The following is in response to Michael Edesess’ article, An Attack on Paul Krugman, which appeared on May 15:
Dear Editor:
“Equal time for Economics”
INET’s link to Michael Edesess’ piece is labeled “a dose of reality for economists.” I note that such dosages are inevitably prescribed for diseases that exist only in the attending physician’s imagination.
As an economist for a large central bank (the one having twelve branches wherein Edesess finds so many of us wasting time and tax dollars) I must publish this rebuttal anonymously; and I am also enjoined from making the references that might most effectively refute Edesess’ claims. I will however cite one publicly-available source as background for what I have to say.
This link will open an ordinary Excel workbook demonstrating economics’ fundamental causality. The ‘SFEcon’ prototype to which I refer presents stable continuum of all the physical and monetary quanta developed as a generalized, international input/output structure finds its way, efficiently, from one Pareto optimum to another.
If Edesess expects to be taken seriously as speaking from the superior posture of Western science, then he should be open to refutation by the objectively-functioning counterexample I cite above. Otherwise he is just a red hat short of the 17th century cardinals who would not look into Galileo’s telescope.
Edesess’ initial point that “neoclassical economic theory is bankrupt because it is enthralled with equilibrium” obviously derives its truth from its pejorative use of the word “enthralled.” If one wishes to be merely dismissive, the same can be said of all precisely understood time-dependent phenomena. Some sort of homeostasis is key to the understanding of any dynamic system: what makes the homeostatic point desirable? How do stimuli jolt a system into sub-optimality? How does the system recover in the absence of stimuli? Remove these questions from the physical sciences and what, Dr. Edesess, remains of science in the specifically Western mode?
Contrary to Edesess’ assertion that “economics is not remotely comparable to Newtonian physics,” it would seem from my citation above that economics’ fundamental generalities are every bit as capable of supporting convincing demonstrata as are those of Newton. Newton followed Galileo in generalizing that “things in motion tend to stay in motion” and economics has generalized that “quanta of economic goods must remain in flux until all economic actors have agreed as to the value of all economic goods”. In what sense are these matters not at least as comparable as are the fundamental generalities and demonstrata among those disciplines that Mr. Edesess can accept as scientific?
Edesess’ ownership of the word “mainstream” is asserted in his additional finding that …
Schumpeter, you’ll recall, was the economist who coined the term “creative destruction” to characterize the capitalist economic process – a term beloved by nearly all economists, but of which it is difficult to find any trace in mainstream economic models.
This is merely belligerent: if our topic really is the exhaustion of one generation of economic goods in producing the next generation of goods, then the models we should be looking at are those specifically designed to portray that process. My SFEcon counterexample is an ordinary engineering-dynamic system whose state variables are the physical quanta of economic goods held among the economic actors. This system has economic actors continuously building-up and working-off their assets in search of higher returns. SFEcon originated at MIT under supervision of the then reigning Nobel Laureate and three other men who would later win gongs of their own. Might not that be sufficiently “main” in respect to Mr. Edesess’ “stream”?
Dr. Edesess also registers his difficulty as …
a non-economist to decipher [economists’] debates, which revolve around esoteric terminology known only to the disputants – like “aggregate demand” and even “money.” Most people certainly don’t know what economists mean by “money.”
