Re: Mirowski and critiques

[Herbert Gintis <gintis@xxxxxxxxxxxxxxx>]

Jamie Galbraith writes:
>
>We are clearly making progress here. Mirowski on one side argues that
>conservation principles are implicit in maximization, Gintis, citing Varian,
>argues that they are not and that they are not necessary either.
>Isaac supports Gintis/Varian, if I read him right.

	I don't cite Varian's *authority*, since he does not claim to
be  an expert. My argument is that I have studied a fair amount of
physics and cannot conclude from the fact that optimization in physics
can be understood in terms of conservation principles (only in
classical physics, BTW), that this is true in general. Again, in
biology optimization models are often used and nothing is conserved.

	More important, I am arguing that the whole issue isn't
important, and it leads economists from studying alternatives to the
ge model (which is empirically weak in many important respects).


>As for Herb's interesing reference to the "new theories" replacing general
>equilibrium analysis. I will freely grant you that there are distinguished
>economists doing good work around. But what specifically do you have in mind
>in this reference to a new orthodoxy? -- if that is not a contradiction in
>terms (!)

	I don't think there is a new orthodoxy. In micro, there's just
lots of interesting stuff going on. As I said before, I don't think
microeconomic theory has ever been _justifiably_ drawn upon to support
conservative policy conclusions. I don't mean that conservatives
haven't used the 'authority' of the invisible hand or the ge model to
support laissez faire policies, but rather the micro theory involved
can just as validly be drawn upon to support the opposite conclusion
(e.g., Lange's use of the ge model to support market socialism, and
the utter defeat of Hayek et al. in their debate in the 30's).

	More recently, the ge model gave us nonconvexities, missing
markets, and externalities, all of which are bases for policy
interventions. The ge model can't give us nonclearing markets, but if
we replace the ge concept of equilibrium with the Nash concept, we can
do that as well--see new-Keynesian economics, the stuff that Sam and I
do, etc.

Herb gintis@xxxxxxxxxxxxxxx