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Friday, December 4, 2015
Jason Smith — Supply, demand, stock, flow
Stocks and flows in physics related to econ with respect to information.
When physicists write about economics, the output is generally garbage. They don't understand the human sciences; they don't understand human behavior; they don't understand human nature; they don't understand history; they don't understand institutions. The result is highly reductive and crude musings about network effects, information and energy flows and "emergence" of order among aggregates. This is the same style of thought that gave us the neo-Hayekian faith in free enterprise and free markets that bombed.
What they do have is the physicists' typical hubris about the idea that their subject area is so "fundamental" it can be hammered into a tool to explain everything. I remember listening to a physics grad student friend I had back in the the day try to explain his view that you could understand the whole social and economic world if you understood the second law of thermodynamics. He was actually a bit of a social nitwit and hadn't the slightest understanding of the human realm. But he was convinced that the kind of knowledge he did have was the key to everything.
There is a fundamental difference between quantity and quality (see the "hard problem" in consciousness studies). Mathematical models are necessarily quantitative and quality is difficult to capture in them and probably impossible in tractable models.
This is one of the foremost issues in philosophy at present and has been since Auguste Comte proposed Positivismas a potential explanation for everything.
Obviously, this has not yet been accomplished, although some seem to think that the project is further advanced than others do. The field is divided into those who assume that a theory of everything that runs through from physical sciences through the life sciences to the social sciences will provide a general explanation that will come to replace both religion and philosophy as "true knowledge based on observation and measurement, and those that are skeptical of the project and see it as a boondoggle.
My view is that humanity is nowhere near close to achieving this so it is pie-in-the-sky at this point.
I don't see any necessity to view all quantitative attempts at explanation into that framework though. It appears to me that studying information holds a lot of promise. After all, digital technology is the outcome of that and that is pretty impressive. Humanity is only on the threshold of the Information Age and no one could have predicted future technological developments at the outset of the Industrial Age.
The problem is not with modeling but the uses to which modeling is put. As I have said before, this is where a lot of illogical jumps get made rhetorically, usually for identifiable ideological reasons to promote a particular political or social agenda. Needless to say, that is unscientific and a prostitution of science. Philosophy of logic, philosophy of science, and philosophy of math focus on such meta issues. A lot of criticism of econ is based on the charge that economists are not concerned enough with foundation and therefore draw unwarranted conclusions. Joan Robinson's Economic Philosophy is about this.
It seems to me that Jason is well aware of such issues in econ and has roundly criticized some economists for this, as well as criticizing conventional economics in general for both ideological (value-laden) assumptions and false assumptions.
The challenge is how much mileage one can get from value-neutral assumptions in generating models that give insight into complex processes like social systems in a tractable way. The goal is not necessarily to explain an entire complex system using a non-complex model, which seems intractable at this point, but rather to capture some key features of the architecture to gain insight into how the system functions.
These are issues with which many philosophers, cognitive and behavioral scientists, and social scientists are grappling. Information as been to the fore in this exploration since it was realized that brains operate similar to computing devices. This is where the hard problem arises between quantity and quality in consciousness studies. There is also a hard problem in computational complexity theory owing to Intractability.
Tom, I have no idea what you are talking about. The question isn't about math vs. non-math. It's about whether physicists understand people and human society well enough to apply their own mathematical tools to an understanding of economic phenomena. In most cases, I claim the answer is "No, not at all."
For example, it makes no sense to say that "supply and demand are properties of state space." Any dynamical system can be modeled and studied using state space techniques. That doesn't mean the phenomena that are being modeled are properties of state space!
So, in a post in which Smith claims that economists don't understand supply and demand, no discussion of supply and demand actually takes place.
Its a very materialist and abstract area of theory Dan and its hard to throw the switch back and forth between the abstract and the real... they spend a majority of their time in the abstract so I think its hard for them to relate in real terms because its back to work for them tomorrow and theyre right back to the abstract...
This is "spacetime" type physics...
ReplyDeleteWhen physicists write about economics, the output is generally garbage. They don't understand the human sciences; they don't understand human behavior; they don't understand human nature; they don't understand history; they don't understand institutions. The result is highly reductive and crude musings about network effects, information and energy flows and "emergence" of order among aggregates. This is the same style of thought that gave us the neo-Hayekian faith in free enterprise and free markets that bombed.
ReplyDeleteWhat they do have is the physicists' typical hubris about the idea that their subject area is so "fundamental" it can be hammered into a tool to explain everything. I remember listening to a physics grad student friend I had back in the the day try to explain his view that you could understand the whole social and economic world if you understood the second law of thermodynamics. He was actually a bit of a social nitwit and hadn't the slightest understanding of the human realm. But he was convinced that the kind of knowledge he did have was the key to everything.
There is a fundamental difference between quantity and quality (see the "hard problem" in consciousness studies). Mathematical models are necessarily quantitative and quality is difficult to capture in them and probably impossible in tractable models.
ReplyDeleteThis is one of the foremost issues in philosophy at present and has been since Auguste Comte proposed Positivismas a potential explanation for everything.
Obviously, this has not yet been accomplished, although some seem to think that the project is further advanced than others do. The field is divided into those who assume that a theory of everything that runs through from physical sciences through the life sciences to the social sciences will provide a general explanation that will come to replace both religion and philosophy as "true knowledge based on observation and measurement, and those that are skeptical of the project and see it as a boondoggle.
My view is that humanity is nowhere near close to achieving this so it is pie-in-the-sky at this point.
I don't see any necessity to view all quantitative attempts at explanation into that framework though. It appears to me that studying information holds a lot of promise. After all, digital technology is the outcome of that and that is pretty impressive. Humanity is only on the threshold of the Information Age and no one could have predicted future technological developments at the outset of the Industrial Age.
The problem is not with modeling but the uses to which modeling is put. As I have said before, this is where a lot of illogical jumps get made rhetorically, usually for identifiable ideological reasons to promote a particular political or social agenda. Needless to say, that is unscientific and a prostitution of science. Philosophy of logic, philosophy of science, and philosophy of math focus on such meta issues. A lot of criticism of econ is based on the charge that economists are not concerned enough with foundation and therefore draw unwarranted conclusions. Joan Robinson's Economic Philosophy is about this.
It seems to me that Jason is well aware of such issues in econ and has roundly criticized some economists for this, as well as criticizing conventional economics in general for both ideological (value-laden) assumptions and false assumptions.
The challenge is how much mileage one can get from value-neutral assumptions in generating models that give insight into complex processes like social systems in a tractable way. The goal is not necessarily to explain an entire complex system using a non-complex model, which seems intractable at this point, but rather to capture some key features of the architecture to gain insight into how the system functions.
These are issues with which many philosophers, cognitive and behavioral scientists, and social scientists are grappling. Information as been to the fore in this exploration since it was realized that brains operate similar to computing devices. This is where the hard problem arises between quantity and quality in consciousness studies. There is also a hard problem in computational complexity theory owing to Intractability.
Tom, I have no idea what you are talking about. The question isn't about math vs. non-math. It's about whether physicists understand people and human society well enough to apply their own mathematical tools to an understanding of economic phenomena. In most cases, I claim the answer is "No, not at all."
ReplyDeleteFor example, it makes no sense to say that "supply and demand are properties of state space." Any dynamical system can be modeled and studied using state space techniques. That doesn't mean the phenomena that are being modeled are properties of state space!
So, in a post in which Smith claims that economists don't understand supply and demand, no discussion of supply and demand actually takes place.
in a post in which Smith claims that economists don't understand supply and demand, no discussion of supply and demand actually takes place.
ReplyDeleteHe addresses that in I, and provides links to prior posts of his on it.
Its a very materialist and abstract area of theory Dan and its hard to throw the switch back and forth between the abstract and the real... they spend a majority of their time in the abstract so I think its hard for them to relate in real terms because its back to work for them tomorrow and theyre right back to the abstract...
ReplyDelete