Fadonomics
Bored with conventional applications of a traditional neoclassical theory, economists on the "cutting edge" have branched out further with ever more elaborate theorizing. The trouble is that they keep repeating the same errors. The changing face of economics has the same old structure beneath the skin. These people would do well to finally absorb some truly advanced ideas made by the Austrians a half century ago.
Read my full review of The Changing Face of Economics, by Colander, Holt, and Rosser.
Comments (1)
Complexity Theory belongs to a branch of mathematics called non linear dynamics, aka, Chaos Thoery. One of the fundamental tenets of non linear dynamics is that the underlying equations, for most systems of interest, are incapable of being solved with current mathematical understanding. Another characteristic, possible THE characteristic, is that tiny perturbations of initial conditions leads to wild fluctations in the behavior of the system studied. This has also been called the Butterfly Effect. As a result non-linear dynamical systems are impossible to use for long term predictions of the behavior of the system of interest. The math is difficult to understand and requires a fair amount of study, but the buzzwords thrown off are neat, concise, and easily used to raise obfuscations to understanding, hence are often tools for mendacious and meritricious behavior on the part of grant seeking institutionalists, like "new economists".
Mises has already covered in detail the flaws of mathemtical tools in quantitative economoics, aka econometrics. I can add nothing toi his gogent analysis (as usual). There is no other scientific field (public policy excluded) where failure is as tolerated and rewarded as econometrics. Consider weather forecasters (another application of non-linear dynamics), if whose prognostications were as bad as mainstream econometricians would quickly become unemployable.
Books like The Changing Face of Economics are just scientistic facades of the longest running ponzi scam in history, Keynesian Economics and the fiat currency.
It is worth noting that a couples of engineers at silicon graphics were awarded a patent for using the lava lamp as a random number generator due to the non-linear dynamics of heat convection in a multi-phase viscous system. Leave it on long eneough and you can get any value out of the system! Kind of like complexity theory in economics.
Published: June 2, 2005 9:05 AM