Re: (OPE-L) Re: Hume and constraint based theories

[Ian Wright <ian_paul_wright@xxxxxxxxxxx>]

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.

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