General Theories

[ecwfm@xxxxxxxxxxxxxxxxxxx (bill mitchell)]

was: (Re: Response to Gonzalo)

BTW: Paul did not respond to my econometric point about his repetitive
claim that fitting a 99 segmented linear trend through 100 observations
is the best model available. it is wrong of-course.

Jim says

>I have a question, which I'm afraid has probably been asked before,
>but I missed the answer:
>
>why is the "generality" of a theory so important?
>
Jim said [lots of deletions]
>
>But a general theory might also be too abstract and not
>have any implications about the empirical world which
>we wish to understand. In order to say anything about
>the world, we may have to deal with special theories
>rather than general theories.

exactly. in econometrics we define a Data Generating Process (DGP)
which is the joint probability function of all variables in the world.
Obviously it is the most general theory about the world possible.
everything depends on everything. but is is not tractable.
so we marginalise on the DGP to get something that is workable, yet
still meaningful to the problem at hand.

general to specific analysis does just this. conditions down to something
specific. that is the only way to go.

and let me be repetitive. Keynes's GT was misnamed. it was not a general
theory of capitalism b/c it had nothing at all to say about surplus creation
and property relations. it also assumed that what went on in imperfect
competition could be abstracted away from by assuming perfect competition.
it missed the boat b/c the institutions of imperfect competition, and
inflationary biases that result, are not transient imperfections which
disappear in the LR. Kalecki knew this and his account was much more
meaningful as an account of capitalism than the GT, even though his work was
also specific analysis.

kind regards
bill

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