Running Naked in the Forest

[From Bill Williams 2 February 2OO4 ]

CSGnet Folks,

In selecting a thread caption, "Running Naked Through the Forest"
seem to have a lot more drawing power that would "User Costs" or
"The Savings and Investment Identity." Economic Theory may not
be everyone's favorite topic for a conversation, but it has in
recent weeks economic threads have dominated whatever has been
in second place on the CSGnet.

Rather than engaged in a lengthy methodological preface
concern ring what I hope to accomplish on this thread, I will
begin with an answer to a question that I have been asked.
Doing so will insure that I have at least one reader.

The question is what people here, students especially, think
of the stuff that I have been posting in my net war in defense
of economics. In particular, the question has been have I asked
what people think?

My answer is, I don't have to. People tell me without my asking.

First, their reaction is, and I don't think this is an exaggeration,
one of astonishment. You have to understand that after a student
has been studying economics for a few years, especially if they
are a graduate student, and they go to a new place to study, all,
or nearly all, the people they interact with are in the economics
department. I don't think myself that this is a good thing.
However, the way the university is administered, this is how it is.
The American (read U.S.) sort of university that has developed
since World War II has been an extremely fragmented organization.
Within this fragmented organization structure there is very little
communication going on between the various specialized departments.
As a partial result of this fragmentation, it is easy to develop
an unconscious assumption that everyone in the university is more
or less like the people one knows. The constant interaction by
people in the Economics department fellow grad students, faculty
and staff seems to result in an unconscious assumption that
everyone knows all this stuff about economics. After all everyone
that one talks to does, more or less, know this stuff. You can in
some sense "know" that this isn't true, but even so most people
I think develop the assumption, or expectation that economic
thought is what you see going on in the Economics department.
In abstract terms, one may know that this isn't how it really
is, because in the history of thought course. Well scratch that.
I was going to say that in the history of thought course one
encounters the various popular "crank" schemes -- Like the but
it has been so long since I studied this stuff that I can't
bring up the names. And, we don't offer a graduate level history
of economic thought course. And, if we did, it is unlikely that
it would include anything other than the mainstream professional
economic theory stuff.

So, a preconception develops that no one thinks about economics
outside economics departments, a few state offices, people in
Washington. What goes on in the minds of corporate world isn't
really considered economic thought.

Into this cosmology suddenly appears this stream of economic
discourse that is totally unexpected. People, I mean people
out there, are arguing with great vehemence about things like
for God's sake the appendix on "User Costs." And, Keynes is
described as "the Great Satan." The most common reaction, I
suppose is, "What got into these people?" The closest thing
I can think of to explain the reaction is to imagine what
people now living in Hawaii might think if the few remaining
natives decided that everyone who wasn't a pure blood native
had to leave the islands. And, to back-up their demand the
natives proposed to construct a new sort of weapon based
upon entirely new principles that no one had ever heard of.
And, that the head designer for this project had, as he
admitted, never so much as attended a secondary school.
Never taken a course in physics, chemistry, or mathematics.
But, as he claimed he was pure in heart, and his soul had
been cleansed by the frequent practice of running through the
forest naked. This running through the forest naked was the
essential requirement. But, to complete their work the
head designer had somehow come to the conclusion that he
needed a pair of the departed Princess Diana's sunglasses.
With Diana's sunglasses he was convinced that he was going
to be able to read Kant's _Critique of Pure Reason_. In
the _Critique_ he was convinced he would find a set of
plans which would tell him how to modify a refrigerator
using simple hand tools into a truly terrifying weapon.
However, before building the actual weapon itself, which
was expected to take some time, the head designer thought
that it would be prudent to attempt something much easier
a project which he called the "TEST BOMB." The Test Bomb
wasn't really intended to do much of any damage. Rather,
what it would do would be to kill all of the people in
Hawaii who weren't 1OO % native Hawaiian. Now, understand
that the head designer had been working on the Test Bomb
for fifteen years, so far some technical problems had
prevented him from constructing a "working model." But,
his senior assistant designer was confident that the
project was nearly complete and would be detonated next
week freeing Hawaii of all those who where not of 100%
native blood. When reporters asked the University of
Hawaii's genetics department how many of the people in
Hawaii were actually 1OO% native stock, the senior
Professor said, "There are none left. All of the
people of Hawaii," he said, "have some non-native
blood." The head designer, however, argued that when
he got a hold of a pair of Princess Diana's sunglasses
it would be easy to see whose blood had been the
contribution of a pure Hawaiian ancestry and who's
was of mixed blood. Contribution was an extremely
concept, an issue that was nearly always occupying
the mind of the head designer, and his chief deputy
the senior assistant designer. Given the length of
the effort to assemble the required materials,--
a copy of _The Critique of Pure Reason_ wasn't hard
to obtain. And, there was always hope of somehow
getting hold of a pair of Princess Diana
sunglasses, but as the years passed, it was
becoming harder for the Head Designer to keep up
his running naked in the forest. So, this was a task
that was increasingly being fobbed off on the chief
deputy, the senior assistant designer.
   The head designer, for some reason, suspected
that a physics professor at the University of Hawaii
Allan Sokal had cornered the market on Princes Diana
sunglasses and had stockpiled them somewhere in
the university's physics Lab. Because the Head
Designer's was considered a, for the most part, a
harmless eccentric who provided a diverting element
of local color an accommodation had been worked out
with the universities security staff so that he could
from time to time visit the Universities Physics Lab.
But, the relationship between the head designer and
Sokal wasn't entirely cordial. The Head Designer was
suspicious of the entire notion of Western Science.
It was, he argued really very simple. There were good
people-- the 100 % native Hawaiian's. And, there were
bad people-- the Head Designer thought that somehow
the Physics Department was a secret weapons lab that
from time to time required a 1OO % native Hawaiian
to be melted down to obtain a special grease.
Obviously the Physics department was engaged in a
plot to prevent the Head Designer from obtaining a
pair of Diana's sunglasses-- because, once the
Test Bomb was available it would no longer be
possible for the physics department to kidnap a
native Hawaiian to melt down for grease. From time
to time the Head Designer made phone calls to other
physics departments on the mainland to see if there
was any possibility that they had a spare pair of
Princess Diana's sunglasses. But, the focus of
suspicion over time was growing-- that Sokal was
the principle agent of a combination that had
cornered the market in Diana's sunglasses.

My thinly fictionalize account provides I think a
good idea of how students here view PCT economics.

Bill Williams

Le Barre, Weston. 197O _The Ghost Dance; Origins of Religion_
  Garden City, New York : Double Day

Ravetz, Jerry. 1994-95 "Economics as an Elite Folk Science:
   The Suppression of Uncertainty" Journal of Post Keynesian
   Economics Winter vol 17 # 2

      Ross, Dorothy 1980 _The Origins of American Social Science_
       Cambridge University Press

       "... the institution of a leisure class acts to make
       the lower class conservative by withdrawing from them
       as much as it may of the means of sustenance, and so
       reducing their consumption, and consequently their
       available energy, to such a point as to make them
       incapable of the effort required for the learning
       and adoption of new habits of thought.
         p. 2O9.

Stopffle, Richard W. 2OOO "Ghost Dancing the Grand Canyon."
  Current Anthropology Vol 41 # 1 February p. 11-38.

Llosa Mario Vargus, 1994 _A Fish the Water_ Farrar, Straus and
    Giroux

     The special grease is thought by some Peruvians to be needed
      by NASA. There is a student here at UMKC who may think that
       I am somehow connected with these kidnappings-- how else
        would a Notre Americana know about these kidnappings?

  These are not mere anecdotes. They represent a general
phenomenon, a state of affairs that affects the entire cultural
life of Peru... p. 313

Magic, Science and Religion and other essays
Bronislaw Malinowski

1948
Free Press

     ... any drawing of conclusions, or arguing by the
     law of logical contradiction, is absolutely futile
     in the realm of belief, belief savage or civilized.
     Two beliefs, quite contradictory to each other on
     logical grounds may coexist, while a perfectly
     obvious inference from a very firm tenet may be
     simplify ignored. p. 220

Medvedev, Zhores A. 1969. _The Rise and Fall of Lysenko_
   Columbia University Press: New York

[Martin Taylor 2004.02.02.0915]

[From Bill Williams 2 February 2OO4 ]

CSGnet Folks,

In selecting a thread caption, "Running Naked Through the Forest"
seem to have a lot more drawing power that would "User Costs" or
"The Savings and Investment Identity." Economic Theory may not
be everyone's favorite topic for a conversation, but it has in
recent weeks economic threads have dominated whatever has been
in second place on the CSGnet.

Rather than engaged in a lengthy methodological preface
concern ring what I hope to accomplish on this thread, I will
begin with an answer to a question that I have been asked.
Doing so will insure that I have at least one reader.

The question is what people here, students especially, think
of the stuff that I have been posting in my net war in defense
of economics. In particular, the question has been have I asked
what people think?

Sorry, but I don't think your allegory is entirely apposite. (Nor is
it opposite, however).

The problem is that to just about everyone outside Economics
Departments, the results of academic economic thinking looks to be
about as reliable as those of academic astrologers or alchemists. All
three disciplines have in common that they sometimes give the right
answer. The difference with economists is that people with power
listen to them, much as people with power used to listen (as some
still do) to astrologers.

The consequence of this is that it gives people without the academic
background the notion that "there must be a better way." Rather than
expecting and waiting for chemistry to develop out of alchemy, or
astronomy out of astrology, people throw out the bathwater without
necessarily looking to see whether the bath contains any babies. I
think it's behaviour easy to understand, given the apparent
consequences of powerful people listening to the punditry of the
"credentialled" economists.

On the other hand, more rational behaviour would be to check the bath
to see whether it contains babies--or whether the water can be
cleaned without throwing it out and filling it anew from a
differently polluted pump. To leave the murkily mixed metaphor, there
are undoubtedly reasonably true things to be learned from academic
economics (other than the conventional definitions of words). The
question is to figure out what is wrong with the foundations, and
that's awfully hard when you have learned all the details of the
superstructure. By then it must be hard even to see that there are
any foundations.

To move from the abstract to the personal, I don't know any academic
economics, as I have said a couple of times on this list. But I have
studied systems of which the politico-economic system is an example.
To some extent what is true of systems in general (to use the term in
its mathematical sense) must be true of the economic system. One of
those truths is that the real system CANNOT be in equilibrium. That
means that any economic discussion that is based on an economic
equilibrium is about as valuable as an astrologer's assertion that
putting some gold into an appropriate mixture will let the gold breed
and multiply, to the benefit of the astrologer's royal patron. Yet
the term "equilibrium" appears over and over in the public
pronouncements of academic economists. Any such pronouncement must be
suspect.

That's only one of the entropic constraints on permissible economic
theory that seem to be ignored, at least in what leaks out of
academe. There's no point here in discussing others, since the gist
of this posting is to answer your implied question about why people
untrained in academic economics think they are suited to develop an
effective alternative to the arcana of which they are ignorant.

To summarize in a less prolix way: The flip side of "If it ain't
broke, don't fix it" is "If it's broke and the experts don't seem to
be fixing it, have a go yourself."

Martin

[From Bill Williams 2 January 2004 12:00 AM CST]

[Martin Taylor 2004.02.02.0915]

This is sure to be fun. Since my machine is still acting funny
I will mark my replies with the pound character #.

[From Bill Williams 2 February 2OO4 ]

CSGnet Folks,

In selecting a thread caption, "Running Naked Through the Forest"
seem to have a lot more drawing power that would "User Costs" or
"The Savings and Investment Identity." Economic Theory may not
be everyone's favorite topic for a conversation, but it has in
recent weeks economic threads have dominated whatever has been
in second place on the CSGnet.

Rather than engaged in a lengthy methodological preface
concern ring what I hope to accomplish on this thread, I will
begin with an answer to a question that I have been asked.
Doing so will insure that I have at least one reader.

The question is what people here, students especially, think
of the stuff that I have been posting in my net war in defense
of economics. In particular, the question has been have I asked
what people think?

Sorry, but I don't think your allegory is entirely apposite. (Nor is
it opposite, however).

The problem is that to just about everyone outside Economics
Departments, the results of academic economic thinking looks to be
about as reliable as those of academic astrologers or alchemists. All
three disciplines have in common that they sometimes give the right
answer. The difference with economists is that people with power
listen to them, much as people with power used to listen (as some
still do) to astrologers.

The consequence of this is that it gives people without the academic
background the notion that "there must be a better way." Rather than
expecting and waiting for chemistry to develop out of alchemy, or
astronomy out of astrology, people throw out the bathwater without
necessarily looking to see whether the bath contains any babies. I
think it's behaviour easy to understand, given the apparent
consequences of powerful people listening to the punditry of the
"credentialled" economists.

# I quite agree with you. However, I would like to point out that
  in contrast to Economics which I will assert has given the correct
  answer to one problem over the last 60 years-- since Keynes's
  _General Theory_ Psychology has consistently given the wrong answer
  since Decarte-- that is stimulus and response.

  So I think to complete your discussion you need to add psychology
  to your discussion. And, I think, to be fair you ought to make a
  distinction between the Keynesian system in economics and the
  Neo-Classial analysis.

On the other hand, more rational behaviour would be to check the bath
to see whether it contains babies--or whether the water can be
cleaned without throwing it out and filling it anew from a
differently polluted pump. To leave the murkily mixed metaphor, there
are undoubtedly reasonably true things to be learned from academic
economics (other than the conventional definitions of words). The
question is to figure out what is wrong with the foundations, and
that's awfully hard when you have learned all the details of the
superstructure. By then it must be hard even to see that there are
any foundations.

# Oh, on the contrary. It is trivally easy. The foundation of the
  Neo-Classical system is maximization. The foundation of the
  Keynesian analysis is the income-expenditure, or savings and
  investment identity. In the future I hope to convince people
  that they should consider a third tradition in which there is a
  combination of Veblen and control theory. In the last seminar I
  was challenged to reduce my thesis to 25 words or less. I didn't
  have any trouble, I said "Behavior is the control of Perception."

To move from the abstract to the personal, I don't know any academic
economics, as I have said a couple of times on this list. But I have
studied systems of which the politico-economic system is an example.
To some extent what is true of systems in general (to use the term in
its mathematical sense) must be true of the economic system.

# OK

One of those truths is that the real system CANNOT be in equilibrium.

# You might enjoy reading Kornae's _Anti-Equilibrium_

That
means that any economic discussion that is based on an economic
equilibrium is about as valuable as an astrologer's assertion that
putting some gold into an appropriate mixture will let the gold breed
and multiply, to the benefit of the astrologer's royal patron.

# You are preaching to choir in this regard. Equilibrium is just shit.

Yet
the term "equilibrium" appears over and over in the public
pronouncements of academic economists. Any such pronouncement must be
suspect.

# Suspect? Let's not be coy. Lets agree to say, "To hell with it!"

That's only one of the entropic constraints on permissible economic
theory that seem to be ignored, at least in what leaks out of
academe.

# Go to the UMKC economics webb site. You won't see any equilibrium
  stuff. What you will see is mostly Keynesianism, and Veblen.

There's no point here in discussing others, since the gist
of this posting is to answer your implied question about why people
untrained in academic economics think they are suited to develop an
effective alternative to the arcana of which they are ignorant.

# Again, I was explaining inside out. You are explalining outside-in.
  I agree with what you are saying. I think it is fine that you have
  said what you said. Now, I think we can bettter understand where
  we seem to agree with each other.

To summarize in a less prolix way: The flip side of "If it ain't
broke, don't fix it" is "If it's broke and the experts don't seem to
be fixing it, have a go yourself."

# Yes, indeed. However, Suppose you see a civlization in the midst
  of a massive war. Like for instance World War Two. Wouldn't you
  think that an outsider might take the time to look at the score
  card to see who is playing rather than just starting in by shooting
  at random?

Martin

# My bitch has been that Bill and Rick haven't learned enough economics
  to be able to telll the good guys from the bad guys. It is a game
  that they know so little about that everyone looks like a bad guy to
  them. As I've said before they are people without enough cultural
  understanding of their own civlization to be able to make sense of
  the world in which they live. The result is that they look to people
  here like my fictionalized Head Designer and his chief assistant.

# And, what you might ask do students, and faculty think of my role
  in this little tea pot? One of the questions they ask me is, Why
  when you don't look anything remotely like a 100% native Hawaiian
  are you running naked in the forest?

# Have you gotten in contact with my Chinese mathematician? At the imps
  dinner, they wouldn't let me bring Snips, but my Chinese mathematican
  really impressed everybody with the way he could scream, "No, you
  are the idiot." The police, however, didn't seem to understand that
  it was a professional custom for all of us to stand up and scream,
  "No, you are the idiot." between the salad and the main course.
   They didn't seem to understand that it was only a ritual. We did,
   however, have to pay for the broken chairs.

Bill Williams

[From Bill Williams 7 February 2004 10: PM CST]

As a sophomore economics student taking the Business Cycle
Theory course in the Spring of 1967 I read Keynes' _General
Theory for the first time. One of the passages that very
Much impressed me was a section that considered the decline
In investment following the stock market crash of October
1929. Over a relatively short period of time, the economy
following the crash slipped into what is known as "the
Great Depression." National income accounting was just
getting started then, so there wasn't anything like the
data sets that are available now. But, the following table
that Keynes presents may still have some interest as a
result of the crucial period of a transition from the
economic prosperity of the late 1920's to the early phase
of the Great Depression.

As a secondary school student economics appealed to me
chiefly because I was aware that Keynes' contribution to
economic theory had been the development of the theoretical
methods that solved the problem of cyclic Economic
instability. I studied the Keynesian system in detail as
an under-graduate. However, as a graduate student I found
that the Keynesian economic theory was considered to have
been, more or less, completed sometime ago, and therefore
not a topic that was considered live. As the result of the
attack upon Keynesian theory be reactionary economists,
recently Keynesian theory has become once again a live
question-or at least it is considered to be a live question.
I continue to regard Keynes' work as revolutionary- but I
Think of the revolution as having been accomplished two
Thirds of a century ago.

In the snippet below from Keynes' General Theory you can see
What I saw as a sophomore- the variability of investment in
The period following the "Crash" in 1929 and the transition in
The economy from boom and prosperity to depression. Unless,
As is very unlikely, the figures Keynes provided below are
Mistaken, the economists definition of investment, is much
more variable than income.

If you say that a tail is a leg, how many legs does a dog have?
The answer is four. Saying a tail is a leg, doesn't make a tail
a leg. In a similar fashion saying that government spending is
investment doesn't make government spending investment.

Keynes, _General Theory_

   "In the United States, for example, by 1929 the
rapid capital expansion of the previous five years had
led cumulatively to the setting up of sinking--- funds and
depreciation allowances, in respect of plant which did
not need replacement, on so huge a scale that an
enormous volume of entirely new investment was
required merely to absorb these financial provisions; and
it became almost hopeless to find still more new
investment on a sufficient scale to provide for such new
saving as a wealthy community in full employment would be
disposed to set aside. This factor alone was probably
sufficient to cause a slump." (p. 1OO.)

                                Millions of Pounds

                            1928 1929 193O 1931

Gross Investment-Output 791 731 62O 482
Value of Physical Wasting
  of old capital 433 435 437 439

Net Investment 358 296 183 43

   Mr. Kuznets has arrived at much the same conclusion in
compiling the statistics of the _Gross Capital
Formation_ (as he calls what I call investment) in the
United States, 1919-1913. The # physical fact #, to which the
statistics of output correspond, is inevitably the gross,
and not the net investment. Mr. Kuznets has also discovered
the difficulties in passing from gross investment to net
investment. "The difficulty" , he writes, "of passing from
from gross to net capital formation, that is, the difficulty
of correcting for the consumption of exiting durable commodities,
is not only in the lack of data. The very concept of annual
consumption of commodities that last over a number of years
suffers from ambiguity"1 He falls back, therefore, "on the
assumption that the allowance for depreciation and depletion
on the books of business firms describes correctly the volume
of consumption of already existing, finished durable goods
used by business firms" (p. 102.)

# I've enclosed in brackets and pound signs a slip that Keynes
# makes when he describes economic production in terms of
# "physical fact[s]. This is the sort of mistake that resulted
# in Marxist accountancy allowing a factory to count as "nail
# production, the creation of enormous spikes weighing tons.
# The tonnage of these "nails" as they were described on the
# books was as Keynes said, a "physical fact" whether they
# were any economic use, as nails, is doubtful. Economics
# Keynes to the contrary is concerned with the production,
# use and consumption of value- not with, values aside, the
# "physical fact" of production.

Keynes' General Theory contains some mistakes. I have indicated
one of them in the above passage. The Keynesian system isn't
perfect. It is still undergoing revision and reconstruction.
But, such contributions require first the honest effort to
Comprehend what Keynes said and what it means. Bill Powers
Hasn't been willing to make that effort before venturing into
An intellectual misadventure in which he spews ignorant
Conjectures and mis, or non-informed criticisms. For whatever
Reasons, when Bill's dad setforth to create a new conception of
The economy he somehow over looked the fact that the problem he
Set out to solve had found its solution long ago.

My fable, "Running Naked in the Forest" and the review by Paul
Davidson of the Crankish text should indicate the difficulties
which efforts like the Bill Powers Test Bed project is setting
out on face.

In my view there is no inherent conceptual barrier to making
a program work, the difficulty which Bill faces is whether he
wishes to genuinely make the model work in a way that is
genuinely useful, or if he is more interested in defending
his dad's inchoherent, lunatic Leakages scheme.

Bill williams