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From: mck@ratex.UUCP (Daniel Kian Mc Kiernan)
Newsgroups: net.politics.theory
Subject: Economic Issues -- Reply to Taylor
Message-ID: <1005@ratex.UUCP>
Date: Wed, 27-Mar-85 16:36:01 EST
Article-I.D.: ratex.1005
Posted: Wed Mar 27 16:36:01 1985
Date-Received: Thu, 28-Mar-85 03:19:08 EST
Organization: Squids R Us
Lines: 87


Lines marked '>>' are from an earlier entry of mine; lines marked '>' are
from Martin Taylor.

>> . . . (I would note that
>>NONE of the supply-and-demand analysis that I have engaged in depends on an
>>assumption of smooth curves!)
>
>Perhaps not, but the analyses do require equilibrium conditions, and
>therefore do not apply to the real world or any possible world.

No.  Orthodox Neo-Classical economics does presuppose equilibrium; I do
not.

>For example, the (repeated) theorem on full employment ignores the
>fact that there must be some unemployment in order to allow people
>to shift jobs. [...]

Beginning way back, with 'Inflation in a Free Economy?', I noted that there
would be frictional unemployment in a Free Economy.  Full employment does
not mean the absolute absence of unemployment, it means the absence of all
but frictional unemployment.  If you want to argue economics (just as if
you want to argue mathematics), learn the terminology before you pompously
'correct' someone.  Note: Some time ago, I posted an offer -- which still
stands -- to explain any bit of terminology used, or direct the reader to
an explanation, upon request.

>Other analyses ignore the effects of phase-shifted feedback, which
>can lead to oscillations (and even chaotic behaviour) under conditions
>in which the equilibrium solutions are stable.

I have addressed such phenomenon, and explained why (in the absence of
government meddling) they are not self sustaining.

>                                                Time matters.  Information
>matters,

Not only did I never say or imply that they didn't, but I have repeatedly
referred to the Austrian School, which continually stresses their
importance.

>         and most of the analyses require the underlying assumption that
>the individual performers (workers, capitalists, unemployed ...) have
>full knowledge of what might happen as a consequence of their individual
>decisions.

Wrong.  Not only have I not presupposed such a thing, but such a claim
would stand in conflict which the importance of the Price System, which I
repeatedly stress; if everyone had full understanding of the consequences
of their actions, the market could successfully be replaced by an
administrative agency.

>            When someone suggested that each individual farmer might
>not be totally aware of the effect of price changes (in reference to
>the cobweb effect), this suggestion was roundly denounced as slighting
>the intelligence of farmers.  But it was really an assertion that
>it takes an infinite amount of time to gather all information, and
>by the time you have gathered it, the situation is different anyway.

IT DOESN'T TAKE FULL AWARENESS FROM ANY PARTICIPANT TO BEAT A COBWEB!!!
Let's say that I'm a wheat farmer, and I notice that we have a cobweb
effect going on.  Now, it MAY be that during the over-production phase my
cost-curves require me to join in the over-production (because I'm not
sure that my colleagues and I have sufficient information about the
equilibrium level).  BUT DURING THE UNDERPRODUCTION PHASE, I KNOW TO
PRODUCE SOMEWHAT MORE THAN PREVIOUS PRICES WOULD OTHERWISE INDICATE.  To
claim that farmers are too stupid to employ this strategy is absurd!  And
as some farmers successfully employ this strategy, they will be imitated by
others, and things will spiral-in towards equilibrium.

I WOULD NOW LIKE TO POINT OUT THAT *ALL* OF THE ABOVE ARGUMENTS USED BY
MARTIN TAYLOR ARE STRAW-MEN ARGUMENTS!  I leave it to the reader to assess
Mr Taylor's integrity.

>The analyses put forward by DKMcK are fun to read,

Well, I'm glad for that; I always worry about them being too dry.

>                                                   but I seldom feel
>they have much to do with the real world, or even with a contrived
>world that contains real people and real information systems.

It's a (sort of) free country, and you can 'feel' that the sun is blue if
you wish.

                                        Back later,
                                        DKMcK