YS: It is necessary to remember Warren Weaver’s three classes of problems which were exposed in his seminal Science and Complexity paper (1948)
Weaver was in information theory an eminent researcher who has a co-authored book with Claude Shannon. Excepting problems of simplicity, which were targets of modern physics until the 19th century, Weaver distinguished problems of disorganized complexity and organized complexity. Probability theory is extremely useful for problems of disorganized complexity. It was successfully applied to statistical mechanics and then quantum statistical mechanics. However, Weaver knew well that there are many fields which cannot be treated as disorganized complexity (or simplicity). At the occasion he retires from the Science and Medicine Division of Rockefeller Foundation, he expressed his view on which direction the sciences should be developed in the next half century. This was a bit too premature prediction, because real science of complexity barely starts in 1970’s.
Economy belongs to the problems of organized complexity. Probability and statistics have only limited applicability. Complex systems of the second category (i.e. disorganized complexity) should develop new methods and tools of analysis. Mainstream economists did not proceeded in this direction and was satisfied with what they can do with probability and statistics. They are attacking problems of organized complexity with the means and tools which were successful for problems of disorganized complexity.
P.S. Ordinary differential equations (whether they are linear or non-linear) are essentially tools for problems of simplicity. Mathematics has not yet developed suitable tools to attack problems of organized complexity. This is one of reasons that we should expect much in agent-based simulation. In short, theory and mathematics are the first mode of scientific method, experimentation the second mode. We need the third mode of scientific research method. See my paper:
A Guided Tour of the Backside of Agent-Based Simulation.
Me: That is a very good post and set of observations. However, economic theory is actually paradigm hypnotized organized complexity.
Thank you for your kind comment. Would you like to explain more concretely what you mean by “paradigm hypnotized organized complexity”? We may deepen our argument by chance.
Me: Being hypnotized is an unconscious state. Current paradigms are largely unconsiously accepted norms. Thus old/current paradigms generally lack full examination, and new ones are generally either rejected as illogical or not reacted to at all because the individual has no frame of reference regarding it.
The current virtually monopolistic monetary paradigm for the vehicle and distribution of credit/money described as Privately Created Debt ONLY is a form of hypnotization that has become the unconsciously accepted norm, and its organized complexity and enforced lack of directness to the individual is coalescing as we sit debating instead of organizing.
The only reason why the new paradigm of Direct and Reciprocal Monetary Gifting is not accepted and applauded is because:
1) economists are not looking at the integratively micro-foundational character of double entry bookkeeping,
2) its digital character (equal amounts of debits and credits equal to zero) is not being recognized
3) the point of sale throughout the entirety of the economic/productive process is a temporary summing and ending point for all costs and prices for any item or service and the point of retail sale is the TERMINAL summing and
ending point for same….and the terminal EXPRESSION POINT for any and all types of inflation as well.
Thus, along with a universal dividend, a digital policy at these points of sale of equal discounts to the consumer and rebates back to merchants giving the discount would enable us to vastly increase individual purchasing power which would equally benefit both the individual and enterprise….and again, as retail sale is the terminal expression point for all inflation, not only eliminate inflation…but painlessly and beneficially integrate price deflation into profit making systems.
I hasten to add that this paradigm hypnotized organized complexity is also a mental-theoretical barrier to recognizing that the entire concept of “free” markets is fallacious. Markets are not just unstable….they are chaotic, that is they in fact are not bounded at all on the lower end by cost nor the upper end by price. In the temporal universe there is no such thing as total freedom….only freedom amongst known, rational and ethical barriers.
Thus the dominatingly smothered economy by Private Finance’s monopolistic paradigm of Debt Only is the parasitical present “answer”…..and the incisive, proactive and tremendously beneficial policies of the new paradigm are the wise actual answer.
YS: Dear Craig,
I understand how economics is hypnotized paradigm. I agree with you. Those who believe in neoclassical theory are hypnotized.
The question we must ask is how to dehypnotize those (perhaps including us). It must need a new paradigm.
Me: We de-hypnotize ourselves and others by looking at and playing out the double entry bookkeeping/micro-foundational policy effects I outlined….and then integrating the very correct macro-economic critiques of neo-liberalism with those micro policies. And then begin organizing a movement to communicate the benefits of those policies to the small to medium sized business community and every individual who has the common sense to accept gifts of income and price reduction.
In other words the integration of heterodox macro critique and the policies I outline IMPLEMENT the new paradigm….so lets take that ball and score six or seven social and political touchdowns with it.