Re: Holistic properties & National Accounting

[Harry Veeder <aa361@xxxxxxxxxxxxxxx>]

On Fri, 19 Sep 1997, Bruce R. McFarling wrote:

> I recently received an email from Tracy Lightcap that read,
> in reference to my discussion of holistic system properties:
>
> > ... R. Lewontin, the biologist, refers to them as emergent properties:
> >properties that are caused by actions of subordinate components but which
> >cannot be explained by reference to causal linkages in the subordinate
> >components. Respiration is caused by the action of specialized cells in
> >the lungs, but cannot be explained by refering to how lung cells function
> >individually. By the same token, individuals in organizations can be safely
> >assumed to be motivated by utility maximization, but organizational
> >characteriztics commonly involve values which contradict individual
> >calculations. Again, an emergent property.
>
> 	I would disagree with the assertion that individuals in
> organisations can safely be assumed to be utility maximisation,
> barring strong restrictions on the economic behavior under
> consideration, and as pkt subscribers may be aware I argue that
> these restrictions make utility maximisation inappropriate as
> general microfoundations for Post Keynesian macroeconomics.
> 	However, that quibble can be laid aside, since Tracy's point
> may be restated as "even if it is granted, for the sake of argument,
> that individuals in organisations may be assumed to be motivated by
> utility maximisation, organisational characteristics commonly
> involve ..." and on the main point we are in complete agreement.
> What is the avenue by which the emergent properties of the economic
> system will be reflected in a quantity index *however constructed*?

For discussion purposes, let me define an "organization" to be a set of
individual utility functions which can be combined without fear of
contradiction. "Emergent properties" would then appear, by definition,
across organizations whenever their different utility functions could not
be summed without contradiction.

This approach means individuals can be treated as mini-organizations and
it means the growth of an "organization" can be defined as a process of
combining *non-contradictory* utility functions of individuals and
organizations.

In fact, if one adopts emergent analysis the struggle to find
the ultimate or the best foundations of micro economics becomes
pointless. The main task is to identify the logical limitations
of each approach as they are applied to different areas of the
economy. The micro/macro dichotomy is a manifestation of the metaphysics
of reductionism and is inconsistent with the metaphysics of
emergence.

Harry Veeder