Category Archives: Prediction

Prediction is impossible in the general case

In his book, FREEFALL (2009, Penguin Books), Joseph Eugene Stiglitz, a professor at Columbia University and a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979), states that economics is a predictive science. Now, one must distinguish between predicting a) planetary motion in its scheme of recurrence, and b) this afternoon’s weather vs. next month’s weather, or this afternoon’s prices and quantities vs. next year’s prices and quantities, all subject to to conditions diverging in space and time.   Continue reading)

 

 

The System of Abstract Primary Relativities Applied to Secondary Determinations

There is required a shift of focus from the concrete secondary determinations of prices and quantities in a non-systematic manifold to the immanent, abstract, primary relativities which may be applied to these secondary determinations to reach particular laws.

Paraphrasing [McShane, 1980, 127]: Taking into account past and (expected) future values does not constitute the creative key transition to Functional Macroeconomic Dynamics.  Continue reading

The Process is Always the Current, Purely Dynamic Process, etc. (See full title specification below.)

The process is always the current, purely dynamic process.  The analysis is purely functional, purely relational and explanatory analysis.  The theory is general and universally applicable  to concrete determinations in any Instance; The theory is a normative theory having a condition of equilibrium.

Our subheadings in this treatment are as follows:

  • Always the Current Process:
  • A Purely Dynamic Process Requiring a Dynamic Heuristic:
  • A Purely Functional Analysis:
  • A Purely Relational, Explanatory Analysis:
  • A Theory, General and Universally Applicable to Concrete Determinations in Any Instance:
  • A Normative Theory Having a Condition of Equilibrium:

Always the Current Process: Continue reading

Walter Scheidel re Cataclysm as the Only Cure

Walter Scheidel, a historian at Stanford University, wrote an opinion piece entitled Only Cataclysm Can Cure Inequalityin the June 11, 2017 Boston Sunday Globe.  Professor Scheidel rails against distortions of the economic process but offers no scientific perspective explaining the distortions as violations of a normative theory of the economic process.  His perspective is largely political rather than scientific.  Similar to the condition for proof in mathematics, until a statement is grounded in verified theory, it may be true or false; it is verified theory alone that elevates opinions such as Professor Seidel’s to the rank of theorems.

In the absence of proof we may have strong evidence for our belief in a certain statement but we cannot state that it is true. … until a proof is provided (statements) remain only statements that may be true or false.  It is a proof alone that elevates them to the rank of theorems. [Bush and Obreanu 1965, 6]

In the long-term creative-destructive process, a capital-expansion phase is intrinsically anti-egalitarian; and the subsequent consumer-goods-expansion phase is intrinsically egalitarian.  Furthermore, in a properly managed economy, the phases will be characterized by surges and tail-off’s but with no systematic requirement for a slump, depression, or Scheidel’s cataclysm.  Thus, Professor Scheidel’s conclusion “only cataclysm” is false.  It is not true that the only cure is a cataclysm.

Enlightenment of higher-paid people as to the science of the normative functionings of the economic process would induce both massive philanthropic activity  and increases in the incomes of the lower-paid people in conformity with the normative requirements of the process.  This philanthropy would be an instance of enlightened government by the competent rather than wasteful bungling by an ignorant, self-interested government bureaucracy.  It would not have the negative connotations of plutocracy or oligarchy; rather, in combination with the provision of increased incomes to satisfy the possibilities of supply, this philanthropy would constitute the competent and effective partial management of the economy by knowledgable and talented, free people.

These free, enlightened philanthropists would constitute a fourth branch of government.  Their adaptation to the norms of the economic process to effect the social good would be an exercise of moral precepts based on the scientific understanding of the dynamics of the economic process by enlightened free persons.

The cure is not cataclysm; rather it is the achievement of an understanding of how the economy normatively functions, coupled with goodwill.  To dispel ignorance, a dynamic perspective and explanatory science are more effective than Professor Scheidel’s recitation of historical, but not determinate, facts.
Cf CWL 15, xxviii, xxxii-xxxv, xivi-xivii, 6

Again,

In the absence of proof we may have strong evidence for our belief in a certain statement but we cannot state that it is true. … until a proof is provided (statements) remain only statements that may be true or false.  It is a proof alone that elevates them to the rank of theorems. [Bush and Obreanu 1965, 6]

Also,

When suitable classes and rates of payment have been defined, it will be possible to show that under certain conditions of human inadaptation this pure cycle results in a trade cycle.  However, that implication is not absolute but conditioned, not something inevitable in any case but only something that follows when human adaptation is lacking.CWL 15, 35