by Summary:
The problem with conventional economics is that it requires that the "settled methodology" define both the questions and how they are answered, insuring that their mathematical models will be tractable. That is inappropriate for complex adaptive systems. All life systems and especially social systems are complex adaptive systems that are appropriately modeled using organic models rather than mechanistic models suitable for the natural sciences.While MMT does not use organic modeling based on the life sciences, neither does it use mechanistic modeling based on the assumption that economics is comparable to the natural sciences and can be modeled on similar principles. But this assume non-existent conditions such as homogeneity and ergodicity, which do not apply to social systems that are
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The problem with conventional economics is that it requires that the "settled methodology" define both the questions and how they are answered, insuring that their mathematical models will be tractable. That is inappropriate for complex adaptive systems. All life systems and especially social systems are complex adaptive systems that are appropriately modeled using organic models rather than mechanistic models suitable for the natural sciences.The problem with conventional economics is that it requires that the "settled methodology" define both the questions and how they are answered, insuring that their mathematical models will be tractable. That is inappropriate for complex adaptive systems. All life systems and especially social systems are complex adaptive systems that are appropriately modeled using organic models rather than mechanistic models suitable for the natural sciences.While MMT does not use organic modeling based on the life sciences, neither does it use mechanistic modeling based on the assumption that economics is comparable to the natural sciences and can be modeled on similar principles. But this assume non-existent conditions such as homogeneity and ergodicity, which do not apply to social systems that are
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Mike Norman considers the following as important:
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While MMT does not use organic modeling based on the life sciences, neither does it use mechanistic modeling based on the assumption that economics is comparable to the natural sciences and can be modeled on similar principles. But this assume non-existent conditions such as homogeneity and ergodicity, which do not apply to social systems that are historical and influenced by culture and institutions.
Why haven't organic models replaced mechanistic models? We aren't there quite yet although much work is being done in this directions. Economics is data-based and therefore limited by path dependence and hysterisis whereas complex adaptive systems involve synergy and therefore emergence due to reflexivity.
Therefore, MMT analysis is based on ex post data from accounting on the one hand and counterfactuals with respect to future contingency. While the future cannot be predicted, it can be forecast to some degree based on the presence or absence of certain conditions that can be specified.
But this approach does not result in models based on "settled methodology" so it is rejected by the mainstream as deviant. Krugman: "Where is your model?" The retort is, "Your modeling doesn't work and here is why. Ours does to a useful degree and therefore it should be adopted."
The Gower Initiative for Modern Money Studies
‘Tombstone for a Tombstone’: Dealing with the ‘bad science’ behind mainstream criticism of MMT
Phil Armstrong