Re Steve K 6533: Steve, many thanks for the references and comments in your post regarding dynamics. A. At 06:45 8/02/02 +1100, you wrote: >Hi Alejandro, > >Yes, Sraffians should also drop statics. This was the point of my 1998 ROPE >paper "Answers (and questions) for Sraffians (and Kaleckians)", which >basically showed that Steedman's 1992 critique of the Kaleckian theory of >markup pricing was invalid in a dynamic setting. > >As for why most economists of all persuasions are reluctant to abandon >statics, I'd come down to about 3 reasons: inertia/familiarity, apparent >definitiveness, and ideology. > >Economics began using static tools--Ricardo's comparative advantage is >entirely static, neoclassical theory ignores time, etc.--and this habit is >maintained by our teaching systems (and the absence of any experimental >feedback [such as applies in sciences] that could show that model outcomes >aren't static ones). > >Static answers are also definitive: "monopolies reduce welfare...", "the >equilibrium price vector is..." whereas dynamics is far less prescriptive. >The reliance on statics has kept the profession in Laplace's grand conceit >that the future of the world can be predicted, whereas sciences have long >since moved past that view to a far more humble statement of science's >possibilities. > >And of course, for neoclassicals in particular, statics--by presuming that >everything happens in equilibrium--neatly hides the theory's ideological >content in its mathematics. If you assume equilibrium in a spot market >system to begin with, and endow that equilibrium with all sorts of >normative conditions--utility maximisation, cost minimisation, etc.--then >you are promulgating the view that the market system is perfection, without >even being aware of ideology. > >My own escape came courtesy of being introduced to Rostow's model of >economic growth as a school student (and loving the nascent dynamics of >it), doing maths outside economics and thus learning of differential >equations independent of the appalling tuition economists receive in >"quantitative methods", and being introduced to the holes in neoclassical >economics as an undergraduate (specifically the theory of the second best). >With that melange I was aware that dynamics was vital to doing economics >properly. > >Hicks stuffed up dynamics big-time! > >His so-called dynamic model of cycles in output: > >Y[t]= (1-s+c) Y[t-1] -c Y[t-2] > >was supposedly derived by discretising Harrod's model: > >G=s/c > >But is actually based on an economic error. Harrod was attempting to >provide a dynamic form of Keynes's model, which began with the convention >that actual savings equals actual investment. Hicks's equation was derived >by equating actual savings to *intended* investment! > >Since both savings and intended investment were described as functions of >output, his model answers the question "what level of output guarantees >that actual savings and intended investment will be equal, if both are >functions of output?" The answer is "zero output", but the question is >nonsense. > >So economists spent 20 years "doing" dynamics using a model which was >nonsense as the basis of their instruction. Hicks, well-meaning and highly >intelligent though he was, did more damage to economic logic than anyone >other than Samuelson and Friedman. > >A great reference on dynamic methods in general is Martin Braun's *Ordinary >Differential Equations and their applications*, Springer-Verlag (I have the >1993 edition, but there's bound to be later ones now). It's a superbly >written maths text--reads like a novel often, rather than a text--with a >competely self-contained introduction to differential equations. > >To go beyond that, Ott's book on chaotic dynamics is excellent. > >As for dynamics within economics, still the best book is Blatt's (reference >in earlier post). It's out of print, but should be available in large city >university libraries. > >I'm not too fond of much else in the economics literature--I hate >Gandalfo's text, for example--but things may be changing. I've just >received Medio and Lines' "Nonlinear dynamics: a primer"(CUP 2001) and on a >quick flick through, it looks pretty good. I'd also suggest Puu's books >(1997 & 2000 Springer-verlag), not because I've read them but because of >Puu's reputation. > >Finally, I must confess that I haven't read the work you cite by Duncan! >Maybe when I can find the time... > >Cheers, >Steve >At 05:00 AM 8/02/2002 Friday, you wrote: >>Re Steve K 6530: >> >>Thanks for your interesting post and the references. Some set of questions: >> >>[...] >> >>You write: >> >>"Neoclassicals would also have to drop static methods and learn about >>differential equations, etc--something none of them show any real >>inclination to do." >> >>1. Pressumably, this would be the case of the Sraffians too, wouldn't it? >>How do you explain this situation? Why are most of the people so reluctant >>to abandon "static methods"? How did you personally escape from this? >>But, wasn't Hicks (a "neoclassical") interested in the kind of dynamics >>you're describing? >> >>2. Can you provide us with a list of references, both from Math and >>Economics books and articles, so that one can learn --from the most basic >>to the complex stuff-- about non "static methods"? What would be a "ideal >>program" for a course(s) to have a "non equilibrium centered" approach to >>the capitalist reality? Is there anything analogous to "Kurz & Salvadori" >>in the field you are describing? >> >>3. What do you think about Duncan's Money, Accumulation adn Crises (1986) >>and his "convolutions" approach to the capital circuit? >> >>A. > >
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