From: Ian Wright (ian_paul_wright@HOTMAIL.COM)
Date: Mon Nov 24 2003 - 14:40:33 EST
Hello Ajit, Got round to replying to you. Sorry for the delay. Ajit wrote: >You have told your model that when >one sector receives higher returns for their one-hour >of labor than the other does some people from the >other sector move from their sector to the higher >labor-remuneration sector. It would be more accurate to say that if one sector fails to receive sufficient returns (rather than higher returns) then some people look for alternative employment, but not necessarily in the higher labour-renumeration sector. It is more like a stochastic, parallel search for gainful employment, rather than a deterministic, ordered allocation of labour. In this sense, the causality is much weaker and noisier than most mathematical models (the assumptions are weaker). >But in the real world, outside of the >computer, this may not happen. People may not have the >right information to behave that way. It may not be >easy to move from one kind of work to another, so the >inertia keeps them where they are and after some time >differential labor remuneration becomes conventional. Of course, this is entirely possible in reality. >The point I'm trying to make is that once you let >things move on historical time then you are dealing >with infinite variables, but to theorize you need to >work with a few variables only and assume that the >other variables either have no impact on those >variables or they remain constant. But both these assumptions are >ultimately arbitrary. I think this issue pivots on scientific method. You can think of reality as a hopeless mess of unfolding events with no necessary connection between them, or you can think of it as structured and layered, with potentially identifiable and seperable mechanisms, which interact over time to generate the appearance of mess. Reality is neither completely chaotic or ordered, but seems to be "interesting" and complex. Ultimately we may have different research programmes. Mine assumes that initial abstraction from all possible historical determinations, in order to identify underlying generative mechanisms, is emphatically not an arbitrary procedure, but an essential part of the analysis. >Thus your theory can never move on real historical time. So all theories are abstraction from real time. Well of course. I don't confuse the theory with reality. But perhaps you are confusing the real with the actual. That is confuse the (factual) succession of events that occurs with the (transfactual) mechanisms that generate them. Or, in older terminology, conflate appearence and essence. >But what causes prices to move in your model? >Differential rates of profit--> movement of capital--> >changes in supply--> changes in prices toward labor >values? Let me ask you one question? What makes you >think that changes in supply will not change the >values themselves, i.e., on what grounds you think >that the methods of production is independent of gross >output? I do not think they are independent, although my model abstracts from this determination. >If you have not implicitly assumed constant >returns to scale? I've explicitly assumed constant returns to scale. (Non-constant returns to scale would change the dynamics, and would be an interesting case to analyse, but I'm fairly certain would not change the fix points). >What makes you think that these >changes in supply will have no impact on labor >productivities through learning by doing or some other >kinds of technical changes? I do not think they have no impact, although I abstract from these determinations in my model. >So your model is not >necessarily running on real time. It is running on the >artificial time of your model. You can learn from it >but cannot claim to know how real world works. You >see! No I don't see that at all. Of course all theories, whether computational, mathematical, or natural language, are distinct from the mechanisms and events they refer to. And all theories are incomplete, and do not include your "infinity" of historical variables. Does that mean we cannot make claims about how the real world works? No of course not. I wonder whether you have a Popperian predictive criteria for scientific theories, which may explain why you think it hopeless to explain the chaos in causal terms. But many scientific theories are explanatory rather than predictive, and are concerned with possibilities rather than actualities. For example, knowing it is possible that an earthquake may occur in San Francisco (rather than predicting when it will happen) allows us to build robust homes etc. >Most of economics from Adam Smith onwards >believed that there is something like 'natural prices' >or 'prices of production' around which market prices >(i.e., real daily prices) fluctuate. Garegnani and his >followers think that Sraffa's prices are also the >natural prices or the center of gravitation of market >prices. I don't. Prices are noisy, and there a huge number of reasons for particular prices at particular times. But truly random phenomena are very rare, often there is an underlying signal, which, with work, can be detected, and help explain the apparent chaos as fluctuations about systematically determined trajectories. >As I have said, your dynamic theory runs on an artificial time not real >time. Sometimes it may give a good forecast about certain variables and >sometimes it may not. The computational model of a simple commodity economy that I developed is not suitable to make any economic forecasts whatsoever, and I would be stupid to use it in that way. Again, perhaps you are thinking that all theories must be immediately predictive, rather than employing abstraction to identify underlying mechanisms which, in reality, do not operate alone but in complex conjunction with others. >But the theories >are about convincing others. Given the cultural melieu >in which you are propounding your theory, it may be >highly convincing to others, as your theory may be >using assumptions and received knowledge that are >highly acceptable in the cultural melieu today. But we >should keep in mind that 'the world is flat' was a >highly convincing theory sometime ago in their >cultural melieu. This explains why a major paradigm >shift in one area of knowledge has influence on other >areas of knowledge too. It simply changes the cultural >melieu. I hope the cultural melieu in which I communicate my ideas is that of a community of scientists who are ultimately concerned with objective facts that are to be explained. I reject the relativism implicit in the above passage. I think that scientific knowledge is cumulative, and although radical re-representation of reality does occur during paradigm shifts, the relation between the old and the new is systematic not arbitrary (e.g., a large sphere does look flat if you're tiny and standing on it). Essentially I think there actually is scientific progress, and it is possible to understand why there is such progress. As I said above, I think our differing philosophies result in different research programs, which is healthy. -Ian. _________________________________________________________________ Help STOP SPAM with the new MSN 8 and get 2 months FREE* http://join.msn.com/?page=features/junkmail
This archive was generated by hypermail 2.1.5 : Wed Nov 26 2003 - 00:00:01 EST