Woods (This guy Rocks)

[Mashuri]

Re: Woods (This guy Rocks)

I missed this one! Better late than never...

Ah - to continue a train of thought dropped a half year ago, I take it you (Mashuri) meant roughly:
No. I disagree.

The higher orders are commonly arranged by quite different principles, such that understanding lower orders provides little or no guidance into the higher orders, and for that matter, vice versa.

Since only individuals can assess information and act, the "higher order" you speak of only has meaning in as much as how individuals assess and react to it, therefore understanding individual behavior is still what's necessary. If an economic theory has to separate "macro" from "micro", and they contradict each other in any way, then the theory itself is fundamentally flawed.

You need to take a key point into perspective when it comes to economics vs the physical sciences you (and most others) inevitably draw comparisons to: We're starting off with very intimate knowledge of the human individual simply because we exist as human individuals in the first place. This is what the Austrian theory bases itself upon, that which is self-evident, and deduces its theory from there. It is a logical science. Trying to imitate the physical sciences by ignoring what is logically self-evident (isn't the purpose of all scientific research to make things evident anyway?) and to induce/deduce only from the observable is grossly inefficient and produces erratic and inaccurate results.

[ThePythonicCow]

Re: Woods (This guy Rocks)

Since only individuals can assess information and act, the "higher order" you speak of only has meaning in as much as how individuals assess and react to it, therefore understanding individual behavior is still what's necessary.

False. It is seldom necessary and almost never sufficient.

Just because the primary objects of a lower layer form in some way the essential atomic elements of a higher layer does not mean that it is necessary or sufficient to understand those objects in order to understand the structure of the higher layer.

See my semiconductor/microprocessor/operating system/software applications example, above.

Do not confuse essential prerequisites with organizing principles.

[Mashuri]

Re: Woods (This guy Rocks)

False. It is seldom necessary and almost never sufficient.

Just because the primary objects of a lower layer form in some way the essential atomic elements of a higher layer does not mean that it is necessary or sufficient to understand those objects in order to understand the structure of the higher layer.

Your comparison is flawed because even the highest level in your example, software applications, is nowhere near complex enough. If, for example, a person understands Windows XP, Vista and 7 intimately, then he/she intimately knows the OS of ~85% of all personal computers currently in use.

To satisfy your engineering tendencies, I'll try to adapt your analogy. Using the four fields you referenced above, when it comes to people, the semiconductor and microprocessor architectures remain pretty constant but each system has a unique operating system. There may be similarities between OS's within each culture but none are completely identical. Go up to higher level software and each system becomes even more distinctly unique. Now, how does one form organizational principles when every single system has custom software installed on custom operating systems? One can try to identify patterns of behavior among groups through external observations and come up with some loose, general theories -- and just chalk it up to "animal instincts", for example, when any of those theories fails, or one can identify the universal behaviors inherent in the design (inevitable since each system uses essentially identical hardware) and come up with theories that hold up so long as said hardware architecture remains the same. I'm concluding that the latter is a more sound, reliable way to go.

[ThePythonicCow]

Re: Woods (This guy Rocks)

We're not understanding each other. I should have let this thread rest in peace. Sorry.

[oddlots]

Re: Woods (This guy Rocks)

I agree that an anchored monetary system will not prevent bubbles and manias.

However, such event would surely be accompanied by an opposite reaction (i.e. price decreases) within the system?

I mentioned - I think - this same issue in another thread here:

http://www.itulip.com/forums/blog_po...wblog&p=182781

I think this is both wrong and right. Right in the sense that the model we all have in our heads of a free-market as a self-righting feedback mechanism is certainly not totally untrue. The most obvious example being something like the ruthless competition in the technology arena where "creative destruction" is very much in play, misteps are punished severely and - putting aside value-laden arguments about where it's leading us - by and large we all benefit.

On the other hand you have the dynamics that Mynsky describes so well which are very much the opposite of this: in fact the system's very stability leads to a more severe downturn as Ponzi-investements flood the market with money looking for a home and both necessitate more risk taking and seem to validate them at the same time.

Now you could argue that the latter is a result of the Fed's intervention in the money markets - in other words, its distortions of a truly free market. By pushing down rates it is sending false signals about values and risks etc. That's not a bad argument to me, except for one thing: one of the key requirements Mynsky demanded of his model was that it be able to re-create the boom-bust patterns of classic, laissez-faire economies of the 19th century. And in my understanding of his work as explained by Steve Keen he succeeded in this (and so provided a counterpoint to "equilibrium theory" which I take, perhaps simplistically, as the academic version of the "self-righting system" above.)

So you have two models of how free-market's work that result in completely different outcomes and seem equally valid. If the difference is not how "free" they are, what is it?

Cue Oscar Wilde on quoting yourself. (Metalman around?)

But really, I think there's something to the above. Mynsky is a hero of this crisis to my mind so if we like free markets we'd better love Mynsky moments and come up with either a convincing argument for why they are not ultimately devastating (Sharky) or for how their worst results - the lower rungs of the ladder just collapse - can be mitigated without making a complete mockery of the system.

[Mashuri]

Re: Woods (This guy Rocks)

We're not understanding each other. I should have let this thread rest in peace. Sorry.

Fair enough. I was getting that feeling too.

[shiny!]

Re: Woods (This guy Rocks)

Too often discussions such as these deteriorate into:

• We must go left because there's a hard place to the right.
• No we must go right because there's a rock to the left.

My instincts say we must go UP. We need a paradigm shift.

"During periods of so-called economic depression, societies
suffer for want of all manner of essential goods, yet investigation almost
invariably discloses that there are plenty of goods available. Plenty of coal in
the ground, corn in the fields, wool on the sheep. What is missing is not
materials but an abstract unit of measurement called ‘money.’ It is akin to a
starving woman with a sweet tooth lamenting that she can’t bake a cake because
she doesn’t have any ounces. She has butter, flour, eggs, milk, and sugar, she
just doesn’t have any ounces, any pinches, any pints."
-- Tom Robbins - "Skinny Legs and All"

[ThePythonicCow]

Re: Woods (This guy Rocks)

My instincts say we must go UP.

I vote we teleport out of here .

[flintlock]

Re: Woods (This guy Rocks)

zzzzzzzzzzzzzzzzz

[shiny!]

Re: Woods (This guy Rocks)

I vote we teleport out of here

Unfortunately, wherever we go, there we are. Firefly proves that ;-)