Mark Buchanan smacks down Chris House.
What the physicists DO believe, however, is that markets and economies are great examples of what scientists have come to call “complex systems” — systems of many elements (people, firms, etc.) with strong interactions between those elements which create webs of non-linear feedback. The elements learn and adapt, their interactions create “emergent” coherent structures and fluctuations at the collective level, and these structures then act back downwards to influence the behavior of the elements. What happens in the system comes about through this interplay of bottom-up and top-down cause and effect. In this sense, economic systems share a deep character with many physical or biological systems from the earth’s crust to turbulent fluids to ecosystems. It’s this complex systems aspect of economics which makes physicists believe that ideas from physics (and other natural sciences) can be useful in economics.
This is precisely why many physicists, myself included, are convinced that modern economics is indeed, in an important sense, “held back because of a deficiency of mathematical tools and techniques”, to use Chris’s words. I can’t do better than to quote a short section from Brian Arthur’s excellent article Complexity Economics, which describes what many people (including physicists) believe is lacking from current economics:The Physics of Finance
Arrogant physicists — do they think economics is easy?
Mark Buchanan
4 comments:
Physicist have always had this kind of arrogance. I remember a physicist friend back in the late 70's who was persuaded that you knew everything important to know about social and economic change once you understood the law of second law of thermodynamics.
comical; the 2nd law DOES open up everything ... but all data is ONLY relevant once you understand a bit of the vast context
I'd worry far MORE about the arrogance of economists, who dare to presume that human economies have few enough interdependencies to be described with crudely simple commerce equations
If it were that easy, it wouldn't have taken this long to program robots to simply walk.
The most amazing part is how & why physicists who know better never called BULLSHIT on all the naive economics models.
There's nothing wrong with having an introductory economic model, but to encourage politicians and electorates to guide policy with such models is criminal.
It's so easy to just find out. Like Marriner Eccles did.
Bah, I'm fed up with these "all economics needs is some real mathematics and THEN it will work" proclamations. Scientists are more likely to compound the current problems than correct for them.
We don't need more math, we need less.
Exactly, Ben,
Data is meaningless without context, and so is ALL of mathematics.
That, however, does NOT excuse economists from ignoring the densely nested inter-dependencies of any human market and culture.
At least physicists understand - and routinely utilize - the concept of propagated error estimates. Orthodox economics literally NEVER shows error bars on all their imaginary graphs, minus context.
Every orthodox economics theory in the literature should come with a std disclaimer: "Plus or minus Bullshit."
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