Post by AnBr on Apr 17, 2021 13:18:24 GMT
evonomics.com/economists-prove-that-capitalism-are-unecessary/
The nonsensical logic of mainstream economics
Actually they’ve done no such thing. But they do effectively assume that it’s unnecessary all the time.
This transcendental truth became apparent to me in the reactions I have had from mainstream economists to a lecture I gave to my Kingston students this month (which is posted on my YouTube channel and blog). In it I explained that, at a very basic level, the original “Neoclassical” mathematical model of a market economy is mathematically unstable: it doesn’t converge to a stable pattern of relative prices and a stable growth path for the economy, as its developer Leon Walras thought it did.
Mainstream economists reacted to my lecture by saying that, while the argument, which was first made in the 1960s by Jorgenson (who was applying a mathematical theorem from the early 1900s) was mathematically correct, all one had to do was assume that “economic agents” would then notice the instability and change their behavior. The model would then converge to equilibrium—problem solved.
And how would “economic agents” notice this instability? They would realize that a pattern of relative prices that had occurred once before in the past happened again.
Hmmm. O.K.A.Y… So economists are willing to assume (1) that people keep such detailed notes on relative prices that they notice that the same pattern of relative prices as we have today occurred 15 years earlier (which is the rough length of the cycle in the relative price of milk cow to non-milk cows in the USA); and (2) that this pattern is perfectly regular (which it’s not since, like most such cycles, it’s a “complex system” that has a-periodic cycles–they repeat but never at the same magnitude or frequency) so that (3) they can stick to their toy model in which all processes converge to equilibrium, rather than to deal with the real world where they don’t.
Actually they’ve done no such thing. But they do effectively assume that it’s unnecessary all the time.
This transcendental truth became apparent to me in the reactions I have had from mainstream economists to a lecture I gave to my Kingston students this month (which is posted on my YouTube channel and blog). In it I explained that, at a very basic level, the original “Neoclassical” mathematical model of a market economy is mathematically unstable: it doesn’t converge to a stable pattern of relative prices and a stable growth path for the economy, as its developer Leon Walras thought it did.
Mainstream economists reacted to my lecture by saying that, while the argument, which was first made in the 1960s by Jorgenson (who was applying a mathematical theorem from the early 1900s) was mathematically correct, all one had to do was assume that “economic agents” would then notice the instability and change their behavior. The model would then converge to equilibrium—problem solved.
And how would “economic agents” notice this instability? They would realize that a pattern of relative prices that had occurred once before in the past happened again.
Hmmm. O.K.A.Y… So economists are willing to assume (1) that people keep such detailed notes on relative prices that they notice that the same pattern of relative prices as we have today occurred 15 years earlier (which is the rough length of the cycle in the relative price of milk cow to non-milk cows in the USA); and (2) that this pattern is perfectly regular (which it’s not since, like most such cycles, it’s a “complex system” that has a-periodic cycles–they repeat but never at the same magnitude or frequency) so that (3) they can stick to their toy model in which all processes converge to equilibrium, rather than to deal with the real world where they don’t.
