Hi Jurriaan
> "There is very strong empirical evidence that economic reality approximates
> a state of statistical equilibrium (an equilibrium in which change
> constantly occurs but some distributions are constant)."
>
> But in reality no such evidence exists, and it has never existed. It is
> merely that, if we abstract out certain economic characteristics, we can
> show these characteristics remain relatively constant across time. Even
> then, the alleged constancy is largely a statistical artifact, produced by
> assumptions which ignore change. The concept of equilibrium is only an
> abstraction, which economists habitually confuse with reality, not unlike
> Hegel's objective idealism.
Just a quick point on this first paragraph in your message. I must
object strongly to your dismissal of the evidence for the existence of
*statistical equilibrium*. For example, I have developed agent-based
computational models that quickly self-organize into a state of
statistical equilibrium. You can then start measuring things. I find a
Laplace distribution of firm growth, a power-law distribution of firm
sizes, a lognormal distribution of firm demises, an exponential
distribution of firm lifespans, a normal distribution of the log of
detrended GDP, an exponential distribution of the duration of
recessions, a lognormal-Pareto distribution of income, an
exponential-Pareto distribution of wealth, stable but fluctuating
shares in national income, and a highly right-skewed, long-tail
functional form for the distribution of the industrial profit rate.
*All* these distributions have been found in empirical studies of
Western economies. To me it seems incredible that a statistical
equilibrium model that replicates this range of empirical data is a
"lucky hit". Instead, I believe it is strong evidence that economic
reality approximates a state of statistical equilibrium, something
which Farjoun & Machover pointed out some time ago, and an approach
that has hardly yet been pursued in academic economics.
Dismissals of equilibrium theorizing or the unimportance of
mathematics just seem very hard to fathom given these results.
The paper is here, in case you are interested:
http://www.economics-ejournal.org/economics/journalarticles/2009-19
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Received on Tue Dec 7 18:15:31 2010
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