Re: Paul D. on this year's Nobel - Addendum

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

The following explanatory comments may be helpful:

As noted in an earlier posting to PKT, Keynes' 1922 definition was not
original - except for the "correct" qualification, it restates John Stuart
Mill's definition of the "science of political economy" as one whose method
is the method 'a priori'.

In other words, "theory" in that sense is a purely axiomatic structure all
of whose "conclusions" are deduced logically from some given set of
axiomatic premises.

Given this concept of "theory", its usefulness - if any - is akin to that
which Isaac Stern once ascribed to finger exercises for students of the
violin, namely, they must first master the technique involved before
attempting to let their imagination fly.

In other words, one does not "feed assumptions" into the "apparatus",
whereby would-be economic theorists train their minds for useful application
to real world economic problems.

In this view of "theory", whatever "conclusions" a trained mind arrives at
with respect to real-world economic policy issues are NOT "correct" any more
than a particular rendering of Brahm's violin concerto is "correct" - in
both cases, individuals do the best they can.

If the real-world is NON-ergodic, then it is impossible to construct an
"apparatus of the mind" which mirrors it in such manner that "conclusions"
drawn within the "apparatus" are at once "correct" insofar as real-world
policy issues are concerned.

Gunnar


From: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
To: <koppl@xxxxxxx>; "James Juniper" <James.Juniper@xxxxxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>; "Gang8" <gang8@xxxxxxxxxxxxxxx>
Sent: Monday, October 14, 2002 11:23 PM
Subject: Re: Paul D. on this year's Nobel


> Re. the following:
>
> >  I think itâs fair to say that for
> > Keynes, investors are irrational *because* the world is nonergodic.
> Rational
> > actions require adequate epistemological foundations.  If these
> foundations are
> > absent, rational action is impossible.  (All this in *Keynes* opinion.
> My
> > opinions are irrelevant here.)
>
> Comment:
>
> There is another epistemological question involved - one to which Keynes
> gave an implicitly affirmative answer in his 1922 definition of what
> constitutes "The Theory of Economics":
>
> "[It] does not furnish a body of settled conclusions immediately
applicable
> to a policy.  It is a method rather than a doctrine, an apparatus of the
> mind, a technique of thinking, which helps its possessor to draw CORRECT
> conclusions."
>
> Keynes' use of the term "correct" is either (a) hyperbole, or (b) leap of
> logic.
>
> For, while Reason yields "correct" conclusions when applied to some Set of
> Axioms - "an apparatus of the mind" such as the General Theory - there is
no
> warrant in logic to conclude that Reason, on that account, is in principle
> capable of leading us to "correct" conclusions with respect to Real-World
> policy issues.
>
> The underlying point concerns what, in physics, is known as the
distinction
> between The Map - Model - and The Territory - Physical Reality.
>
> Gunnar
>
> ----- Original Message -----
> From: "Roger Koppl" <koppl@xxxxxxx>
> To: "James Juniper" <James.Juniper@xxxxxxxxxxxx>
> Cc: <pkt@xxxxxxxxxxxxxxxx>
> Sent: Monday, October 14, 2002 1:53 PM
> Subject: Re: Paul D. on this year's Nobel
>
>
> > A couple of recent posting address a supposed conflict between two
> > interpretations of Keynes.  Loosely, itâs irrationality vs.
nonergodicity.
> > (Iâll leave aside my criticisms of Paul Davidsonâs use of the term.)  I
> think
> > itâs a bit of a false dichotomy, however.  I think itâs fair to say that
> for
> > Keynes, investors are irrational *because* the world is nonergodic.
> Rational
> > actions require adequate epistemological foundations.  If these
> foundations are
> > absent, rational action is impossible.  (All this in *Keynes* opinion.
> My
> > opinions are irrelevant here.)  Thus, if people act when the
> epistemological
> > foundations for actions are too weak to sustain rational action, they
are
> by
> > definition acting irrationally.  The ânonergodicityâ of the social world
> often
> > leaves us bereft of  epistemological foundations for action.  Itâs
either
> > irrational action or no action.  Carabelli and De Vecchi (2000) say
> something
> > close to that, but for some reason imagine that we follow conventions
only
> our
> > ignorance of is âtotal.â
> >
> > Cheers,
> >
> > Roger
> >
> >
> > --
> >
>
>