This paper by Hayek is of the utmost importance for understanding the key difference between pure Misesian economic theory and the positivism of Popper/Friedman. Indeed, they do not contradict each other. One way of seeing it, and this is precisely what is illuminated by Hayek, is: Misesian economic theory would say that there are supply and demand curves, and why they are of such and such shape and so on. But Misesian theory could never assure that an equilibrium is going to be achieved. That is not pure logic of choice (theory, in Mises terminology) but history (or empiricism or behavior, according to neoclassic parlance).
Given that some individuals have in their minds at a specific instant a certain maximum price to pay and/or a minimum price to be paid, the actual process of groping is achieved by specific individuals in specific situations in time and space: they are empirical!
What Hayek says is akin to: "hey guys, economics is not only what Mises calls theory (pure logic of choice) but is also history (and then empiricism, positivism, etc.).
Showing posts with label epistemology. Show all posts
Showing posts with label epistemology. Show all posts
Saturday, July 26, 2014
Thursday, August 22, 2013
Irrational market
"The market is irrational" is Economist for "I don't have a fricking idea of what is causing such and such behavior on this market".
"The market is irrational" can be translated into Noneconomist as "I am either stupid enough or lack enough training as to understand what the heck is going on with this damned market, but I'm also a little too arrogant as to acknowledge it."
"The market is irrational" can be translated into Noneconomist as "I am either stupid enough or lack enough training as to understand what the heck is going on with this damned market, but I'm also a little too arrogant as to acknowledge it."
Saturday, April 6, 2013
Thursday, April 4, 2013
Time is a mere informational topic
Future is future only and as long as we are ignorant about it.
As long as we arrive at the logical mechanics of a system that system becomes for us in an eternal present.
Put another way: it is not merely that time is related to information. From the viewpoint of human thought, time is entirely an informational phenomenon. Uncertainty is not a feature of future, it is its essence. There where you don't find uncertainty, you don't have a future whatsoever.
There is not such a thing as time on the one hand and information on the other. There's only a one, un-separated, phenomenon: timeformation.
As long as we arrive at the logical mechanics of a system that system becomes for us in an eternal present.
Put another way: it is not merely that time is related to information. From the viewpoint of human thought, time is entirely an informational phenomenon. Uncertainty is not a feature of future, it is its essence. There where you don't find uncertainty, you don't have a future whatsoever.
There is not such a thing as time on the one hand and information on the other. There's only a one, un-separated, phenomenon: timeformation.
Thursday, March 21, 2013
Apodicticity of theories
A theory, if correctly constructed from a logical viewpoint, can be useful or useless, but never empirically wrong. The test on a theory is exclusively on its logical correctness on the one hand, and on a useful identification of parts of the reality with concepts of the theory.
Monday, March 11, 2013
Market is the most efficient mechanism
The interaction of the information of agents with, in principle, different plans is the very definition of what a market is. It is true that a market could incorporate not all conceivable information, but markets do incorporate all possible information. If information is not already in the market, nobody (in particular, not the government authorities) can incorporate further information.
A market reaches all possible efficiency. There is no further informational, operating, or allocative efficiency beyond the market. In that sense, if you accuse the market of being inefficient, automatically you neglect the possibility of any further possibility whatsoever of improving that inefficiency.
A market reaches all possible efficiency. There is no further informational, operating, or allocative efficiency beyond the market. In that sense, if you accuse the market of being inefficient, automatically you neglect the possibility of any further possibility whatsoever of improving that inefficiency.
If you do find a possibility of improving efficiency, you automatically become part of the market, not something beyond it.
There is, for instance, no way of reflecting new information faster than through the market. To put another way, the quickest way in which new information can be reflected is precisely what a market is.
There is, for instance, no way of reflecting new information faster than through the market. To put another way, the quickest way in which new information can be reflected is precisely what a market is.
Sunday, February 3, 2013
Planned or spontaneous?
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| Picture 1 |
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| Picture 2 |
After seeing the second picture, take another look at the first one again and answer again the first question. Did your opinion change?
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| Picture 3 |
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| Picture 4 |
Does this fourth picture somehow change your answer to the question with respect to the third photo? (Once again, compare the third and fourth pictures.)
How many "disordered" cubes there are out of the two?
Is one of them already solved? If so, can you say which one?
Can it be that both are already solved?
Can it be that none is already solved?
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| Picture 5 |
Thursday, January 10, 2013
A manifesto on the epistemology of economics
1. The prime cause of economic phenomena is purposeful behavior. Economics qua economics doesn't have any more to explain once it arrives at this prime cause.
2. Every economic phenomenon is caused ultimately caused by the prime cause. Something not linkable to the prime cause is, ex definitione, not economic.
3. Through logic, it is possible to develop explanations about economic phenomena whose logic concatenation could not be obvious at first sight.
4. The interaction of the purposeful behavior of different agents or of the same agent through time or of the same agent with regard to different goals could generate the emergence of spontaneous orders which are themselves purposeless.
5. The method of economic logic is useful to explain economic orders and, through this, to arrive at pattern predictions, empirically falsifiable.
6. Economic logic is logically falsifiable in the sense that the chain of reasoning can be proven wrong by not obeying the logic method.
7. Economic logic is empirically falsifiable in principle, in the sense that its primitive assumptions can be proven not to be present in a factual situation.
8. Economic logic is often empirically not falsifiable in practice, in the sense that there is empirically impossible sometimes or always to falsify some primitive assumptions. For instance, it is impossible to empirically falsify that an assumed agent is not such. At the end, the attribution of some assumptions to facts is often a matter of faith. For instance, there is an ultimate impossibility for you to falsify whether this text is the work of an agent (i. e. the external successful fruit of a will) or just characters randomly disposed. Under a model which assigns equal chance to a list of characters to be randomly disposed in each position for a string of some positions, the chance that this exact text be the fruit of pure chance is higher than zero. So, at the end there is an inextricable, this is a necessary, portion the faith, even if small, in your hypothesis that this text is a fruit of some will, a purposeful behavior, an economic phenomenon.
9. Whichever which is not logically and therefore generally modelable is history, is particular.
10. The particular can be approached through statistics, but this, to be sure, is not economic logic.
2. Every economic phenomenon is caused ultimately caused by the prime cause. Something not linkable to the prime cause is, ex definitione, not economic.
3. Through logic, it is possible to develop explanations about economic phenomena whose logic concatenation could not be obvious at first sight.
4. The interaction of the purposeful behavior of different agents or of the same agent through time or of the same agent with regard to different goals could generate the emergence of spontaneous orders which are themselves purposeless.
5. The method of economic logic is useful to explain economic orders and, through this, to arrive at pattern predictions, empirically falsifiable.
6. Economic logic is logically falsifiable in the sense that the chain of reasoning can be proven wrong by not obeying the logic method.
7. Economic logic is empirically falsifiable in principle, in the sense that its primitive assumptions can be proven not to be present in a factual situation.
8. Economic logic is often empirically not falsifiable in practice, in the sense that there is empirically impossible sometimes or always to falsify some primitive assumptions. For instance, it is impossible to empirically falsify that an assumed agent is not such. At the end, the attribution of some assumptions to facts is often a matter of faith. For instance, there is an ultimate impossibility for you to falsify whether this text is the work of an agent (i. e. the external successful fruit of a will) or just characters randomly disposed. Under a model which assigns equal chance to a list of characters to be randomly disposed in each position for a string of some positions, the chance that this exact text be the fruit of pure chance is higher than zero. So, at the end there is an inextricable, this is a necessary, portion the faith, even if small, in your hypothesis that this text is a fruit of some will, a purposeful behavior, an economic phenomenon.
9. Whichever which is not logically and therefore generally modelable is history, is particular.
10. The particular can be approached through statistics, but this, to be sure, is not economic logic.
Saturday, December 29, 2012
The part and the whole
Can you know the whole by observing the part? If you are grasping the whole by the part, then you're not observing the part indeed: you're observing the whole from a specific viewpoint. As long as a viewpoint necessarily leads to another viewpoint, you're grasping the whole.
A true part doesn't allow to know the other parts. It is necessary but not sufficient to know the whole. However the part conveys some information about the whole which can be classified in two categories: one, definite but limited knowledge about the whole; two, reduction of the possible true assertions which can be given about the whole, or which is the same, some information about what the whole is not.
A true part doesn't allow to know the other parts. It is necessary but not sufficient to know the whole. However the part conveys some information about the whole which can be classified in two categories: one, definite but limited knowledge about the whole; two, reduction of the possible true assertions which can be given about the whole, or which is the same, some information about what the whole is not.
Saturday, December 22, 2012
Mean means: true versus merely apparent economics
Explanation of economic phenomena is rarely an end in itself, some times a means for technological ends, and near to always a pretext to deceive others and oneself.
Sunday, November 18, 2012
Alchemy economics
Chartism (euphemistically, technical "analysis") is alchemy economics in three senses:
1) it pursues golden correct price forecasts,
2) it ultimately doesn't achieve it,
3) it eventually brings closer the understanding of true economic science.
1) it pursues golden correct price forecasts,
2) it ultimately doesn't achieve it,
3) it eventually brings closer the understanding of true economic science.
Thursday, November 15, 2012
A manifesto on general epistemology
1. Everything in the physical universe is deterministic, i. e. caused, i. e. related to the rest of the physical universe.
2. Knowing all the causes, the effect is necessarily known.
3. Not knowing all the causes, possible causes are tried (tested). This is basically an heuristic process.
4. What is a cause is a different question of how is that a cause interact so as to provoke an effect. Determining what is a cause is forecasting. Determining how is that a cause interact is explaining.
5. Not knowing the total logic of a cause-effect relation, i. e. not being able to fully explain a cause-effect relation (including but not limited to not being able to fully forecast the full list of causes which provoke an effect), possible causes are tried (tested). This process of finding provisional hypothesis is basically an heuristic process.
6. An heuristic theory cannot be accepted, i. e. cannot be taken as a complete explanation of some effect. An heuristic theory can only be failed to be rejected in the sense of being unable to find an obvious contradiction. It takes only an asserted contradiction to reject an heuristic hypothesis.
7. A heuristic theory calls for statistic inferential tests as the process to determine its definite rejection or its everlasting provisional failure to reject it.
8. An explanation is a logical structure which if free from logical errors cannot be contradicted by reality. Due to the complex nature of the reality far beyond of human ability to explain (or the totality of reality is explained or not), explanations are only mental logical structurizations.
9. A structure or model is a logical structurization in which the effects are fully explainable through the causes.
10. A model can only be proved wrong through finding a logical error. It can never be proved wrong through empirical testing.
11. In the aim of reality only particular explanations are possible. The study of reality is always the study of concrete episodes, it is history.
12. A model can be used to advance an understanding of an empirical, i. e. historical or real, phenomenon even if the full exhaustive explanation of reality is impossible.
13. An exhaustive explanation of reality would be an explanation of all reality, through all times and all spaces. It would include, but wouldn't be limited to, the reduction of mental phenomena to physical phenomena. Given that the very cerebral process which would aspire to such an explanation would of need require physical changes in the process of explaining, that would create a loop to eternal development of explanation which, under the physical limitations of human nature are not just technological but logically impossible.
14. In order to use a model to advance the understanding of specific aspects of reality, an identification of the model's concepts with heuristically defined aspects of reality must to be achieved. An example in economics would be the identification of the concept of agent with a specific human being, for instance. The question of whether a regular adult, or child, or an idiot, or a baby, or the most intelligent animal in the world, or a regular dog, or a mouse, or a roach, or a bacteria, or a molecule, or a plant, or a piece of wood, or a chair, or an office, or a factory or the state, or a religion, or the universe is an agent or not, is at the end an heuristic decision whose appropriateness depends, in science, of its power to advance understanding, whose appropriateness in advance, depends, in technology, of its power to allow the assembly of inventions which work.
2. Knowing all the causes, the effect is necessarily known.
3. Not knowing all the causes, possible causes are tried (tested). This is basically an heuristic process.
4. What is a cause is a different question of how is that a cause interact so as to provoke an effect. Determining what is a cause is forecasting. Determining how is that a cause interact is explaining.
5. Not knowing the total logic of a cause-effect relation, i. e. not being able to fully explain a cause-effect relation (including but not limited to not being able to fully forecast the full list of causes which provoke an effect), possible causes are tried (tested). This process of finding provisional hypothesis is basically an heuristic process.
6. An heuristic theory cannot be accepted, i. e. cannot be taken as a complete explanation of some effect. An heuristic theory can only be failed to be rejected in the sense of being unable to find an obvious contradiction. It takes only an asserted contradiction to reject an heuristic hypothesis.
7. A heuristic theory calls for statistic inferential tests as the process to determine its definite rejection or its everlasting provisional failure to reject it.
8. An explanation is a logical structure which if free from logical errors cannot be contradicted by reality. Due to the complex nature of the reality far beyond of human ability to explain (or the totality of reality is explained or not), explanations are only mental logical structurizations.
9. A structure or model is a logical structurization in which the effects are fully explainable through the causes.
10. A model can only be proved wrong through finding a logical error. It can never be proved wrong through empirical testing.
11. In the aim of reality only particular explanations are possible. The study of reality is always the study of concrete episodes, it is history.
12. A model can be used to advance an understanding of an empirical, i. e. historical or real, phenomenon even if the full exhaustive explanation of reality is impossible.
13. An exhaustive explanation of reality would be an explanation of all reality, through all times and all spaces. It would include, but wouldn't be limited to, the reduction of mental phenomena to physical phenomena. Given that the very cerebral process which would aspire to such an explanation would of need require physical changes in the process of explaining, that would create a loop to eternal development of explanation which, under the physical limitations of human nature are not just technological but logically impossible.
14. In order to use a model to advance the understanding of specific aspects of reality, an identification of the model's concepts with heuristically defined aspects of reality must to be achieved. An example in economics would be the identification of the concept of agent with a specific human being, for instance. The question of whether a regular adult, or child, or an idiot, or a baby, or the most intelligent animal in the world, or a regular dog, or a mouse, or a roach, or a bacteria, or a molecule, or a plant, or a piece of wood, or a chair, or an office, or a factory or the state, or a religion, or the universe is an agent or not, is at the end an heuristic decision whose appropriateness depends, in science, of its power to advance understanding, whose appropriateness in advance, depends, in technology, of its power to allow the assembly of inventions which work.
Wednesday, August 15, 2012
Lie sold as truth
Some "economists" (lobbyists in scientific disguise) dedicate their work not to clarify truth but to elaborate lie so that, through unnecessary complication of explanations, it becomes harder to understand the phenomenon in consideration on the one hand, and lie acquires the venerable appearance of truth on the other.
Tuesday, July 3, 2012
Self-consciousness on methodology
"More than other scientists, social scientists need to be self-conscious about their methodology."
Milton Friedman, "The Methodology of Positive Economics"
Milton Friedman, "The Methodology of Positive Economics"
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