Re: Minsky, FIH, and stability

[FAC_BROSSER@xxxxxxxxxxxxxxxx]

Rejoinder to Paul Davidson, yet again:
     This responds to two previous messages from you.
1)  I plead guilty to being a moving target.  I like to think
I am a chaotic butterfly (not a hurricane, Roy Rotheim!).

2)  That I agree that reality is non-ergodic does not therefore
mean I agree that it is impermissible or uninteresting to think
about models in which ergodicity holds, just as I think the same
about models with linearity, symmetric information, perfect
competition, and perfect wage and price flexibility, even though
I think none of these hold.  To the extent that non-ergodicity
may significantly result from nonlinearity, as I happen to think
is the case, then the latter is more foundational (axiomatic?)
than the former, even if that was not Keynes's argument.

3)  You argue (citing p. 236 of the GT) that Keynes's argument
for socialization of investment depends on "attribute of liquidity."
But on p. 234 he notes that "relief" can come from "changes in the
marginal efficiency of capital."  Well now, I would submit that
(see p. 136 of GT) _expectations_ are a part of that MEC which
as he eloquently argues in Chap. 12 is subject to "beauty contest
speculation" and animal spirits.  In other words this is the
world of the self-fulfilling sunspot equilibrium prophecy.  Keynes
may not have mentioned "coordination" or "nonlinearity," but
recent theory has shown exactly how nonlinearity can lead to
multiple self-fulfilling prophetic equilibria (see earlier entries
from me in this debate for references).  The lower level ones can
be thought of as poorly coordinated ones, low animal spirits ones.
So the "attribute of liquidity" problem can be seen as generated by
nonlinearity and coordination problems, even if this not the language
used by Keynes in the GT!

4)  It may make the non-ergodicity argument more real and more general
to keep it to investment, where as even Herb Gintis admits (flames on
you, Herb!!!), it is a problem.  But where does that non-ergodicity
come from?  An awful lot of economists will knee-jerk reject any
argument based on non-ergodicity because "rational expectations
is an axiom" (or Lakatosian "hard core").  Showing that rat. exp.
can generate non-ergodicity is thus very useful, IMHO.

5)  General on "Solow (and Gintis) guantlet":  I would suggest that
recent versions of Goodwin's work are an example of innovative PK
work (which has links to Skott's, yes Herb).  Class struggle models,
sometimes with Minsky or other financial elements, generate complex
dynamics (relation to strong NK models here).  Some of these are amenable
to evolutionary and self-organization interpretations.  I would note
that a little explored link with the older Anglo-Italian PK is that
some of this can be generated by the kind of "capital theoretic
paradoxical models" much studied in that tradition (any comments,
Neri Salvadori?).  Of course Solow has never really admitted losing
that particular argument, so some of his remarks come across as
gratuitous and self-serving to say the least.
Barkley Rosser
James Madison University