Tag Archives: Economics

.[embedded content] Paul Samuelson once famously claimed that the ‘ergodic hypothesis’ is essential for advancing economics from the realm of history to the realm of science. But is it really tenable to assume — as Samuelson and most other mainstream economists — that ergodicity is essential to economics? In economics ergodicity is often mistaken for stationarity. But although all ergodic processes are stationary, they are not equivalent. So, if nothing else, ergodicity is an...

The methods economists bring to their research There are other sleights of hand that cause economists problems. In their quest for statistical “identification” of a causal effect, economists often have to resort to techniques that answer either a narrower or a somewhat different version of the question that motivated the research. Results from randomized social experiments carried out in particular regions of, say, India or Kenya may not apply to other...

Why do economists never mention power? The intransigence of Econ 101 points to a dark side of economics — namely that the absence of power-speak is by design. Could it be that economics describes the world in a way that purposely keeps the workings of power opaque? History suggests that this idea is not so far-fetched … The key to wielding power successfully is to make control appear legitimate. That requires ideology. Before capitalism, rulers legitimised...

The vanity of deductivity Modelling by the construction of analogue economies is a widespread technique in economic theory nowadays … As Lucas urges, the important point about analogue economies is that everything is known about them … and within them the propositions we are interested in ‘can be formulated rigorously and shown to be valid’ … For these constructed economies, our views about what will happen are ‘statements of verifiable fact.’ The method of...

Learning from econophysics’ mistakes By appealing to statistical mechanics, econophysicists hypothesize that we can explain the workings of the economy from simple first principles. I think that is a mistake. To see the mistake, I’ll return to Richard Feynman’s famous lecture on atomic theory. Towards the end of the talk, he observes that atomic theory is important because it is the basis for all other branches of science, including biology: “The most...

The marxian labor-time values of individual commodities fall as productivity improves. This means that if a currency unit is to command a stable quantity of use-values (i.e. physical goods and services) over time, the value of the currency must likewise fall as productivity improves. For a given distribution between wage and profit income, and a given share of value added in total value, a currency unit’s command over use-values will remain stable when money wages rise in line with...

How economic orthodoxy protects its dominant position John Bryan Davis (2016) has offered a persuasive account of the way an economic orthodoxy protects its dominant position. Traditional ‘reflexive domains’ for judging research quality — the theory-evidence nexus, the history and philosophy of economics — are pushed aside. Instead, research quality is assessed through journal ranking systems. This is highly biased towards the status quo and reinforces...

Les 150 ans de la Commune de Paris .[embedded content]

What’s wrong with economics? This is an important and fundamentally correct critique of the core methodology of economics: individualistic; analytical; ahistorical; asocial; and apolitical. What economics understands is important. What it ignores is, alas, equally important. As Skidelsky, famous as the biographer of Keynes, notes, “to maintain that market competition is a self-sufficient ordering principle is wrong. Markets are embedded in political...

Modell och verklighet i ekonomisk teori If orthodox economics is at fault, the error is to be found not in the super-structure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premisses. John Maynard Keynes Ekonomistudenter frågar ofta vad de ska med nationalekonomin till. Vad är poängen med att lära sig en massa matematisk-statistiska modeller när de uppenbarligen ändå inte hjälper oss...