Tuesday, February 9, 2021

Lars P. Syl — Does it — really — take a model to beat a model? No!

 Some philosophy of economics, or foundations of economics, if you prefer.

The object of philosophy is the logical clarification of thoughts.

Philosophy is not a theory but an activity.

A philosophical work consists essentially of elucidations.

The result of philosophy is not a number of “philosophical propositions”, but to make propositions clear.

Philosophy should make clear and delimit sharply the thoughts which otherwise are, as it were, opaque and blurred.

Ludwig Wittgenstein, Tractatus Logico-Philosophicus, 4.112

It is not as though the deficiencies of conventional economic models are unknown or even even to be further elaborated. Nor it is a matter of creating another theory of the same type, that is, one that is based on "microfoundations," involving the fallacy of composition, or is designed to be mathematically tractable by ignoring significant causal factors, or oversimplifies complexity by ignoring uncertainty, or does not define key terms operationally, etc.

Heterodox economists and even some conventional economists, Paul Romer, for instance, have elucidated many reasons that such approaches to economic modeling are insufficient. 

A more realistic approach needs to be adopted, which means one that is more practical in its methodological assumptions, more comprehensive in its substantive assumptions and more modest in its aims. 

At minimum, this means adopting an institution and accounting-based approach instead of a strictly axiomatic one. For starters, a stock-flow consistent approach such as advanced by Wynne Godley based on accounting.

Lars P. Syll’s Blog
Does it — really — take a model to beat a model? No!
Lars P. Syll | Professor, Malmo University

3 comments:

Andrew Anderson said...

At minimum, this means adopting an institution and accounting-based approach instead of a strictly axiomatic one.

Except the liabilities of banks toward the non-bank private sector are largely a sham anyway since, for example, the non-bank private sector may not even USE fiat except for mere coins and paper Central Bank Notes.

jrbarch said...

Consciousness is being aware. Aware of what is the question. Some people have said an awareness of the Divine, hidden within - the true 'secret of consciousness’ - is the greatest of all awareness’s (Raj Vidya). Some people say "don't waste your time; it doesn't exist" - but that is their experience. It does exist, but you have to know how to look.

Then there is the mind where thoughts and emotions gather to dance and spill out onto the world’s stage. We become fascinated by the lights, the music, the glamour - the dancers and plots and movements - but it’s all illusory: a grand show. Why? Enter stage left - do a little twirl - leave stage right. We did not come to this earth for society; or to do a little dance and have someone applaud. We came because being human - we want to experience something that fills the heart. That lights up the consciousness. That makes us complete. That has nothing to do with society. Or else we leave empty-handed.

The uppermost thought, TITLE Header for a DGSE or Mahan+Mackinder+Spykman or any worldly list - before we start spinning thoughts of clarification together and like the spider get caught up in our own web - should be:

MAHAMÂYÂ

If you see the light, you will definitely see the shadow. Otherwise, you will think the shadow is real. Society too is Mâyâ: a paper thin little human etching, a fragile human web, draped over and often disfiguring our beautifully natural planet. A web so easily torn, so easily disrupted (even by just a microscopic virus). Even capable of tearing itself apart. All the dancers, tangled in its veils.

So somehow I would add that to Wittgenstein's elucidation of philosophy. Human beings are about way more than just clarification of thoughts; and I have heard Tom say that philosophy must be too. In fact, to go inside and find the Divine within, mind has to be still. So, mind is just an external tool of communication. But the awareness dictates what is communicated. I think the Upanishads said it somewhere: 'The worldly mind is born in Mâyâ, lives in Mâyâ, dies in Mâyâ.' There's a clarifying thought.

At least it would help us look at articles on the www in a different way.

AXEC / E.K-H said...

Do economists finally wake up from their methodological delirium?
Comment on Lars Syll on ‘Does it — really — take a model to beat a model? No!’

Lars Syll maintains: “A more realistic approach needs to be adopted, which means one that is more practical in its methodological assumptions, more comprehensive in its substantive assumptions and more modest in its aims. At minimum, this means adopting an institution and accounting-based approach instead of a strictly axiomatic one. For starters, a stock-flow consistent approach such as advanced by Wynne Godley based on accounting.”

Right. Macroeconomic accounting is the objective-systemic core of economics and NOT some silly behavioral assumption. Methodological rule #1: If it isn't macro-axiomatized it isn't economics.

Economics is a failed science because the major approaches, Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, are provably false. This includes Godley’s and Lavoie’s approach. More precisely, Godley’s and Lavoie’s program ― the integrated approach to credit, money, income, production, and wealth ― is basically correct but at some point, an inconsistency slipped in and that happened exactly in Section 8.2, p. 262, eq. 8.25 (Godley et al., 2007).#1-#5 This blunder carries over to MMT and also invalidates it.

Lars Syll is a bit slow. The Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations is an accomplished fact.#6

Egmont Kakarot-Handtke

#1 Godley, W., and Lavoie, M. (2007). Monetary Economics. An Integrated Approach to Credit, Money, Income and Wealth. Houndmills, Basingstoke, New York, NY: Palgrave Macmillan.

#2 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2124415

#3 Micro and macro inconsistency
https://axecorg.blogspot.de/2016/09/micro-and-macro-inconsistency.html

#4 MMT-Refutation for Dummies
https://axecorg.blogspot.com/2019/03/mmt-refutation-for-dummies.html

#5 MMT: Time to say goodbye
https://axecorg.blogspot.com/2018/12/mmt-time-to-say-goodbye.html

#6 The Paradigm Shift is an accomplished fact
https://axecorg.blogspot.com/2020/10/the-paradigm-shift-is-accomplished-fact.html