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UCD-STAFFORDBEER  October 2009

UCD-STAFFORDBEER October 2009

Subject:

Re: New Economics in the Classic Mode

From:

Roger Harnden <[log in to unmask]>

Reply-To:

Forum dedicated to the work of Stafford Beer <[log in to unmask]>

Date:

Fri, 30 Oct 2009 16:41:17 +0000

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (238 lines)

In line with the recent thread, it has not yet ARISEN as an  
identifiable  system.

Roger
On 30 Oct 2009, at 16:33, Stefan Wasilewski wrote:

> How would we know Javier unless we try to make it so.
>
> In my mind it is still an emerging mess.
>
> Stefan
>
> On 30 Oct 2009, at 16:29, Javier Livas wrote:
>
>> Dear friends:
>>
>> One little question:
>>
>> Is the economy a viable system or a complex adaptive system? If the  
>> latter, I doubt that it can be a science in its own right, so the  
>> whole point is moot.
>>
>> Javier Livas
>>
>>
>> On Oct 30, 2009, at 2:25 AM, Czeslaw Mesjasz wrote:
>>
>>> Dear All,
>>>
>>> First, a usual disclaimer - I (we) could write much more but time,  
>>> duties,
>>> etc.
>>>
>>> 1. The discussion on New Economics is in 95% "nihil novi sub  
>>> sole". There
>>> is, and was, a divide between neoclassical, mainstrem economics and
>>> various "non-orthodox streams". Oliver Williamson, a  
>>> representative of
>>> most mathematicized non-neolcassical trend, i.e. American
>>> Neoinstitutionalism was recently given the "Nobel Prize" in  
>>> economics.
>>> It's an important signal.
>>>
>>> 2. The line of divide is clear - "objectivity" vs. "subjectivity" in
>>> economics and finance.
>>>
>>> I have no time to provide links but search engines should help. So  
>>> firstly
>>> I recommend Robert Mirowski's works. He provides a good  
>>> introduction for
>>> a deepened understading of economics as science.
>>>
>>> Then Donald McCloskey (presently Deirdre McCloskey) - economics as  
>>> the
>>> science of discourse and not the science of objective  
>>> mathematization.
>>>
>>> 3. Calls for a New Paradigm in Economics are well-known. There is  
>>> truly a
>>> need to change the fundamentals - search for "objectivity" based  
>>> upon
>>> classical mechanics (stability, equilibrium, etc.) proved to be  
>>> vain - to
>>> some extent.
>>>
>>> Directions of replacement are well known - implementation of new  
>>> models and metaphors.
>>> In this case cybernetics and complex systems are particularly  
>>> useful -
>>> search for J. Barkley Rosser's works. Perhaps revitalization of  
>>> systems
>>> dynamics at a new much more advanced level.
>>>
>>> 4. Current events in finance only fuelled the long-lasting  
>>> discourse.
>>>
>>> A few weeks ago Paul Krugmann wrote in NYT about dominance of  
>>> mathematical
>>> elegance over reality - it's a well-known issue but convincing  
>>> when applied to the
>>> situation on financial markets.
>>>
>>> 5. Here I cannot refrain from quoting the Black Swan of Nassim  
>>> Taleb. But
>>> on the financial markets we have also the Dragons (search for that  
>>> along with
>>> the name Didier Sornette - an "econophysicist").
>>>
>>> In the USA there is Doyne Farmer, one of the pioneers of that  
>>> approach -
>>> the Santa Fe works. His critique of traditional econometrics and  
>>> mathematical
>>> modelling in finace is quite persuasive - search for an article in  
>>> one of recent issues of "Science".
>>>
>>> 6. So what is new as a result of the crisis? BTW, I think that use
>>> of the term "crisis" is an abuse. See a picture of Fred Bell from  
>>> San
>>> Francisco in 1931 - that WAS the Crisis!
>>>
>>> Perhaps only a few issues which are alreaady developed.
>>>
>>> A. Rethinking mathematization of economics/management. Perhaps  
>>> even more
>>> attention should be given to CAS (adding cognition and  
>>> understanding of
>>> limits of decisiopn making), networks, system dynamics, etc. A more
>>> critical approach to existing models - perhaps a kind of non- 
>>> Gaussian
>>> econometrics with more attention paid to "fat tails".
>>>
>>> For example, in my opinion, the efficient market hypothesis is  
>>> based upon
>>> a simplified understanding of information. We know that we do not
>>> precisely what is information - there are several functional  
>>> approaches
>>> to defining it.
>>>
>>> B. More attention to subjective discourse - again, "nihil novi..".  
>>> Post
>>> structuralism and constructivism have been around in economics and
>>> management for some time. New ideas are emerging - markets for  
>>> risks,
>>> "subjective" (not necessarily creative) accounting - I call it  
>>> post-modernist accounting.
>>>
>>> "I do not know if my numbers are correct and/or "objective" but  
>>> due to my
>>> social/political position I am able to make my numbers more  
>>> convincing
>>> for the public/policy makers/shareholders/bondholders/media, etc.
>>>
>>> I very much like the discourse on financial stability. A deeper  
>>> look at
>>> this "objective scientific term" gives amazing results.
>>>
>>> C. Perhaps more attention should be paid in academic discourse
>>> to another idea, too often treated as a buzzword -  
>>> "sustainability" at
>>> various levels.
>>>
>>> D. Search for a "New Paradigm". I think that in a short term it's  
>>> a vain
>>> effort. Of course, there will be attempts of the masters of  
>>> discourse of
>>> global economics and finance to infuse new overwhelming metaphors.  
>>> We
>>> aleready have something new coined for the public -  "jobless  
>>> recovery".
>>> Perhaps soon we will have "balanceless banks" or "value of non- 
>>> marketable
>>> derivatives".
>>>
>>> Continuation of brainstorming could perhaps be a good source of  
>>> similar
>>> new predictions.
>>>
>>> E. I do not expect that soon some day somebody wil proudly declare  
>>> - here
>>> is a NEW ECONOMIC PARADIGM!
>>>
>>> Perhaps in the process of rethinking modern economics a consensus  
>>> will
>>> emerge about some changes in theory and policy oriented thinking.  
>>> But I
>>> would not expect any breakthrough.
>>>
>>> F. There may be only one exception - a truly deep crisis, of course,
>>> different from the Great Depression. But hopefully there would not  
>>> be
>>> such a stimulus for research. A truly deep economic crisis would
>>> imminently lead to local or global war(s).
>>>
>>> As an exercise I suggest to read the texts where AIG painted  
>>> consequence
>>> of its collapse. Perhaps exaggerated but gave some taste of what  
>>> could
>>> happen.
>>>
>>> 6. So before applying for any financing for the search of a New  
>>> Economics
>>> it's better to see what has been already done.
>>>
>>> 7. As for me, at present  I have not capacity to search for  
>>> something in
>>> New Economics.
>>>
>>> The above is just a "collateral effect" of my daily work on several
>>> texts in systems, security, management and corporate governance.
>>>
>>> I know that some of us will be at the Heinz von Foerster Congress in
>>> Vienna in November. So hopefully there will be time for discussion  
>>> about
>>> all that.
>>>
>>> Best regards, Czeslaw Mesjasz
>>>
>>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>> For more information go to: www.metaphorum.org
>>>
>>> For the Metaphorum Collaborative Working Environment (MCWE) go  
>>> to:  www.platformforchange.org
>>>
>>> METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html
>>>
>>> Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
>>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>> For more information go to: www.metaphorum.org
>>
>> For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org
>>
>> METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html
>>
>> Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
> For more information go to: www.metaphorum.org
>
> For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org
>
> METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html
>
> Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information go to: www.metaphorum.org

For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org

METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html

Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
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