filc wrote:
<<< My statement is nonesensical? Your telling me “economics”, even “Macro” economics has nothing to do with individuals? Whats the point then? >>>
That’s right. Macro economics doesn’t deal with individual behaviour. That is why it is called macro-economics.
Priceless.
Rob, macroeconomics needs to be consistent with microeconomic foundations. Most economists will tell you this.
Sieben wrote:
<<< Which arises from individual preferences. You can’t aggregate preferences. >>>
We don’t aggregate preferences, just the objective observables.
<<< The overall market price is the result of supply and demand, not the summing up of everyone’s ordinal utility. >>>
Correct.
Sieben wrote:
<<< I don’t believe that marx secretly knew about entropy. There doesn’t even appear to be a link between the LTV and entropy. Entropy = random zomg so maybe the data doesn’t fit but we fit the data and its a pretty good fit! >>>
It is not stated that Marx somehow knew about entropy, it is just stated that with the known laws of entropy applied to economy, Marx’s LTV can be confirmed.
Sieben wrote:
<<< Did you ever consider that only a few people are intelligent? >>>
Why would that be a consideration? I’m sure the distribution of intelligence also follows some statistical pattern. But again, what has this to do with the stamement, that - whetever the distribution of intelligence is - there is no connection between intelligence and wealth.
<<< Or that there might be MORE THAN ONE INPUT for once? >>>
More then one input for WHAT?
Objective observables are preferences placed into action. And you still cannot place them in an aggregate and have anything coherent come out of it. You cannot place millions of objective observables into an easy to distinguish aggregate and still have any real representation of reality.
Which effectively dissmiss’s your notion about economics being disconnected from individual human action.
Rob, can you compile your responses into single posts instead of into 3-8 consecutive posts?
There isn’t? What about between entrepreneurial ability and wealth.
For prices. For outcomes. For anything.
@Smiling Dave
Yeah, so to be short, as in the thermodynamic cases of gas molecules in the atmosphere and in the case of people’s behaviour, there are (outside) forces at work that determine the outcome.
Nothing new, I would say.
But then in neither cases this dismisses the thermodunamic behaviour of the system.
Given Robert’s claims about the Labour markets having rates of profit Boltzmann distributions, I decided to have a gander at Laws of Chaos. My skepticism was punctuated by the fact that I already know from what little reading I have done of information theory that the data of distributions concerning phenomena resutant from human action, e.g. likelihood of letters appearing in written english tend not to be equiprobabilistic, and thereby not resulting in producing binomial distributions, or Gaussian distributions in the case of continuous data sets(never mind having miraculously found Boltzmann distributions in economic data) .
For critical analysis of these claims, I recommend other posters on this thread to view Chapter 8, as there the authors outline the empirical justifications to the claims they’ve made. The authors make a very neat, and of course inevitable dodge on pg 173:
It can be seen that the various rates of profit achieved by different firms are quite widely dispersed over a range from no profit (0%) to around 40% and beyond. We have ignored the small amount of capital that made losses before tax and interest.
This is a deliciously mendacious and myopic way to ignore the rate of loss and business failure, which is certainly statistically significant, even if one does ignore startup failure. The latter is of course due to the fact that most startups fail precisely due to their inabillity to properly cater for consumer demand both on the sales and costs angle(thereby preventing too many resources being diverted from productive employment as ascertained through the purchasing decisions of other producers in the economy). The same could be said of failing big business.
From reading the above sentence however, and the data that follows in the sections that follow (Which I’m assuming good faith in), one could be tempted into adopting the incorrect hypothesis that failure rates for big business, leaving aside government intervention, would be quite low. However, since capital is conceived as what Austrians perceive as “financial capital” one can immediately reveal the circularity implied in this reasoning. The market value, or capital contained in them is precisely determined by both their present and anticipated rate of return. Hence even large failures would get neatly and obliquely eliminated from their statistical analysis. This is of course also important for considering the significance for the economy of startup business losses. No doubt if the authors learned of the extent of such horrors and ineffciencies it would be enough to convert them from marxists to extreme left wing social democrats.
Somewhat related to this, the data significantly lacks a time element, as for instance with the charts of rate of profit for British non-oil manufacturing industry in 1972 and 1981. Although it would probably break their holier than thou only analyse macro procedure, if they actually began with the data at 1972 and at least matched specific firms to specific profits(perhaps with different colured stripes), they would be able to observe the changing composition of the “capital” in the economy as a necessary consequence of the profit-loss system and their ability to satisfy subjective value. I won’t take a gulp, but it might even allow them to see how subjectivism could be stretched beyond “use value”, to actually explaining and determining imputation of capital goods, land and labour.
Other than that, I welcome others to continue along these lines analysing the book and this chapter. A fair portion of the rest of it probably has some use in providing a pedantic and somewhat dry way to teach Sophomore Statistical Physics, though the appendix on Probability theory is appreciable, if a little thin.
P.S. In some fairness to the authors of Laws of Chaos, they don’t make the crankish claim of the OP to have discovered Boltzmann distributions in any of this data. They assert a Gamma distribution with regard to rate of profit, and a Gaussian with regard to specific price. Needless to say, just looking at the graphs on pg 175, even ignoring the problems I’ve pointed out regarding the composition of the data they rely on, the former claim is ludicrous. That is the worst Gaussian fit I’ve ever seen(admittedly this does possibly reveal my lack of reading in quantitative “empirical” economics).
filc:
<<< Which effectively dissmiss’s your notion about economics being disconnected from individual human action. >>>
It does not disconnect economics from indivual behaviour as neither the thermodynamic behaviour of a gas is disconnected from the behaviour of individual molecules.
Why is this thread still alive??!?? It’s pure gobbledy-gook, it doesn’t deserve any more airtime than any of the other Venus Project-esque nonsense!
Clayton -
Why is this thread still alive??!?? It’s pure gobbledy-gook, it doesn’t deserve any more airtime than any of the other Venus Project-esque nonsense!
Perhaps I’m masochistic, but I’ve enjoyed it.
So the whole history of mankind is predetermined to the end of time. No point in arguingabout anything then, hey?
Smiling Dave wrote:
<<< So the whole history of mankind is predetermined to the end of time. No point in arguingabout anything then, hey? >>>
That’s your conclusion, not mine.
As long as we can by no means determine the outcomes of things with sufficient accuracy, there isn’t any real difference either.
From Wikipedia:
In science, thermodynamics (from the Greek θέρμη therme, meaning “heat”[2] and δύναμις, dynamis, meaning force) is the study of energy conversion between heat and mechanical work, and subsequently the macroscopic variables such as temperature, volume and pressure. The first to give a concise definition of the subject was Scottish physicist William Thomson who in 1854 stated that:[3]
Two derivatives of thermodynamics to emerge in the decades to follow include: statistical thermodynamics (or statistical mechanics) (1860), a subject concerned with statistical predictions of the collective motion of particles from their microscopic behavior, and chemical thermodynamics (1873), a subject concerned with the nature of the role of entropy in the process of chemical reaction.[4][5][6] Historically, thermodynamics developed out of a need to increase the efficiency of early steam engines, particularly through the work of French physicist Nicolas Léonard Sadi Carnot (1824) who believed that engine efficiency was the key that could help France win the Napoleonic Wars.[7]
So that thermodynamics is totally irrelevant. We are not studying heat and mechanical energy.
As for statistical mechanics, here’s a line from Wikipedia: The essential problem in statistical thermodynamics is to determine the distribution of a given amount of energy E over N identical systems.[3]
The key word here is IDENTICAL. You will never see any discussion in statistical mechanics which subjects every single little particle to a different outside force. It approacheth the absurd to even try to make such a claim. Read up on this if you will. Become enlightened, my son.
So there is a third possibility I am unaware of. I thought the only two are:
We have some degree of free will.
We don’t.
And a consequence of assuming 2 is that something else makes us do what we do, other than our free will. Meaning what we do is predetermined. Please open my eyes about this.
Your last sentence seems to be saying "We don’t really know what will happen. Of course nothing on Heaven and Earth can possibly change what will happen, including our own feeble attempts, which are predetermined anyway. We are but flailing blindly trying to change the unchangeable, And yet there is is no “real difference” between what we are doing and someone who has actual control over the situation who does something about it.
To bring this point out fully, imagine 2 cars zooming down the road. One has a working steering wheel, with a driver with open eyes. One has a broken steering wheel, and a driver with open eyes who cannot change the movement of the car, since the wheel is broken. So you suggest the driver put on a blindfold, so that he won’t know where the car is headed, and now the steering wheel will work. I dunno. Seems flawed to me somehow.
But even if we accept such a mad proposition, you have painted thyself into a corner. Because you admit we that we can assume we humnas have free will, and those little molecules don’t. So that thermo and stat mech cannot possibly be applied to us.
Correction: what I should have said is :“in short, the analytical methods used in the fields of physics and physical sciences are simply not appropriate, nor applicable, for analyzing human actions- useless, in fact.”
Apologies.
Regards, onebornfree