RE: Re: Contractual setlement vs. exchange medium

[Bruce McFarling <brmcf@xxxxxxxxxxxxxx>]

On Mon, 3 Apr 1995, Roderick Hay wrote:

> Surely Chaos theory attempts to do more than show that linear
> deterministic models are not useful. If it was purely critical, then I
> would have no objection, but it also pretends to be a positive
> [predictive] method of describing a complex system which cannot be predicted.
> 	Rod
> rhay@xxxxxxxxxxxxxxxxxxxxxx
>
	I think a distinction from theories of social insitutions might be
useful here.  Institutions provide additional capabilities for social
action along certain lines by simplifying an individual's task of
predicting the reactions of others.  In game theoretic terms, institutions
help define the socially recognized 'strategies'[*] that permit an
individual to guess what set of 'strategies' others are picking from.  In
the near term, then, they act to increase the 'degree of determinate -
edness' of the system.  However, individuals are not forced to play by the
institutional playbook, and innovative behavior (which is *not* restricted
to entrepeneurs!) provides the generative basis for institutional
evolution, which is intrinsically indeterminate.  So whether or not
non-linear deterministic models are candidates for useful explanations of
the operation of a given system of economic institutions, they do not
qualify as candidates for explaining institional evolution.
	I have a personal interest in these models, but not an abiding
interest, so unless the discussion gets back to contractual settlement vs
means of exchange, that all from me.

Bruce McFarling, Knoxville
brmcf@xxxxxxxxxxxxxx

[NB: I put 'strategy' in single quotes because what game theory calls
'strategies' are really tactics.  Cf. the classic _The Art of War_, or B.
Liddell Hart, _Strategy_).

Note:
Rod Hay was writing in response to a message of Fri, 31 Mar 1995, where
bjm@xxxxxxxxxxxxxxxx wrote, in part:
>
> > Rod  Hay asks does chaos theory add any explanatory power to Post Keynesian
> > theory?  ...
> >     Of course most of us would agree that the world is not deterministic.
> > (Few people of our century still believe in determinism). Reality is not like
> >  a movie.  And of course chaos theory is deterministic.
> >
> >          But this determinism is not a desirable quality per se.
> > I nor most of its supporters do not value chaos theory because
> > of it is deterministic, but rather because chaos theory enables
> > us to show rigorously that a very simple deterministic system
> > can yield apparently random, i.e. nondeterministic, results very
> > much like the observations we make of the real world.
> > ...[which helps debunk NC theory]...