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We cannot derive "fundamental laws" for economics.

PostPosted: Wed May 01, 2019 9:29 pm
by Ikonoclast
Shimshon Bichler and Jonathan Nitzan in their conclusion to “Capital accumulation: fiction and reality” manage to sum up and refute modern economics in one masterful sentence:

“You cannot build an entire social cosmology on the assumptions of individual rationality, equilibrium and perfect markets – and then blame the failures of this cosmology on irrationality, disequilibrium and imperfections.”

They continue:

“In science, these excuses and blame-shifting are tantamount to self-refutation. What we need now are not better tools, more accurate modelling and improved data, but a different way of thinking altogether, a totally new cosmology for the post-capitalist age.”

I believe Bichler and Nitzan mean that we do not need better tools in the current paradigm as the paradigm itself is based on false premises. They propose the need for a new paradigm, “a totally new (social) cosmology”. To explore this cosmology analogy, we can note that the physical cosmos is a single connected system and cosmological science investigates it via a relational theory framework. In such a framework, the positions and properties of existents are only meaningful relative to the positions and properties of other existents in the system. In a relational system "social cosmology", this immediately suggests that individual “rationality” is not discretely atomistic and fixed. Rather, individual rationality is socially conditioned and thus fluid or malleable. Collective (as well as individual) rational and irrational behaviors exist, or rather arise, as emergent properties. The essential problems to be resolved here are ontological ones. What really exists in a socioeconomic system and how do these existents relate each to each?

Bichler and Nitzan refer to “the duality of real and nominal”. They expand on this to refer to the splits of “subject and object, idea and thing, nomos and physis”. As I see it, the problems presented by the duality of the real and the nominal are what modern economics fundamentally and comprehensively fails to deal with. This constitutes the foundational ontological and scientific failure of modern economics. When the premises are wrong, all the deductions which follow the premises are wrong.

When we are dealing with physical phenomena, the fundamental laws of the cosmos are independent of human understanding or modelling of them. No matter what you or I or any human thinks of the Laws of Thermodynamics or even if we are ignorant of them, the fundamental natural phenomena follow predictable courses which can be well modeled by the laws of thermodynamics (when those laws are mathematicized to permit accurate-enough descriptions and empirically verifiable predictions of the natural phenomena in question). However, when it comes to socioeconomic phenomena, what we think and believe can and do enter into the constructions and emergent outcomes of socioeconomic phenomena themselves (along with fundamental physical phenomena also entering into the constructions and outcomes). At this level, any theory of the system enters into the system as a compounding or complicating element. Thence, meta-theory (theory of the impact of theories on the system) will also enter into the system. These theories enter into the system by changing the behaviors of human subjects, not by changing any fundamental laws of physical nature.

It is not possible to mathematicize socioeconomic process into fundamental economic laws for the simple reason that most socioeconomic rules are arbitrary and may be changed at any time. Here we must distinguish between rules and laws. Rules are social decisions on how to conduct matters. Hence rules in this sense are any and all of customs, legal laws, regulations, accounting rules, finance rules and so on. Rules instituted into formal systems become algorithms or recipes; lists of ingredients, methods and time orders for doing things. Any of these rules may be made one way or made any other way with the major proviso that rules which contradict fundamental natural laws are not actionable. Rules which self-contradict are also not actionable unless one rule takes precedence over another rule.

It is not possible to fully mathematicize the changing arena of socioeconomics precisely because the grounds and bounds of the problem can be changed by changing the rules of the game (meaning the cooperative-competitive game of socioeconomy in praxis). The socioeconomic system which we seek to model continually mutates as we change its parameters and rules. Changing the parameters and rules happens by any and all of fiats, diktats, limited consensus or wide consensus and also includes issues of gaming the system, loophole-finding, criminality and so on. Also, theories of the system themselves enter into the system as outlined above. Changing the rules sets up new constellations of "bodies" and interactions (as processes) and annuls other constellations and processes. This statement again refers to the relational system cosmology analogy. This is not just an n-body problem where n is a huge number. It is also an “n-rule” problem, where n again is a huge number; and the rules continually mutate in designed and undesigned ways.

The totally new "social cosmology" Bichler and Nitzan very rightly call for is not predictable nor even envision-able in many ways. Being a new and emergent complex system it will demonstrate radical novelty. In systems emergence theory, radical novelty is not predictable because an explanatory gap, an epistemological gap, unavoidably exists between the precursor or substrate system and the next radically different system. We do not and can never have complete knowledge, nor is the future predictable in a system which shows both chaotic and non-determined aspects to its evolving nature.

Calls to theoretically elucidate (and worse, calls to mathematically delineate) the new desired economic system are totally inoperable calls. We cannot pre-define it by positive or prescriptive statements. We do not know the right way to go as it is an open-ended problem with an infinite or near-infinite move tree. It is as if the problem were a hyper-complex chess game played on a near infinite board. The analogy of search tree “look ahead” logic is entirely appropriate. In a massively complex open-ended problem, the series of perfect moves leading to a perfect or “won” game is incalculable. What are calculable are very bad and indeed dreadful moves which lead to imminent checkmate (as human civilizational collapse or species extinction) in a “few moves”, meaning in a relatively short time frame.

Thus the problem is not to find the “perfect moves” or the theoretically “perfect system” for calculating perfect moves. (Modern economics pretends to be an idealized perfect system.) Instead, the problem, pragmatically defined, is to avoid the really bad moves. Our practice of late stage capitalist economics (neoliberal economics) has revealed and is revealing a wide panoply of really bad moves. In summary, the really bad moves clearly revolve around;

(a) treating the free goods of nature (of the biosphere) as infinite;
(b) running an endless growth economy on a finite planet;
(c) allowing algorithmic (and “autocatalytic sprawl”) processes to run unimpeded according to the current prescriptive theories of capitalism without regard for real system impacts.
(d) allowing algorithmic (and “autocatalytic sprawl”) processes to run unimpeded according to the current prescriptive theories of capitalism without regard for human impacts.

Points (b) to (d) are really elaborations on point (a) rather than truly separate points. However, the elaborations are important. They indicate the areas where we should start changing things to avoid the obviously bad moves. It is in the employment of science, logic, democratic decision-making and humane ethics to avoid the obviously bad moves that we will in effect instantiate a move away from the blind implementation of the ideological / faith logic and algorithms of orthodox economics. It is this method of avoiding the obviously bad moves (obviously bad to a high degree of certainty according to contemporary science and humane consequential ethics) which can likely shift the system to a better and “totally new social cosmology” even though we cannot as yet envisage or predict the emergent form of that system.

Re: We cannot derive "fundamental laws" for economics.

PostPosted: Sun Jul 14, 2019 9:25 pm
by wayburn

I suppose I have been laboring under the delusion that one can derive fundamental laws for a new economic system. In particular, I have agreed not to employ variables which are not measurable in terms of real physical quantities. Then, I can invoke balance equations for quantities I do employ if I am careful in choosing systems, boundaries, etc. It seems that many who dabble in political debate do not bother to employ balance equations, which leads to absurdities such as perpetual growth in a finite world. Secondly, I wish to assign values to some quantities in terms of other quantities. I insist that this be done in a theoretically reproducible way. I suppose that the choice of one out of many algorithms (if they exist) for computing values cannot be included in the theory and perhaps this is what you had in mind.

Thomas Wayburn

Re: We cannot derive "fundamental laws" for economics.

PostPosted: Tue Jul 16, 2019 6:15 pm
by Ikonoclast

I agree that we can "quantity survey" the real economy if we stick to units measurable by hard science (physics, chemistry, biology). This means the seven SI base units and the 22 derived units for other common physical quantities. However, when it comes to money as capital, I now follow the lead of Bichler and Nitzan's "Capital as Power" analysis. I won't recap it here. One has to read their published books and papers.

This is the way I see it. The ontology of conventional economics is prescriptive rather than descriptive. Now, there is nothing wrong in principle with prescriptive ontologies for human actions. We require them to live in society. However, they do need to be labelled for what they are, namely moral philosophies. Neoliberal economics is a moral philosophy. Marxist economics is a moral philosophy. More precisely they are moral philosophies with praxis appendages. The dishonesty comes in where such theories pretend to objectivity when in fact what they prescribe is deontologically derived ethics. They pretend to have found some pure and abstract truths (about humans and economies) by axiomatic deductions from praxeological premises.

Praxeology, especially but not only of the type exemplified by Austrian economics and Neoliberalism, is bunkum (to use a plain term) but I can't waste space refuting it here. My post would get too long. Of course, the term "praxeology", meaning the study of human purposive action (from an economic-theorising point of view), is not to be confused with the term "praxis" which refers to putting ideas into practice.

"Deontological ethics" is a nicely accurate term in my view. Interpreting it very literally as I do, it is ethics without an empirical ontology, that is without a relation to real things. On the other hand, consequentialist ethics at least mandates an eye to real outcomes, to real consequences. So, while deontological ethics prescribes adherence to abstract pure principles (like the free market), derived via deduction from assumed first principles (a dogma in other words), consequentialist ethics sets up a requirement for empirical checks on what we are doing.

The free market in Neoliberal theory is an unimpeachable first principle. A consequentialist looks at climate change, increasing monopolisition, increasing inequality, human suffering and longer soup lines and says, "the real outcomes of attempting to follow the abstract principle are not good". At the moral philosophy level it is clear what needs to be done. The laws and rules of conventional economics and neoliberalism need to be wound back and rescinded. New laws and rules are required. That much is clear. The exact shape of the required new laws and rules as a set is not clear. However, as the subversion of democracy by capital had led to the current pass or rather impasse then the heuristic prescription would be to lessen the power and concentration of money (lessen the power of oligarchs and corporations) and increase the power of broad, indeed all-inclusive democracy.

None of the above reasoning can be mathematicized. It proceeds by philosophical language and indeed by plain language. It makes heavy reference to moral philosophy (ethics) and democracy (the right to an equitable say in social and economic organisation). Culture and economics are one melded complex entity which cannot be mathematicized or scientized. Anyway, that is my view. :)

Re: We cannot derive "fundamental laws" for economics.

PostPosted: Fri Jul 19, 2019 5:23 am
by wayburn
Thank you, Ikonoclast, for taking the trouble to answer my remarks. And thank you for a word which I had not known previously, namely, praxeology. I see now that my own suggested political economy has a moral dimension (subspace) and a physical subspace. My faith in democracy (or demarchy) is a moral choice. I am not certain that the mere fact that I cannot discover a mathematical method of determining the quantitative parameters of individual consumer rationing (other than the determination of the sustainable community dividend) constitutes a theoretical argument for equality. I guess the belief that all human lives are equally valuable (because the value to the living person under discussion is the only value that matters) is a moral choice. Is "normative" the right word? If only I could get someone as capable as yourself to read the post I placed in "Recommend a Good Political Economy" even if they decide that it is worthless. I hope they tell me why. So much water has gone under the bridge since these ideas were entertained initially that I have grown quite detached from the theory. I can go about falsifying it as though it were written by someone else.

Re: We cannot derive "fundamental laws" for economics.

PostPosted: Wed Jul 24, 2019 4:17 pm
by stanr
Ikonoclast, I mostly agree. However, I disagree with "Culture and economics are one melded complex entity which cannot be mathematicized or scientized" which simply goes too far. I agree with your underlying claim, if I may paraphrase, that moral philosophy, and moral progress, have historically proceeded regardless of science, with ideologies and power structures enrobing themselves in scientific legitimacy as science started to become "a thing" in society. Scientists, only flawed human beings, after all, were often complicit in building these layers.

However, if we just sweep all of the discipline of economics off the table of consideration, we have within the other social sciences many other attempts to do rigorous science on the messy thing that is human society on Earth. One can look for example in anthropology, social-ecological systems studies, social psychology, rural sociology, geography, and plenty of other pockets of inquiry that attempt to understand the various factors at play and the relationships between them. You elude to this yourself, in that science could help us avoid the really bad moves by identifying them. In the field of optimization, one might not find the best solution, but one finds a solution that is good enough if you know how to search the complex space. Social science could certainly find a number of constraints of human societal dynamics to mark some large areas with "NO-GO."

But I think "could" is the key word here, because it's not just hard to do the science, it's hard to get the funding to do the science because it's social science and that's now dangerous. The hard sciences don't speak uncomfortable truths, but the social sciences can when identifying that policies and programs are based on bad science, and that the evidence on the ground doesn't line up with the ideological claims about outcomes. In the United States, this is understood by the political elite, which is why the social science directorate of the NSF is regularly under attack (I'm surprised the current administration didn't try harder to annihilate it, but they figured cutting funding overall was good enough I guess). Thus, avoiding the really bad moves is left to trial and error by those on the frontlines. Consider Jo Freeman's article, "The Tyranny of Structurelessness." I can imagine a transdisciplinary scientific effort identifying the most important factors in that article with solid rigor, mapping its contours with many different research methods, and providing the public with a better sense of the really bad moves, and even a few little good moves here and there, so people could make better organizations. It could happen. But sadly, it probably won't.

Re: We cannot derive "fundamental laws" for economics.

PostPosted: Wed Jul 24, 2019 7:07 pm
by Ikonoclast
In turn, I mostly agree. Perhaps some of my broad claims are little too rhetorical and general. I could do with more rigor of selection and expression. Blogging always leads one further into making such mistakes.

Where you say "Social science could certainly find a number of constraints of human societal dynamics to mark some large areas with "NO-GO." I certainly agree in full.

Can we rescue order out of chaos?

PostPosted: Sat Nov 02, 2019 3:58 am
by wayburn
I am constantly amazed by the chaotic nature of my thinking on the subject of "fundamental laws of political economy". Wasn't it the brother of the famous author from Indiana who said, "If you think my office is a mess, you should see the inside of my head!"? In any case, the notion crossed my mind a moment ago in the space between sleeping and waking that, if one cannot find fundamental laws to justify a judgement, it has no place in political economy. This thought crossed my mind as I continued to wrestle with the difficult subproblem (what to do with violators of the Token Principle ) that arises in finding a solution to overpopulation that does not result in the degeneration of the human race into Gulliver's Yahoos. Earlier, I had decided that the ownership of land was illegitimate because no fundamental method could be found for determining its price. On the other hand, the rent on land can be established by computing the total incidence of sunlight upon it measured in the fundamental units of any reasonable currency, emjoules say (or emquads, whichever is convenient.) One pays rent to nature whose natural advocate on Earth is part of the fundamenetal approach to establishing a fractal government. (I am under no delusion that anyone pays attention to these nearly private thoughts concerning my private model of society-as-it-should-be. It's a little like the model railroad I am building in the space behind my computer desk in this room.)

Re: Non-inequality

PostPosted: Sun Nov 10, 2019 3:31 am
by wayburn
So I wrote: "On the other hand, the rent on land can be established by computing the total incidence of sunlight upon it measured in the fundamental units of any reasonable currency, emjoules say (or emquads, whichever is convenient.) One pays rent to nature whose natural advocate on Earth is part of the fundamenetal approach to establishing a fractal government." This seems to be one pretty good idea followed by another for which there is much less justification.

Traditionally, we need land (1) to establish a reliable place to sleep, unless we are some sort of hunter-gatherer type, (2) to afford ourselves a little privacy, which may be less important on a sparsely populated Earth, and (3) most important of all - perhaps of sole importance, to avail ourselves of enough sunshine to grow food and, soon enough, to provide useful energy. Thus, the establishment of a value per unit time for a piece of land seems to be straightforward theoretically. Its total value approaches infinity so long as the Earth and Sun endure; therefore, no one can pay enough to actually own it. To whom one pays the rent is a problem; but, if we are concerned with the value of things only to ration our consumption, it's not a problem. Once the portion of the cost of consuming such resources as we consume solely to render a useful service to our communities is charged to the cost of the useful goods or service, there is no theoretical way of determining that one citizen should get more than another in the vast majority of cases. Therefore, the sustainable economic dividend of the community should be divided equally - again in the vast majority of cases. If Steven Hawking deserves an extra share because of extenuating circumstances that no one could anticipate, let us hope the entire community acting in consort in a sort of town meeting can authorize it. I wonder if there is a theoretical reason why the entire community acting in consort democratically can be justified by another appeal to non-inequality.

What are "useful" goods or services?

PostPosted: Sun Nov 10, 2019 3:42 am
by wayburn
Ah, but what is "useful"? That's one more problem that I hope can be solved (or finessed) theoretically.