Re: Mirowski and critiques

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> From: Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>
> Subject: Re: Mirowski and critiques
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> FROM:  Paul Davidson
> "      Economics Department
> "      523 Stokely Management Center  (615) 974-4221
> As much as I agree with Basil Moore's argument that the function of escience is
>   to explain -- prediction is just iceing on an ergodic scientific cake --
> this does not mean we must abandon the concept of equilibrium (as my controlled
> experiment posting suggested). But we should not confuse the concept of
> equilibrium in economics with market clearing. As I noted in the ECONOMIC jOURN
> AL in 1967, equilibrium (a concept Marshall borrowed from the hard sciences)
> merely means that there are no endogenous forces that cause further movement,
> i.e., a state of rest. Clearing is a sufficient condition for equilibrium,
> it is not a necessary condition. Thus Keynes insisted on a theory of
> employment equilibrium where the stae of rest could be at less than labor
> market clearing given specific values for the exogeneous variables.
>       The use of "stylized facts" is perfectly consistent with specifying
> values of exogenous variables and investigating the position of rest of
> the experiment al population.
>
> Have a good day!____Paul Davidson
> ))))_ fax # (615) 974-1686


Paul
    If you mean by equilibrium a state of rest, a position of balance,
no change, then I think I have you.

    You know better than I that a nonergodic system will never find
itself in  such a state. In a credit money economy we cannot even
define general equilibrium.  So how useful is general equilibrium
analysis?

    You would then retreat to partial equilibrium, as a kind of
thought experiment. But I would argue that this is only applicable for
micro questions. For macro, one can't just say "this is
partial equilibrium analysis", because macro is centrally concerned
with the interdependencies among macroeconomic variables. One cannot
e.g. assume the money supply is given, unless one abandons the
assumption that the world is nonergodic. The supply of credit money
in a nonergodic world cannot be given, and if one makes that
assumption, one is being inconsistent with other core assumptions of
the model.      Basil