Re: Sweden -- A few reactions on the N.Y. Times article (ergodic and chaotic)

["John M. Legge" <jlegge@xxxxxxxxxxxxx>]

Paul,

you wrote:


>
(Therefore Barkley
>once you admit that a complex or chaotic system can have fundamentalist
>traders intoroduced -- you have given away the ball game.)
> and (b) explain why the classical axioms are not applicable to the real
>world and the rejection of these axioms are!
>


A chaotic system is deterministic but not predictable except in the very
short term.  This means that no amount of analysis can introduce
fundamentalist traders into a chaotic market, since it is impossible to
analyse the past in sufficient detail to make anything but a short term
"inertial" prediction about the future.   Non-ergodic and ergodic but
chaotic are strictly equivalent and indistinguishable  in practice.

>
> if you insist that you can work with the classical axioms by introucing
some
> nonlinearities -- or some monopoly (capiyalist) power into the argument --
you have
> already lost the war!
>

Surely the entire classical argument for "efficiency" rests on the
assumption of perfect competition.  Since this assumption is demonstrably
false the classical conclusions stand unsupported: an unconstrained market
economy will not necessarily be a fully employed one, much less an equitable
one.  Intervention cannot be ruled out a priori, which is what the
libertarians attempt to do.

The New Right has been remarkably successful at attracting corporate
sponsorship, although the executives who write the checks would fall out of
their chairs laughing hysterically  if the classical axioms were explained
to them as accounts of their own behaviour.  In particular, the rising
marginal cost curve is a figment of the classical imagination: if any
corporation did experience rising marginal costs its senior executives would
leave from the window to escape from the angry shareholders storming the
stairs,

JML