Monday, August 29, 2016

Alan Kirman — Orthodox Economics Is Empirically Invalid and Theoretically Flawed. Bring on Complexity Economics.

Over the last two centuries there has been a growing acceptance of social and political liberalism as the desirable basis for societal organisation. Economic theory has tried to accommodate itself to that position and has developed increasingly sophisticated models to justify the contention that individuals left to their own devices will self organise into a socially desirable state. However, in so doing, it has led us to a view of the economic system that is at odds with what has been happening in many other disciplines.
Although in fields such as statistical physics, ecology and social psychology it is now widely accepted that systems of interacting individuals will not have the sort of behaviour that corresponds to that of one average or typical particle or individual, this has not had much effect on economics. Whilst those disciplines moved on to study the emergence of non-linear dynamics as a result of the complex interaction between individuals, economists relentlessly insisted on basing their analysis on that of rational optimising individuals behaving as if they were acting in isolation. Indeed, this is the basic paradigm on which modern economic theory and our standard economic models are based.. It dates from Adam Smith’s (1776) notion of the Invisible Hand which suggested that when individuals are left, insofar as possible. to their own devices, the economy will self organise into a state which has satisfactory welfare properties.
Yet this paradigm is neither validated by empirical evidence nor does it have sound theoretical foundations. It has become an assumption. It has been the cornerstone of economic theory although the persistent arrival of major economic crises would seem to suggest that there are real problems with the analysis.…
Orthodox Economics Is Empirically Invalid and Theoretically Flawed. Bring on Complexity Economics.
Alan Kirman | professor emeritus of Economics at the University of Aix-Marseille III and at the Ecole des Hautes Etudes en Sciences Sociales and is a member of the Institut Universitaire de France


Kaivey said...

We're a little bit selfish, sometimes we're very selfish, but were are also very collective. Our intelligence helps, but on our own we tend to be very weedy creatures, but collectively we're invincible.

It's always makes me laugh about 'rugged individuals' who love more than anyone else to be noticed and admired by other people. "I'm a rugged individual, look at how successful I am, look at my car, my achievements, my house, my family.' ' If you don't notice me, I will try harder.'

Schofield said...

Biologists tell us that of all the life that has existed on this planet 99% of it became extinct at some stage. The belief is also slowly growing amongst biologists that much of the cause of the extinction came from deadly viruses pursuing their own life persistence by attempting to create niche environments for themselves. An example of this is the decimation of native Americans from European imported viruses. Contrast that with the belief among development psychologists that the dominance of the human race on this planet is a consequence not only of our virus-like aggressiveness and inquisitiveness but also our ultra-sociality which has lead to high levels of co-operation. In terms of the development of economic ideology it would seem logical to argue that insufficient emphasis has been placed on the need to structure for increased ultra-sociality which drives efforts to defeat deadly viruses of which economic Neo-Liberalism can now be judged to be in that category.