[OPE-L:6559] Learning beyond "static methods"

[Alejandro Ramos <aramos@xxxxxxx>]

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.
>
>