reason’s biological function is
to preserve and to promote
life and to postpone its extinction as long as possible. Thinking and
acting are not contrary to nature;
they are, rather, the foremost features of man’s nature. The most
appropriate description of man as
differentiated from nonhuman beings is: a being purposively struggling
against the forces adverse to
his life.>This PCTish paragraph, by the way, illustrates a peculiar sort
of expository style which appears often in >economics and philosophy. It
consists of making a series of statements of fact without any
support or proof, as if there could be no doubt that they are true. Of
course every assertion above, and some sentences >contain two or three of
them, could be false, in which case there would be no reason to read
further.
Again, this is Mises axiomatic foundation. He believes that everything he says is self-evident by the very actions of man himself. You know there are no scientific proofs for any cognitive assumptions, and there won’t be for a very long period. The real question hee is whether any meaningful and useful work can be done without the benefit of scientific proof and I believe the answer is yes. Contrary to the belief of many, science does not provide the only useful knowledge.
After each assertion, one could be justified in asking “How
do you know that?” and not allowing the exposition >to go on until
the question is answered, or at least until some plausible basis for the
assertion is indicated. >How do you know there is an Id?
The same way you believe that their are levels, and he same way that I believe their is a network. There can be no scientific proof of the existence of anything cognitive because we can’t identify and measure basic units for one. But there are many other obstacles and I think trying to use the physics model of science for human behavior is probably the biggest.
Its fine for inanimate objects but all hell breaks loose for complex living purposeful entities.
The primary effect of this style, it seems to me, is the early
elimination of dissidents, leaving only those who >already believe these
assertions to accompany the author the rest of the way.
And how does this differ from any other theories?
Mises considers “thinking and acting” to be “the foremost
features of man’s nature.”
Bill, you are making this whole thing about one man and one set of ideas. Mises is not the world view. There are many other views and the purpose is not to critique Mises. Its to try and see how one (PCT) can help inform Austrian economics and how economics can help inform PCT.
There are economics concepts such as “value”, “cost”, and “price” that I believe have significance for a cognitive model.
This should not be about Mises “style”. It should be about substance.
But he doesn’t say thinking and acting
about what.
Again he did not believe psychology was an area he should venture into, and that is where and why the opportunity exists between the two.
If one breaks thinking down into more detailed types
of thinking, as I have attempted to do with my proposed levels of
perception, it becomes clear that traditional logical entrepreneurial
thinking, “bottom-line” thinking, is >the only kind there
is, or even the most important kind. It’s not enough to explain, Donald
Trump-like, some >despicable action by saying “That’s just good
business.” One must also explain what’s good about it, and in
explaining that, one can’t help but reveal the principles and system
concepts that motivate the specific >strategies.
Interesting, and I view things a bit differently. As I said before, for me everything is perceptions. Yes, we could categorize things into beliefs ideas, principles, etc. but bottom line they are all perceptions.
But you are talking about a “value” system here and I do not believe we all have the same way of structuring our values. Indeed, subjective values are what economics are all about.
Everything emanates from our ability to control and everything we do is in the name of control. So although we may have our ideals, our ability to control overrides all.
With levels how do yoiu account for Hitler and Mother Teresa. Different Principles? maybe, but I would put my money on each controlling for different things and “principles” may or may not play a part.
If I feel threatened, I will react to that threat, and how I react to that threat has more to do with how I successfully navigated it before than any idealized way I may know about.
But I agree strongly with one of Mises’ tenets.
It is customary to find fault with
modern science because it abstains from expressing judgments of
value. Living and acting man, we are told, has no use for Wertfreiheit;
he needs to know what he
should aim at. If science does not answer this question, it is sterile.
However, the objection is
unfounded. Science does not value, but it provides acting man with all
the information he may need
with regard to his valuations. It keeps silence only when the question is
raised whether life itself is
worth living.>If science provides acting man (ideally) with all the
information he may need with regard to which acts will >achieve the ends
he freely values, the Austrian rejection of observation ceases to make
sense. How can you >determine what economic effects a given action has, or
is likely to have, without making observations?
You are misreading “observation” here. Observation as it pertains to labaratory experiment. Indeed it is only through observing man’s actions that we know what choices are ultimately made by man.
The Austrian’s are not very big on polling and the use of statistics. This is one reason they place very little credence in “macro” economics.
Pure reason is simply not
enough. To try to understand economic systems without using careful,
verified, and >replicable observations, organized by a working and
verifiable model, is to construct a systematic delusion.
I’m afraid not. To an Austrian if you go to the movies rather than he theater, than you valued the movies higher than the theater at that particular time. If you spent $100 on shoes instead of a suit than you valued the shoes higher than the suit at that time.
You cannot infer an internal value system by observing the choices people make. They will vary depending on any number of factors. We know hat to a large degree those choices are based on what folks are attempting to control for at any particular time. Hence the notion of rationality goes out the window.
The start of an economic model that I presented a few years ago was
nothing more than an attempt to look >at the interacting effects of
actions in an economic system.
Yes, but before you can do this you must understand the components of the system and the relationships involved, and I’m afraid you were and are off the mark here.
You might want to see what has been done in SD in this area. Much of Forrester’s initial work was devoted to economics.
The problem with all attempts to do this
that I had read about before, from Keynes to Samuelson, is that >they
tried to derive the behavior of the system by looking at just a few parts
of it in isolation. The idea of >supply and demand, for example, is
handled in a way that leaves reference conditions out of the picture;
there is no concept of “enough.” And other simultaneous
influences on buying and selling are ignored while >talking about supply
and demand.
Keynes was the father of Macroeconomics and his work has been largely discredited. This is part of the “mush” I was speaking about. I remember someone in SD once pointing out an economic study of milk production that had no references to cows in it. So it goes with macroeconomics.
Of course there is a relationship between supply and demand, and another
between demand and supply,
Nice of you to notice. 
but it is not the only relationship that
exists between buying and selling.
And who said it was?
The economic system is full of closed
loops of causation, and there is no way to understand it or predict its
behavior correctly without understanding the laws governing interacting
closed loops.
You can’t predict economic activity anymore than you can predict any other kind and type of human action. You might be able to “project” based on current patterns but you cannot scientifically predict.
The only people I have seen who manage to do this
correctly, using models, are those who study >“agent-based”
economics (Charlotte Bruun is one of them). And even they try to use
short-cuts based on >abstractions like supply and demand without
understanding how they emerge from the more basic model.
Agent-based modeling cannot predict the action of any one individual. What it can do is utilize a set of rules and apply them to various agents, but as you noted it gives you no understanding of why the actual behavior occurred.
My model was certainly not complete, but it could have been made a lot
more complete. Unfortunately, the >person who could have helped make it
more complete couldn’t bring himself to do it.
If yiu are talking about Bill Williams you are mistaken. No one, not Bill or anyone else could have completed that model with any validity.
It has been extremely
frustrating for me in trying to talk about economics in this forum as it
applies to >>PCT as it was for Bill Williams.
…Toward the end, however, all that changed. He became offended at the
idea of people without degrees in >economics proposing unorthodox (or any
other) views (though he had little good to say about orthodoxy).
At the very end Bill and I were not talking. He hung up on me when I made some criticisms about the book he was writing.
Bill was a very unorthodox economist. So much so, that he could not get a teaching position. He was an advisor to graduate students and at the end was living on a meager stipend that was about to run out. Bill’s biggest love was his book and he always felt that the book would be hus legacy. He believed very deeply in perceptual control and he was going to explain not only the Giffen Effect but knock the doors off with his ideas about control.
Bill and I had many stimulating conversations and it was with Bill’s influence that I went back to school and got my degree in economics. I also am dedicating whatever I do in the future to him. He was quite a character.
Bill became very frustrated when he could not seem to get through to you about your dad’s work and what he wanted was your help with his work and as you oted when he did not get it he got real nasty. He felt betrayed because he felt you did not reciprocate his interest in your work with his attempts at his.
Of couse his life at that point was crumbling all around him and than he cut his foot and the rest as they say is history.
ideas of modeling changed from his practical approach toward the Giffen
Paradox to something more >impressionistic and much less organized. When I
did not accept his new approach, I very quickly turned into >his
arch-enemy. I was angry and upset about that at the time, but now, in the
light of subsquent events, I >am only sad.
Its unfortunate that none of us got to resolve our differences. I might have 3 chapters of his book in a file, would you like to see it?
My suggestion is for them to
read a bit from the Austrian School and Ludwig Von Mises. Again, as you
note, it is extremely important that they stay away from that
“macro” mush
The quotations from Mises above were taken from some exerpts I made in
- Unfortunately I didn’t write >down the title of the book, but it’s
probably one of the main ones you get to through his web page.
Yes, its from his book Human Action
As to the
Austrian school, I see no reason to accept their pessimistic views about
scientific observation in >economics – it sounds more like an excuse than
a view, to me.
No one is asking you to.
As to their claim that human behavior is just too complex
to study scientifically, all I can say is that it may be that they
don’t know how to do it, but that does not mean that nobody can do it.
That is certainly true, but to date it has not been done and I see nothing that might change the landscape any time soon.
Bill, I don’t think its a “pessimistic” view. That book was originally written in the early twentieth century and I think he was being a realist. He was unconvinced that the scientific model (physics) would be of any value and many today feel the same way.
I
think I’ve made a pretty good start on it, and others have, too.
Yes, you have made an excellent start, but it is just they very beginning and there is little anyone beside of a micro biologist can do about it for a very long time.
The
Austrian rejection of science sounds like sour grapes to me.
They do not reject science. They reject the physics model as an appropriate way of studying human behavior.
As I’ve said
before, to me, science just means studying things honestly and
systematically and trying not to >let your own desires and beliefs distort
the results.
Sorry BIll, before you say someone “rejects” something you might want to clarify exactly what it is they are rejecting. Mises is not rejecting your definition of doing science. He is rejecting the physics model of doing science. NOT the same thing.
To reject science is to embrace ignorance, prejudice, and
superstition. Can they really be proposing that we >do that?
Again, you derive faulty deductions from false premises.
As to that “macro mush,” there is no way to avoid it. Even the
law of supply and demand, or any other >regularity that is seen in
economic interactions, is macro mush.
Sorry, this is not so.
A truly micro account of economics
would be as meaningless as a half-tone photograph viewed under a
microscope.
No, “micro” in the case of economics is about individuals.
Any time you’re talking about more than one person, more than
one producer, you’re in the realm of >macroeconomics. I
No, macro economics has to do with “average” man. You can look at economic activity as the result of individual choices rather than the average of a group of individuals
It looks like mush
only when you don’t know how to deal with complex systems, but there is
no excuse for >that any more.
No, it looks like mush when you start dealing with 4.4 people and no cows in a study of milk production. Now exactly do you combine values among people?
Macroeconomics is far more powerful than
microeconomics in revealing the consequences of system-wide >policies or
properties, and it’s the only way to unravel the effects of multiple
closed loops >acting at the >same time.
On what basis do you make this claim? Certainly not a scientific one. You seem to slip in and out of science as the situation suits you and your aims.
I think that a lot of objections to
macroeconomics arise from the fact that a macro analysis leads to
conclusions that are contrary to popular beliefs and superstitions, such
as –
Actually Bill it is through macro economics that most of the superstitions arise about economics. Again, how do you come to this claim?
well, I’m not here to throw gasoline on the fire. Suffice it to say
that there is no way to get a correct picture >of economic interactions by
looking at the whole system one entity at a time. But it is very easy to
develop >wrong ideas that way.
Right, and taking the generalities of population studies and trying to apply them to individuals is a good thing. To take a population study and then say how any one individual might think or act based on that is valid “science”? Please, give me a break.
I think there is a much bigger
problem that both Rick and Bill face and that is the complete
revision of >>their current mind sets about what economics actually is and
what it describes.s revision will create utter >>havoc with their current
world views and I’m not sure either one of them is up to
that.
Thus spake Zarathustra. My view is that modern economics is a total mess
and needs a complete revision of >world-views, which are mostly so
transparently self-serving as to be laughable, not just wrong.
Judging from this post you have no real idea about economics so any thoughts you might have on the efficacy of the subject frankly aren’t worth very much. The real problem here Bill is you think you know a whole lot and you don’t. You are unwilling to admit to your ignorance so you will continue blissfully in it thinking that if someone would just spend a little time they would shake the economic establishment to its foundations with your model and I wish you much luck.
I’m afraid both will fight tooth
and nail against what I would think could be the only reasonable outcome
given their beliefs about perceptual control.
It’s really time to stop alluding indirectly to things and start saying
what you mean.
I tink I’ve been pretty clear. Perceptual control is about why folks make choices. Economics isabout what they do. Control is not eglitarian, nor is it altruistic. It is about every man for himself and the trick is to figure out how we arecall going to get along given those facts. When push comes to shove we will do what we need to in order to control what we believe w need to control.
This forum has been a wonderful example of just this. If you had such a great handle on why we do what we do you could eliminate conflict or at least minimize it, yet in this forum conflict is both rampant and unabated. Your supposed knowledge of levels provide you with no better insight that any one else and no way to curtail it.
Is this clear enough?
You refuse to describe >what you refer to as your research
because you anticipate criticism and stubborn >refusal on the part of
others to admit the truths you have discovered.
WRONG!!! Where the hell did you get this from? If I actually got some valid critism I would be tickled pink. But what I get is silence to my questuons or sneers about my intentions. I presented some of my ideas on perceptions and you made it very plain and clear that you had no interest in discussing my ideas, and no one else in this forum responded to them. So either they agree with me, or they don’t, or they don’t care. Who should I present my research too?
Anyone who expects
scientific work to be accepted sight unseen as valid just doesn’t
understand how the >world works.
My work is NOT scientific and is not intended to be, and I’m very well aware of how the world works thank you.
If I had taken that attitude, my name
would not be associated with PCT (though someone else’s might be). If you
continue that way, your work will be ignored, and why not?
Again, your faulty premises lead you to invalid conclusions. Seems we have been here a number of times before in this post.
Just what is that “only reasonable outcome?”
You seem to have the answers to everythng else so I’m sure this is a piece of cake for you now.
If you can’t figure it out let me know and I’ll tell you.
If it were truly
that, wouldn’t everyone already agree with it? Or >is your definition of
being unreasonable the >refusal to agree with you? Why not just
throw it out on the table >for discussion?
I have, the ball is in your court
Regards,
Marc.
···
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