About the Playground

The History of Economics Playground began in 2007 as a conspiracy. A handful of young PhDs decided in bars in Fairfax, VA, and restaurants in Paris, France, that they were too isolated. Most departments will have none, those that do will have no more than one historian of economics. In our field, unlike most disciplines, there are no venues for collaborative work or the barter of fringe concepts, research methods, and results. Until we could find such physical scholarly places, we would have a virtual community. We started a blog. We called it Playground as a site of encounters, of gaming, of pushing and shoving.

Five years on, and it has fulfilled its promise. Some graduated from being “Kids” and went on to create their own playgrounds. Others joined, recruited or invited themselves. We remain committed to asking, in public and together, how to write compelling histories. We have also probed the roles that histories play in the economics profession and in our polities. We write erratically and in different voices, on our topics and other peoples' too. We invite our readers to come out and play.

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A Western Science of Materialism?

Economic heterodoxy isolates a preoccupation with general optimality as the most significant impediment to new thinking in scientific materialism. A more productive outlook might focus on the scholastic mindset implicit in orthodoxy’s handling of their utility/optimality premise. The rigorous specification of orthodox scholasticism would perhaps allow us to see some of the same mental constructs operating in heterodox thinking, where their elimination is at least a possibility.

Examination of orthodoxy’s central organizing principle should begin by observing that the utility/optimality duo (they are creatures of one another) constitutes a self-evident generality of the sort that has launched all science in the Western tradition. It states simply that economic actors will not cease adjusting the physical levels of their input commodities until they all agree as to the commodities’ values. Were this adjustment process governed by constant utility parameters, there would ensue the hypothetical ‘general economic optimum’ spied-out more than a century ago by Vilfredo Pareto, a true man of the West. It has since fallen on hard times.

Main-stream classical economics asserts that Pareto’s description of homeostasis in the economic system is the economic system. Its mere assertion of Objectivist materialism assures that general optimality is always present:

• General optimality is the logical result of people operating freely in their material self-interest;

• If our society is free, then optimality is already here, and all that needs knowing may be deduced there from; and

• To the extent that our society is less-than-free, then our material self-interest requires that we make it more free, thereby validating economic theory en passant.

This short-circuiting of an unsubstantiated premise with a pre-ordained conclusion betrays the static, Scholastic turn of mind. It parallels the normative logic by which Christianity regulated (and ultimately failed to regulate) medieval feudalism. Thus cultivated western minds receive most economic science as a jarring contrast to the science familiar to us since the Renaissance, which has systems understood in terms of their responses to stimuli, i.e.: the dynamic by which homeostasis, having been disrupted, is restored.

Economic orthodoxy responds by setting itself beyond the ordinary scientific requirement for objective demonstrata by positing supernatural intervention in the middle of its causality. Having conjured a self-interested economic man out of nothing more than an enthusiasm for rationalist constructs, orthodoxy’s homo economicus is then exposed to prices generated by a market system that is both omnipotent and imponderable – the “literal miracle” articulated frequently by Ludwig von Mises, and by his following down to the present day. Finally, un-sourced ‘reason’ and ‘miracle’ are amalgamated into Pareto’s optimum by way of hallucinations as wild as any induced through religious rites originating with Abraham.

Economic orthodoxy generates a plethora of heterodoxies based in findings that Objectivism’s homo economicus does not exist. The general tendency toward optimality generated by economic man is then duly removed from the analysis; and the ‘miracle of the market’ is recast as the object of rational understanding for a true 21st Century science of economics.

Economic man was euthanized by injections of empirical findings from anthropology, behavioral psychology, and the experience of real business practices. Actual people are not seen acting exclusively for the sake of material advantage. Any true Randian individualist who will not perform the un-remunerated small courtesies that make civilized society possible will be shut-out of any known cultural dispensation. The healthy family is a commune where each does contribute according to their abilities and receive according to their needs. Businesses do not operate for the sake of economic efficiency: their executives collude on the division of markets, conspire to set prices, and generally take care of their own.

Having demolished orthodoxy’s core, heterodox economists are now mostly wandering in search of some new and effective organizing principle for economic life that can control the macro economy. And, sadly, they are doing so from motives that only re-enforce the medievalism that is their true opponent. The Scholastic mind requires, above all else, that its universe be unified. In their God-like view, a prospective truth cannot be valid unless it operates in all contexts. The logic of the whole must therefore govern each of its constituent parts; and this creates an impossible dilemma with respect to the familiar realities that have falsified orthodoxy’s economic man.

When scaled-up to model the economic whole, those actual behaviors observed in individual, familial, and corporate behavior would logically add up to the old Soviet system – at least insofar as its ideals were actually realized. History tells us that such artificial regimes decompose quickly; whereas the more organic capitalistic systems, logically the scaled-up behaviors of a non-existent economic man, have sometimes continued themselves for centuries.

Here again the distinctively Western mind finds a jarring contrast with his accustomed scientific practice. Mature science in the specifically Western mode left the childish pretense of universal understanding behind long ago. The European personality does not presume to “hear God thinking” in the quantitative metaphors we project upon nature. We accept that nature, when viewed at a given length of focus, presents us with different phenomena than are revealed by instruments calibrated at other lengths of focus. Our understanding of the sub-atomic world proceeds from Schrödinger; our understanding of the more familiar world around us proceeds from Newton. Few of us are troubled by our inability to derive Newton’s Laws of Motion from the Schrödinger Equation. Unified field theories exist only as objects of religious quest.

Scientific materialism’s true departure from its medieval cast of mind will begin when we accept that the macroeconomic whole requires explanations having nothing to do with its microeconomic parts. Let us then ask if orthodoxy’s homo economicus can be found in a completely macroeconomic context. He can; and he is real to the extent that you can shake his hand. The small fraction of humanity that are professional securities analysts manifestly effect the capital placements that control macroeconomic order. Pareto optimality logically describes the order brought about by these genuinely hedonistic, profit-obsessed, materialists as they exploit the near-perfect information provided through their interlocking memberships on the relevant boards of directors.

Having thus resuscitated general optimality as a plausible description of macroeconomic homeostasis, let us resolve to understand the ideal of capitalism in terms of how the homeostatic point is discovered, arrived-at, and maintained. To do so in the manner of objective demonstrata required by economic heterodoxy would entail solution to what orthodoxy has variously referred to as its ‘socialist calculation’ or ‘economic computation’ or ‘Vienna’ problem. By whatever name, this familiar problem challenges economists to demonstrate the economic system’s progress through a continuum of all the chaotic physical states and disequilibrium prices by which the material order maneuvers itself into Pareto’s optimum. And it requires that this demonstration represent economic actors and markets as operating only on the limited, local information that they might be reasonably expected to possess.

Having failed to solve this problem for a century or so, economic orthodoxy now confidently and incessantly proclaims that any solution to their Vienna Problem is beyond all human capacity. And, sadly, heterodoxy has been taken-in by their performance. But the on-going ‘truth’ of this problem’s insolubility is only another creature of economics’ Scholastic mindset. In this instance, a fortiori arguments (e.g.: the presumably insurmountable polynomial factoring problem) have overwhelmed the objective demonstrations of general economic optimality emerging from chaos that have been confected for decades. The only real impediment to these demonstrations now appears to have been availability of the necessary computing technology.

One of the most potent exhibits of a solved computation problem is available at www.sfecon.com. A desktop prototype of SFEcon’s basic model runs on the homepage; and any reasonable person can see that it falsifies received economic theory’s central premise of non-computability by direct counterexample. SFEcon has long been poised on the perimeter on economic science : it has passed peer review as an instance of complex, nonlinear system dynamics ; it has won NSF grants for mathematics and supercomputing; and it has been the topic of a successful doctoral thesis in Managerial Cybernetics . With Piltdown Man and N-Rays now de-bunked, economics’ famously indissoluble Vienna Problem remains the greatest and most remorselessly defended academic fraud left over from the 20th Century.

The final test of a science for inclusion with the Western canon is of course its application; and here it must be said that the Vienna Problem’s solutions, at present, amount to nothing more than academic rebellion and mathematical elegance for their own sakes. Were a solution to the Vienna Problem accepted somewhere in economics proper, it would likely find place as a Platonic form with which to embody the most elementary economic causality, and to exhibit the most efficient dynamic for economic adjustment under the premises of pure capitalism. Its analog in the more developed sciences would be the Carnot Cycle, which demonstrates the most efficient heat engine possible under the laws of thermodynamics.

Platonic forms must of course be invested with real content in order to become useful in resolving this or that issue. The current economic hazard can be addressed in one of two ways: the public might demand more in the way of economic command and a centralization of society’s responses to the crisis; or the public might demand more material liberty, as from its obligations under the TARP bailout (a good candidate for history’s most extreme act of class warfare). In the former case, a solved Vienna Problem demonstrates the feasibility of an efficient command alternative to the now hopelessly corrupt capital markets. In the latter case, a solved Vienna Problem demonstrates the beauty of free markets, which might then commend a greater vigor in protecting markets from fraud and exploitation by narrow interests.

In either case, economic science can be most effective by providing a mutually-agreed context in which its normative and descriptive possibilities can sort themselves out in the manner of civilized science. A solved Vienna Problem can be ‘run in reverse’ so as to reveal the utility tradeoffs implied by an observation of prices with physical transactions under the premise of optimality. The time-series of utility parameters generated in this way are remarkably consistent in time, and quantify economic potential in terms that are foundational to all manner of economic analyses.

Should that foundation be extended to a publicly-accessible description of global economic potential, we can be confident that a great deal of otherwise impossible analyses – most especially an adjudication of currency values – will follow spontaneously. And these analyses will have a natural authority over an economics profession that first could not solve its Vienna Problem, and then maintained the impossibility of solution against all evidence until the horizontal communications of our era forced them to concede.

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