ghholtham: At the level of theory we require equations of motion, if you like, based on plausible aggregation properties of plausible views of human behaviour in particular circumstances. There is no expectation that these would have a “solution” in the form of a stable equilibrium. We need to acknowledge not only the incompleteness of information that makes optimisation not only impossible but actually meaningless and the importance of feasible information flows in the system. And because the economic system is evolutionary conclusions will always be bounded and conditional on particular circumstances. I must have acknowledged many times that I agree with most of Lars criticisms. My frustration is that basic theory of the sort we need will not be constructed by endlessly rehearsing the failings of current text-book orthodoxy.
In my opinion some of the building blocks of a more useful theory are to be found in the work of Herb Simon. See Models of Man, Essays in memory of Herbert A Simon ed Augier and March, MIT Press, available on kindle, for a gentle introduction. At the applied level you can do useful work with a few basic notions and a readiness to get your hands dirty with data but I agree better basic theory is highly desirable.

Me: ghholtham,

“At the level of theory we require equations of motion, if you like, based on plausible aggregation properties of plausible views of human behaviour in particular circumstances. There is no expectation that these would have a “solution” in the form of a stable equilibrium.”

Precisely. As has already been researched by Steve Keen with his Minsky software which dynamically relates the various relevant variables and flows of money. The only thing he’s failed to perceive is the concept of the new paradigm which will invert the present realities of individual monetary scarcity/systemic austerity, namely grace as in abundance and flow/free flowingness.

Once one “grocs” the new paradigm concept all they need to do is find the best way to implement and regulate it so as to prevent the other intentioned/anti-social from attempting to de-stabilize it. Its helio-centrism which resolved 99% of the emergent problems of terra-centrism and then the discovery of the ellipse which polished off the new concept.

So, the monopolistic present paradigm of Debt and Loan Only (terra-centrism) is broken up by integrating Monetary Gifting into the system, and then the rest of the edifice of the mentally thwarting, indirect and obsessive complexities of macro-economics drop back into their actual data point nature with the discovery of the strategically significant points of policy implementation, namely retail sale and note signing. Voila! We can get on with the existential problems of climate change and trying to game the second law of thermo-dynamics by off-planeting the most energy intensive means of production and colonizing the moon.

And while we’re at it we can also realize that “small is beautiful” is really just an aspect and technique for the self actualization of grace as in higher self awareness/consciousness. The better to transition to the potential zeitgeist of Arcadia from Faustian civilization.

Me: “And because the economic system is evolutionary conclusions will always be bounded and conditional on particular circumstances. I must have acknowledged many times that I agree with most of Lars criticisms. My frustration is that basic theory of the sort we need will not be constructed by endlessly rehearsing the failings of current text-book orthodoxy.”

Completely agree. But what we need is a theory of the new paradigm concept in money and finance….that will alter virtually all of the problematic economic issues people on this blog “endlessly rehearse” the failings of current text-book orthodoxy.