An old comment haunts me

It turns out that I wrote two versions of the piece on the financial crisis I posted earlier. The other version, which you’ll find posted here, says basically the same thing but contains the following comment which now haunts me. I had written:

“Unfortunately, most economists appear to have little understanding of system design. (When I was in college, many of those who failed our engineering subjects shifted to economics.) Instead of following good principles of design, our economists repeat the most common mistake of amateur programmers: they rely on global variables.”

What a twist of irony! Although I did pass my electrical engineering course, I’m now an MA economics student in the same university where I learned engineering more than 25 years ago.

It is interesting, though, that many of the early founders of neoclassical economics, like Vilfredo Pareto and Leon Walras had engineering training.

An insightful historical analysis by Philip Mirowski (Against Mechanism) traces the development of neoclassical economics from 19th century physics, whose mathematical methods the early neoclassicals imported en toto and applied to the analysis of consumer utility, producer profit and market equilibrium. The methods of physics, Mirowski says, have changed radically since then, but neoclassical economics remains mired in 19th century physics methods of analysis. I am still trying to grasp the full meaning of Mirowski’s analysis, however.

In another piece (I don’t recall now if in the same book or another), Mirowski also commented that economics needs an algebra of its own, which also haunts me in a different way. It has challenged me to learn more about different algebras. (Aside from the more commonly-known high school/college algebra, there’s boolean algebra, matrix algebra, vector algebra, set algebra, etc.) When I mentioned this to an economist who was currently taking a PhD in Math, he thought about it for a while and then said, “actually, that’s true.”

Another area to explore.



  1. Posted October 23, 2008 at 5:20 pm | Permalink

    Nice to read that my suspicions ( regarding the need to re-conceptualise certain key academic disciplines can be confirmed by a published book.

    However, I suspect that you are looking in the wrong direction: I’m not at all sure why you suspect the answer lies in Algebra. Having had a quick look at Penrose’s (mathematical) book “The Road to Reality” I have the feeling that perhaps the whole of mathematics might need reconceptualising.

    Of course, I also have my thoughts on how to approach these problems -but will save them for some other time. One of my objections to the academic system is the way it seems to be completely blind to everything outside the system -until an accepted academic picks it up as a basis for their career -usually ignoring any original non-academic sources. If one looks at the history of inventions, it seems that most inventors did not actually invent the invention they are so famous for inventing.

    The social and economic consequences of such blindness based on a denial of the importance of the social exchange of ideas in a creative context may be invisible but huge. Perhaps this is an example of where a non-system designers approach (based on instability and flux) may be more profitable -in more than just monetory terms. Indeed, perhaps the obsession with “originality”, ownership and economic exploitation of ideas in our society may be a good example of how modular and “static” thinking (which may be normally “good”) can produce “bad” results in a different context.

  2. Roberto Verzola
    Posted October 24, 2008 at 11:15 am | Permalink

    To Trevor:

    You’ll be surprised at the number of books and academics that question mainstream neoclassical economic thinking.

    Regarding your suspicion that my suspicion is wrong, I hesitate to pursue the matter further. As I said, I’m still trying to grasp the full import of Mirowski’s piece. To intelligently discuss the reconceptualization of the whole of mathematics, is way beyond my intellectual capacity, I’m afraid.

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