Re: Piorot on Madrick

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

This a monstrous non-sequitur.

I offer a short obeisance to James Galbraith's work on inequality and cop a
blast on my supposed sins on some completely different topic.  If you are
asserting that Galbraith's research as summarised in "Created Unequal" is
faulty then abuse him, not me.  If you have actually discovered a flaw in
Galbraith's work, I am sure that he would discuss it with you politely if
you drew it to his attention.

If, as seems obvious from your comments, that you haven't read Galbraith and
have no idea what I was writing about then you could do everyone a favour
and keep your remarks to yourself.

JML

> -----Original Message-----
> From: pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx]On
> Behalf Of Ted Winslow
> Sent: Wednesday, 11 September 2002 11:27 PM
> To: pkt@xxxxxxxxxxxxxxxx
> Subject: Re: Piorot on Madrick
>
>
>
>
> John M. Legge wrote:
>
> > James Galbraith's K/C/S classification of industries makes
> more sense
> > than
> > the Akerlof argument that you summarise, with the
> particular advantage
> > of
> > being solidly grounded in empirical research.
> >
> > Factors such as value added per worker, and value at risk
> per worker,
> > have a
> > stronger force than vague notions of "fairness", although
> these play a
> > secondary role. One shouldn't forget that the word "sabotage" was
> > derived
> > from the practice of disgruntled workers throwing an old
> wooden shoe
> > (sabot)
> > into the textile machinery.
> >
> > Manove put this concept into economese fairly elegantly:
> >
> > Manove, M. (1997), "Job responsibility, pay and promotion",
> Economic
> > Journal
> > 107(440, January), pp. 85 - 103.
> >
> > A factor that Manove and apparently Akerlof missed is the need for
> > inter-worker cooperation and the resulting joint product:
> while it is
> > easy
> > to establish value added and value at risk per worker
> statistically, it
> > is
> > often impossible to assign it individually; not only is a
> uniform wage
> > "fair", it may be the best approximation to the
> economically optimal
> > level.
>
> How do you reach the conclusion that the hypothesis that all economic
> behaviour is the outcome of "rational maximization" is
> "solidly grounded
> in empirical evidence"?
>
> There is first of all the problem that the "complexity
> theory" which you
> take as the realistic elaboration of this hypothesis
> constructs reality
> as "a fully deterministic system" having no logical space for
> the notion
> of future outcomes being affected by present choices i.e. no logical
> space for the idea of "rational maximization."
> Self-contradictory ideas
> can't be "solidly grounded in empirical evidence," can they?
>
> I gather that what you mean by empirical grounding is that some
> empirical phenomenon, e.g.  a uniform wage, liquidity preference, the
> domination of current profits in the formation of expectations about
> future profits, etc. can be shown to be consistent with the
> hypothesis
> that the phenomenon in question, e.g. this method of expectation
> formation, is the outcome of "rational maximization" elaborated as
> complexity theory, e.g. since using current profits to predict future
> profits (though not, I gather, future profits in other than the short
> run) can be shown to be "rational" for agents who believe reasonably
> that complexity theory provides the true account of the
> reality they are
> attempting to understand and predict and since agents are
> using current
> profits to predict future profits, it therefore follows that the
> particular economic reality in question is accurately described by
> complexity theory and that agents know this and base their
> expectations
> on this knowledge.
>
> Have you empirically investigated how and why individuals do
> in fact use
> current profits to predict future profits?  Can you point to evidence
> showing they are using complexity theory to do this and that they are
> not, as Keynes claims, using current profits to predict what
> is knowably
> going to be different (even in the very short run e.g.
> Keynes's example,
> taken from Marshall, of the irrational influence of knowably
> temporary
> changes in railway revenues) from current profits and , in addition,
> within a psychological context of "mob psychology"
> irrationally treating
> as relevant many other kinds of irrelevant "news"?
>
> With respect to "uncertainty" you say both that complexity theory
> explains why the future is unknown and unknowable by a finite
> agent and
> that any other way of understanding the phenomenon is
> "religious" in the
> sense of not "scientific" because it's inconsistent with the
> ontological
> premises of orthodox natural science, namely those underpinning its
> conception of "determinism."  This is a religious way of defining
> science.  It dogmatically insists on the adoption of ideas
> that, among
> other problems (e.g. the "determinism" associated with the
> ontological
> idea of "internal relations" can equally well explain
> uncertainty), are
> self-contradictory i.e. against reason.  It implicitly makes
> its own the
> credo of anti-rationalist religion - credo quia absurdum.
>
> By the way, as I've pointed out to you before, treating what, for
> ontological reasons, is necessarily and essentially "vague" "as if it
> were precise and trying to fit it into an exact logical category" is
> another form of scholasticism.  If you believe that
> Whitehead's argument
> about the requirements material must meet for forms of reasoning that
> make use of the logical concept of the "variable" to be
> applicable to it
> is mistaken, you should (given that you understand yourself to be a
> rationalist rather than a dogmatic adherent of religion) be able to
> demonstrate by means of argument how it is mistaken, no?
>
> Ted
>