Ergodicity and Economics [Was - Re: Putting Chartalism In Its Place?

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

William:

Re. the following:

I didn't think we were talking about mathematics of physics.  Perhaps
this is further evidence that we are hung up on semantics.

Comment:

One can approach economics in any number of ways.

But, whatever one's approach, it is necessarily predicated on implicit or
explicit epistemological considerations.

In this respect, the approaches of Samuelson and Friedman are polar
opposites.

In Friedman's case - as also in that of most PKTers - "theory" is neither
more nor less than generalization of observed correlations between
variables.

But variables do not exist in intellectual vacuum out there - they are
ALWAYS the creation of somebody's imagination.

That is why an understanding of the relationship between "definitions" and
"substance" in mathematics and physics is of the essence for would-be
economic theorists - a point embraced by both Samuelson and Friedman but
honored in the breach insofar as their economic "theorizing" is concerned.

In Samuelson's case - as in that of Robert Lucas - the relationship between
"definitions" and "substance" in mathematics and physics is understood to be
of the essence for any would-be "theoretical" economics.

Hence their insistence on treating real-world economies AS IF they were
ERGODIC - the alternative, from their point of view, is to forego the
attempt to do any  "theoretical" economics at all.

Paul Davidson has a different point of view - while recognizing that
real-world economies are NON-ERGODIC, Paul does not construe the
relationship between "definitions" and "substance" in mathematics and
physics as implying that the condition of non-ergodicity dooms up front any
attempt to do "theoretical" economics of the kind to which Keynes aspired in
his younger years.

In his 1922 definition of "The Theory of Economics", to which I have made
repeated references in this forum, Keynes' position reduced to the
following:

1.  Ergodicity is a sine qua non for "The Theory of Economics";

2.  Real-world economies are Non-Ergodic; whence it follows that

3.  "The Theory of Economics" is - and can only be - "an apparatus of the
mind, a technique of thinking" which, while NOT directly applicable to the
real world, yet "helps its possessor to draw correct conclusions" with
respect thereto.

In my view, Paul and some/many/most (?) PKTers agree with Keynes on point
(2) and ignore his points (1) and (3).

Gunnar





----- Original Message -----
From: "William F Hummel" <wfhummel@xxxxxxxxxxx>
To: "Gunnar Tómasson" <gunnar.tomasson@xxxxxxxxxxx>
Sent: Tuesday, September 16, 2003 2:14 PM
Subject: Re: Putting Chartalism In Its Place?


Gunnar,

>William:
>
>Re. the following:
>
>I think this exchange is now the realm of semantics - definitions -
>not substance.
>
>Comment:
>
>The distinction between "definitions" and "substance" makes no sense in
>either mathematics or physics.
>
I didn't think we were talking about mathematics of physics.  Perhaps
this is further evidence that we are hung up on semantics.

William