mck@ratex.UUCP (Daniel Kian Mc Kiernan) (03/28/85)
Lines marked '>>' are from an earlier entry of mine; lines marked '>' are from Martin Taylor. >> . . . (I would note that >>NONE of the supply-and-demand analysis that I have engaged in depends on an >>assumption of smooth curves!) > >Perhaps not, but the analyses do require equilibrium conditions, and >therefore do not apply to the real world or any possible world. No. Orthodox Neo-Classical economics does presuppose equilibrium; I do not. >For example, the (repeated) theorem on full employment ignores the >fact that there must be some unemployment in order to allow people >to shift jobs. [...] Beginning way back, with 'Inflation in a Free Economy?', I noted that there would be frictional unemployment in a Free Economy. Full employment does not mean the absolute absence of unemployment, it means the absence of all but frictional unemployment. If you want to argue economics (just as if you want to argue mathematics), learn the terminology before you pompously 'correct' someone. Note: Some time ago, I posted an offer -- which still stands -- to explain any bit of terminology used, or direct the reader to an explanation, upon request. >Other analyses ignore the effects of phase-shifted feedback, which >can lead to oscillations (and even chaotic behaviour) under conditions >in which the equilibrium solutions are stable. I have addressed such phenomenon, and explained why (in the absence of government meddling) they are not self sustaining. > Time matters. Information >matters, Not only did I never say or imply that they didn't, but I have repeatedly referred to the Austrian School, which continually stresses their importance. > and most of the analyses require the underlying assumption that >the individual performers (workers, capitalists, unemployed ...) have >full knowledge of what might happen as a consequence of their individual >decisions. Wrong. Not only have I not presupposed such a thing, but such a claim would stand in conflict which the importance of the Price System, which I repeatedly stress; if everyone had full understanding of the consequences of their actions, the market could successfully be replaced by an administrative agency. > When someone suggested that each individual farmer might >not be totally aware of the effect of price changes (in reference to >the cobweb effect), this suggestion was roundly denounced as slighting >the intelligence of farmers. But it was really an assertion that >it takes an infinite amount of time to gather all information, and >by the time you have gathered it, the situation is different anyway. IT DOESN'T TAKE FULL AWARENESS FROM ANY PARTICIPANT TO BEAT A COBWEB!!! Let's say that I'm a wheat farmer, and I notice that we have a cobweb effect going on. Now, it MAY be that during the over-production phase my cost-curves require me to join in the over-production (because I'm not sure that my colleagues and I have sufficient information about the equilibrium level). BUT DURING THE UNDERPRODUCTION PHASE, I KNOW TO PRODUCE SOMEWHAT MORE THAN PREVIOUS PRICES WOULD OTHERWISE INDICATE. To claim that farmers are too stupid to employ this strategy is absurd! And as some farmers successfully employ this strategy, they will be imitated by others, and things will spiral-in towards equilibrium. I WOULD NOW LIKE TO POINT OUT THAT *ALL* OF THE ABOVE ARGUMENTS USED BY MARTIN TAYLOR ARE STRAW-MEN ARGUMENTS! I leave it to the reader to assess Mr Taylor's integrity. >The analyses put forward by DKMcK are fun to read, Well, I'm glad for that; I always worry about them being too dry. > but I seldom feel >they have much to do with the real world, or even with a contrived >world that contains real people and real information systems. It's a (sort of) free country, and you can 'feel' that the sun is blue if you wish. Back later, DKMcK
mmt@dciem.UUCP (Martin Taylor) (03/31/85)
In response to a posting of mine critiquing some of the control-theoretical issues in DKMcK's postings, he issued a response with more UPPER-CASE than I have seen from him. I guess that his ice is a little thin, so I apologize for hitting where it might hurt. >I WOULD NOW LIKE TO POINT OUT THAT *ALL* OF THE ABOVE ARGUMENTS USED BY >MARTIN TAYLOR ARE STRAW-MEN ARGUMENTS! I leave it to the reader to assess >Mr Taylor's integrity. It is not possible to go through all of DKMcK's book-full of articles, because I don't keep them, but "*ALL*" of the so-called straw-man issues are: the need for equilibrium conditions in establishing a non-inflationary full-employment economy, and the need for full information in order that individuals may produce/price things rationally. These are the two issues on which McK challenges my integrity. My errors I can acknowledge, but my integrity I defend. I have never read the "Austrian School" so often referenced by DK, but I don't need to do so in order to know that complex feedback systems are always unstable in the presence of time delays. I agree with McK that the oscillations eventually damp out, if only by reaching limiting amplitudes (e.g. nuclear winter). The equations with which DK "proved" there would be no inflation do not include phase effects, but are predicated on the underlying assumption that the differentials in the several terms propagate their effects instantaneously (and if they don't, different equations are required to take the phase shifts into account). someone McK accused of slighting the intelligence of farmers was in fact claiming they needed information they couldn't get. McK argues that current price is enough information. But decisions must be made long in advance of the information provided by current price, and so farmers need not be stupid in order to be unable individually to project the collective effect of their decisions. I don't think my arguments were straw men. They could be wrong, but DKMcK will have to do better than using UPPER-CASE to shoot them down -- such as learn a bit of control theory or perhaps psychology. > The analyses put forward by DKMcK are fun to read, > >Well, I'm glad for that; I always worry about them being too dry. > >> but I seldom feel >>they have much to do with the real world, or even with a contrived >>world that contains real people and real information systems. > >It's a (sort of) free country, and you can 'feel' that the sun is blue if >you wish. > Back later, > DKMcK As it happens, I really have seen a blue sun! If you don't believe it, look at the Scottish newspapers around the early (I think) summer of 1950 or 51. Blue suns can be real, but they are as rare as the effective application of pure maths to social situations. -- Martin Taylor {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt {uw-beaver,qucis,watmath}!utcsri!dciem!mmt