Hi,
I would like to start discussions on three premises that I believe form the real impasses to fundamental advances in economic science.
Be it resolved:
1. The ‘polynomial factoring problem’ is irrelevant to quantification of general economic optima, i.e.: there exists one polynomial expression for general optimality (via multi-dimensional hyperbolae) that can always be factored in mathematically closed form. A mathematical development of this polynomial requires six algebraic steps; and will be supplied to anyone open to a discussion.
2. This polynomial can be used to abstract manufacturing sectors’ technical parameters and household sectors’ utility parameters from published input/output data. These parameters are remarkably stable in time; and their changes are indicative of technical growth, the impact of government policies, etc. As evidence on this point, I would offer a study on 11 years of consistently defined I/O data from the UK ONS. The I/O data are in 12 x 12 matrices, so the utility parameters behind these observations are derived by 11 x 12 solutions to polynomials of the 12th degree.
3. The ‘socialist computation’ or ‘Vienna’ problem was solved in the 1970’s – well before Hayek’s failed attempt, or the aborted Angora Project at GMU. To instantiate this claim, I offer a desktop prototype that represents the global economy in terms of three 5 x 5 I/O matrices. This structure can be initiated with any physical exchanges, and the program will compute the prices and parameters for which the hypothetical data are optimal. The model can then be stimulated with any combination of changes to its parameters or state variables, and it will enact the transit to its new general economic optimum. This transit is presented in terms of the continuum of all the disequilibrium prices and chaotic states by which the structure discovers its new, unique, optimal state. The model’s code is open-sourced, so it can be readily established that the economic actors operate with nothing more than limited, local knowledge, and on the verge of an unknown future. The new optimum is never computed because it cannot be computed except by allowing its emulation of economic causality to play out.
I wish to argue for the affirmative in each of these assertions.
Incidentally, this submission has a bet associated with it: the under/over is that, for every Austrian economist willing to look at the evidence, there will be six Austrian economists who will present a praxeological case as to why the evidence offered must be a priori a fraud, a delusion, or irrelevant.
Though I have the ‘over’ side of this bet, I would be more than pleased to lose it. I remain an Austrian insofar as I believe that the general economic optimum should be the center of economic thinking: it is axiomatic that the economic order must continue in flux until every sector agrees as to the price of every commodity; and perfectly sound and socially important science flows from this premise. Praxeology works in this instance because the condition of economic stasis is co-definitional with the general economic optimum; and mere reason is sufficient for working out the consequences of a definition.
But reason is limited to consideration of the data brought to it: it cannot tell us if something important is being left out of consideration. When the Austrian School asserts that general optima cannot be quantified owing to polynomial factoring, it must be with the realization that it is stating a ‘general negative’, and that such statements are beyond proof because the totality of possibilities being negated is beyond enumeration. A general negative is therefore only part of civil discussion if it is offered as an invitation to refutation by counter-example.
Having been made aware of the counter-example as an undergraduate, and having since learned that it has been fought-off by the Austrians on a priori, praxeological grounds for more than forty years, I am now embarrassed that my profession disgraces the larger Libertarian, neo-conservative movement which I otherwise support. Libertarian economics begins with a commitment to reason and evidence, and proceeds to von Mises’ “miracle of the market” as the only possible explication of economic causation. And, when confronted with a perfectly sound, mathematically determined rendering of that “miracle”, our side’s response has been to hound the mathematician out of academic life with our pro forma accusations of Nazism and sexual deviancy.
I hope this submission will receive some serious consideration. The general optimum’s categorical resistance to quantification is, after Piltdown Man and N-rays, perhaps the greatest intellectual fraud of the Twentieth Century; and therefore the greatest remaining to be exposed. The religious fervor of its defense now approaches that which once favored a geocentric universe. And the heterodox guys are on to us. I therefore urge a full intramural airing of the three premises I hereby nail to the door of Austrian economics.
Mabel
This has nothing to do with Aguilar. My authorities are addition, subtraction, multiplication, and division. Once again, anyone here willing to do the math?
I'm guessing he's talking about http://www.sfecon.com
I can't really make heads or tails of the site, though my knowledge of the mathematical side of economics is slim-to-none. The authors do not appear to be native english speakers.
Grant,
You are right. I am talking about the SFEcon models – and the mathematics there are intense.
Might I suggest that the complexities of economics are also intense? - otherwise they would have been penetrated in the 19th Century when the general economic optimum was formulated.
But you do not have to be a genius at applied math to appreciate whether or not it has led to a correct result, anymore than you have to be an automotive engineer to drive a car. I am sure you have at least sampled video games even though you are perhaps not an expert in kinetics, optical projection, or the mathematics of emulation. You know these disciplines map into the real world because the instruments they create are realistic.
Once again, I am asking you to test the Austrian faith as regards the categorical impossibility of quantifying general equilibrium against a mathematical development of six algebraic steps. This requires little more spatial imagination than proving the Pythagorean Theorem.
Then I am asking you to consider an empirical case in which utility parameters have been calculated and found stable over a lengthy period. The mathematical sophistication required here rises to the level of ordinary least squares.
Finally, I challenge you to operate a simple instructional game and merely observe that it puts boxes of numbers together in relations that the economics profession has long concluded are beyond humanity’s ability to conceptualize.
I do not know how any less could be asked of Austrian economics in the way of defending its views.
I note that two Austrians have now registered reasons not to take up the defense. Four more and I win my bet.
P.S.: Three years ago I directed my career to San Francisco, moving from Chicago in order to meet the SFEcon guys personally as preparation for my doctoral thesis. They are all Americans by birth. The over-representation of Germanic ancestry is an accident, and the charge of anti-Semitism is convenient right-wing baloney. My mentor at SFEcon happens to be Jewish; and my ancestry is Chinese.
After reading this post, goes off to grab the aspirin. Math was never my strong suite. :)
Actually, reading this made me believe someone took English classes from Keynes himself.
But more seriously:
@Mabel:
"Once again, I am asking you to test the Austrian faith as regards the categorical impossibility of quantifying general equilibrium against a mathematical development of six algebraic steps. This requires little more spatial imagination than proving the Pythagorean Theorem."
You are so smart. Send me your files. darkhty@email.com
I can't vouch to making good use of your files if your writing is an indication of how clear your mathematics are. At any rate, I'm certain someone as smart as you knows what KISS stands for in regard to software engineering.
Mabel,
I am not an "Austrian", nor any sort of economist. I do understand regression techniques such as least squares, three-dimensional computer graphics and some of kinematics. I am an engineer.
I may not understand Hayek's and Mises's points entirely, but I think you are miss-representing their views. I don't believe either said that the mathematical calculation of the general equilibrium is in itself impossible. I believe Hayek's point was that it was impossible to gather the necissary information to do this calculation. Both Hayek and Mises also seemed to stress that the economy is never really in equilibrium to begin with, which is hard to deny.
I don't think its correct to say praxeology somehow indicated that general equilibrium calculation was impossible. The fact that praxeology cannot aid in any such of calculation is true, but that does not make such calculations impossible. Mises stressed that models are just that, models. They aren't the real thing, but that does not mean they do not have their uses. Obviously improvements in economic computations could have benefits to both government and private industry, and it would seem to me that a significant improvement in such things could be used to great effect and profit in the marketplace. So I do not see how SFEcon's work, assuming it works as is claimed, would in any way invalidate Austrian economics.
Of course, the use of mathematical models, or any investment strategy, becomes less profitable and less meaningful as other investors begin to utilize it as well. Mises pointed this out, but in doing so I do not think he meant to suggest that such models are useless in the practical sense. It is just that they cannot point out the basic mechanisms that cause markets to function in such a fashion in the first place. Praxeology is uniquely suited for this goal, and uniquely unsuited for economic calculation.
Mises did not consider such models to be a part of economics due to the definition of what economics was to him, but that does not mean he discounted them to the point of total uselessness.
I think people here should give their email to Mabel. I started reading the first paper and although I did not come to a conclusion yet (I have to check many terms first), the curve itself seems to make sense. I am skeptical to its application regarding a world made of many unpredictable factors, but all things being equal this could be used to explain some relationships if the language could be toned-down a little so people can understand faster.
Mabel:Once again, I am asking you to test the Austrian faith as regards the categorical impossibility of quantifying general equilibrium against a mathematical development of six algebraic steps. This requires little more spatial imagination than proving the Pythagorean Theorem.
I am not an expert, but isn't this a straw man? Is there any such Austrian claim? To me it is obvious that you can compute equilibrium given all the equations. (However, the equations may not be discoverable in practice, but thats not the point is it?)
Mises in "Socialism":
"...it is quite easy to postulate a socialist economic order under stationary conditions. We need only avoid asking how this stationary condition is achieved. If we do this there is no difficulty in examining the statics of a socialist community. All socialist theories and Utopias have always had only the stationary condition in mind."
I appreciate your allowing that you are not an expert; but let us hope that the Austrian Institute is sufficiently well populated by people who are confident enough in their expertise to keep us on track.
I do assert that the impossibility of quantifying the general equilibrium is subsumed throughout economic science, whether orthodox or heterodox. I intuit that our disconnect is over what is meant by a ‘general equilibrium’.
A physical equilibrium is indeed computable if we know all the economy’s production and utility tradeoffs. This is a state in which everything being used-up by current production comes to be exactly replaced by that production just at the moment when all markets clear. And, of course, any such state can be made to disclose its associated relative prices via a solvable set of linear simultaneous equations.
Your post, especially the von Mises quote, indicates the dynamic context in which all this must be considered, viz.: the physical equilibrium state I have described is not stable in time because any number of such states are possible for any given set of production and utility tradeoffs. Physical equilibrium in this sense cannot therefore define economic order because it entails nothing to inhibit the economy from bouncing around among the limitless number of physical equilibria implicit in any set production and utility tradeoffs - which, we agree, are themselves changing with time.
Equilibrium is therefore more than physical equilibrium defined above, which I think is how you are defining the term. The economic steady-state is, I assert, the unique physical equilibrium that is also a general economic optimum. The general economic optimum is the unique physical equilibrium in which every economic sector values every commodity at the marginal cost of producing that commodity. I formulate the central tenet of the Austrian school as being that, until such a state is achieved, the economy must remain in flux.
To define the general economic optimum further, please reconsider the physical equilibrium defined above. At any physical equilibrium we can presume to know 1) where every economic sector is on its production function (i.e.: how much of each commodity it is using) and 2) every commodity price. We can, therefore, presume to know every sector’s marginal product with respect to every commodity. Knowing prices and marginal products, we can formulate values of marginal product: the price at which a sector can sell its product, times the marginal product of an input commodity.
When (and only when) all the values of marginal product in a sector-versus-commodity array equal the price of the respective commodity, then the system is presumably in stasis and will have no reason to change (for so long as its underlying structure of production and utility tradeoffs remains constant). This is the unique, steady state that I refer to as ‘equilibrium’ or ‘the general optimum’.
While I understand that the general optimum’s definition is perhaps challenging, I hope my summary is sufficient to indicate that its quantification entails simultaneous solution to a set of equations each having degree N, where N is the order of the sector-versus-commodity array with which the economic order is described. I believe everyone who has ever become an economist has professed that such a state cannot be quantified for a sector-versus-commodity array having more than two or three rows and columns. This is because of the computational issues arising when solving equations of degree 3 or greater: cubic equations are a mess; quartic equations are all but impossible; and, beyond that, solution is hopeless. These are the ‘polynomial factoring problems’ to which I refer.
At present there are perhaps a few score of economists who accept that there exists one polynomial expression for the general economic optimum that can always be factored, irrespective of the order of the economic array. To my knowledge, not one of these economists is an Austrian; and a great many Austrians have informed me as to why the math ‘just has to be wrong’ on praxeological grounds.
I believe your quote has von Mises subsuming that a ‘socialist’ or ‘economic command’ dynamic is unthinkable. And my understanding of things Austrian is that the reasoning behind his conclusion follows from the impossibility of formulating the general optimum owing to polynomial factoring. If the ‘socialist computation’ or ‘Vienna’ problem were solvable in von Mises thinking, I do not see how he could have concluded on the “miracle of the market”. If Hayek had successfully reformulated the nature of understanding so as to permit something in the way of a solution, then he would not have concluded on the “spontaneous ordering of markets”.
In any case, the SFEcon system I offer for consideration is an utterly dynamic, disequilibrium portrait of economic adjustment in which economic order is held together in decaying orbit around whatever general optimum is implicit in a set of parameters describing production and utility tradeoffs. These parameters are 1) calculable, and 2) expressive of continuously decreasing marginal utility.
Best wishes,
Hi Grant,
I hope my response to the post above adequately disposes of your question as to the Austrian school’s assertion that the economic dynamic is indescribable in quantitative terms. If we agree that von Mises and Hayek did not offer an engineering dynamic model of economic adjustment as they described it, then I will subside – so long as we also agree that their failures are not to be taken as prohibiting someone else’s having accomplished the task.
I accept that your larger point, about gathering enough timely information to calculate the equilibrium, is a central issue – but one which is separate from whether or not the (optimal) equilibrium can be calculated at all. I believe the reasoning goes like this:
even if the general economic optimum were quantifiable, there is no way to focus the information necessary for the computation in time to usefully direct the economy toward the optimum’s realization; and
there is, in any case, no possibility of any central authority acquiring the coercive power to coordinate all the individual economic actors’ activities in service to the optimum, even if such were knowable in a timely fashion.
I would, however, submit that placing these admittedly valid, characteristically Austrian, conclusions at the center of economic thinking is needlessly hostile to the development of economic science. Indeed, it creates a tautology by which economics can never be scientific. It is analogous to traditional culture’s presentation of Intelligent Design as science - where it would be sufficient to simply assert that we cannot (and therefore might never) understand evolution in mechanistic terms.
I suggest that Hayek struck out in the right direction with his re-considerations on the nature of knowledge itself. These have given rise to the disciplines of fractal design, complexity, chaos theory, etc. – fields where SFEcon is welcome. In these fields ‘order’ emerges from the simple actions, having nothing to do with the emergent, of myriad elements. ‘Understanding’ occurs in terms of building an objective (usually mathematical) mechanism that actuates what the fractal elements do, and observing the emergent in what the overall mechanism does.
Clearly, the economic machine’s emergent is the general economic optimum implicit in its production and utility tradeoffs; and the fractals of economic systems are elements of its input/output array. What these fractals do constitutes our knowledge of economic causality. Whether or not we have the fractals’ identity right is indicated by whether or not the general optimum emerges from the mechanical embodiment of this knowledge.
I believe it is fair to say the Austrian school generally holds that, because Hayek did not discover the mechanism he envisioned, this vision is beyond realization. (Citations supplied if needed.)
As an engineer conversant with modeling philosophy, you could perhaps advance our discussion here by examining the prototype I offer as a demonstration that Hayek’s vision has been realized, and the ‘socialist computation problem’ is thereby solved. Drop me an email with a private return e-ddress, and I will attach the prototype to my reply.
Mabel:I accept that your larger point, about gathering enough timely information to calculate the equilibrium, is a central issue – but one which is separate from whether or not the (optimal) equilibrium can be calculated at all. I believe the reasoning goes like this: even if the general economic optimum were quantifiable, there is no way to focus the information necessary for the computation in time to usefully direct the economy toward the optimum’s realization; and there is, in any case, no possibility of any central authority acquiring the coercive power to coordinate all the individual economic actors’ activities in service to the optimum, even if such were knowable in a timely fashion. I would, however, submit that placing these admittedly valid, characteristically Austrian, conclusions at the center of economic thinking is needlessly hostile to the development of economic science. Indeed, it creates a tautology by which economics can never be scientific. It is analogous to traditional culture’s presentation of Intelligent Design as science - where it would be sufficient to simply assert that we cannot (and therefore might never) understand evolution in mechanistic terms.
Why should conclusions about definite limits -- of either the scope of the truths calculable via economics, or the knowledge attainable by men -- make economics unscientific?
Mathematics, via Kurt Gödel’s Incompleteness Theorem, is aware of its own limits -- i.e. it is provable (using mathematics) that there're things which mathematics cannot prove.
In physics, it is accepted that you can't view something with any clarity below the atomic level (because of the definite limit in size of any physical instrument made to view the subatomic). It's also accepted that you can't exceed the speed of light.
Are mathematics and physics not to be regarded as scientific? (Note that I'm using scientific in the general sense (truth) and not the more modern sense implied by the physical sciences).
I'm not sure which of these best addresses your point; perhaps because you seem to be writing in an intentionally cryptic way (this isn't an ad hom - it's a point that will hopefully lead to clearer future discussion).
Mabel:3. The ‘socialist computation’ or ‘Vienna’ problem was solved in the 1970’s – well before Hayek’s failed attempt, or the aborted Angora Project at GMU. To instantiate this claim, I offer a desktop prototype that represents the global economy in terms of three 5 x 5 I/O matrices. This structure can be initiated with any physical exchanges, and the program will compute the prices and parameters for which the hypothetical data are optimal. The model can then be stimulated with any combination of changes to its parameters or state variables, and it will enact the transit to its new general economic optimum. This transit is presented in terms of the continuum of all the disequilibrium prices and chaotic states by which the structure discovers its new, unique, optimal state. The model’s code is open-sourced, so it can be readily established that the economic actors operate with nothing more than limited, local knowledge, and on the verge of an unknown future. The new optimum is never computed because it cannot be computed except by allowing its emulation of economic causality to play out.
I think you might be referring to the Hayekian paradigm of Socialist Calculation. Hayek makes it a problem of scope - a socialist commonwealth cannot perform rational economic calculation because of the sheer amount of information involved.
Mises, who first formulated an argument against calculability within socialism, didn't argue that it was a problem of scope, but one of the fundamental impossibility of deciding upon a best course of action for the production of anything in a system with no working capital goods market, i.e. how does one decide how to produce something efficiently if one cannot account for the costs of different methods of doing so?
More is available here - an absolutely fantastic explanation of the SC debate:
http://www.lewrockwell.com/rothbard/rothbard132.html
I'm sorry if the above fails to address your point; it really wasn't very clear just how the problem was settled in your mind.
I'm inclined to agree with the above assessment of your discussion of the solvability of general equilibrium. I can't recall reading, in my studies of Austrian Economics, anything describing general equlibrium as theoretically unsolvable for a given point in time.
I think that Austrians would readily agree that given the the right knowledge, general equilibrium could be "solved." The Austrian view, as I understand it, has simply been that because general equilibrium is only valid for a static moment in time, it's a rather trivial thing to have solved.
Perhaps I'm wrong - I am not an economist (by any stretch).
Markara,
As to whether or not I consider economics to be a science, I accept Nelson’s estimate in his Economics as Religion: at present ‘economics’ is mere pseudo-scientific imagery in the service of a self-sufficient system of values, whether the Libertarianism of Chicago or the Progressivism of the two Cambridges (one in England, one in Massachusetts).
Economics as we have it is the Scholasticism of our materialistic age – a baffling circuit of unexamined assumptions and pre-ordained conclusions. I find economics’ subject matter interesting for the potential it holds for doing better.
As to your argument as to why this is not going to be possible, first allow me to supply you with an authority higher than Rothbard: I have (in print, and by a tenured professor OF ECONOMICS) the substance of your argument against the possibilities adduced by SFEcon attributed to His Holiness Paul VI. So what? Urban VIII had his a priori reasons for asserting that Galileo, aided by his telescope, was not really observing moons revolving around Jupiter. Are the moons there or not?
Is the economy there are not? Do we not observe it in terms of the order it presents to us? Having observed order, does not the scientist obligate himself to explain it in terms of some self-evident generalization? Was Hayek a fool insofar as he invested as much as he did in attempting a formal, scientific explanation for the order he acknowledged as present?
I believe your argument exposes what I would like to address as the reductionist fallacy in Austrian thinking, which I understand as follows:
The macroeconomic order we observe appears to us in terms of a closely realized tendency to an equilibrium.
We intuit that this equilibrium is fairly stable because it is also a unique optimum characterized by every sector’s marginal value for every commodity equaling the commodity’s marginal cost of production.
We are comforted in this conclusion because the atomistic elements of the economic system can be trusted to do their part in bringing this overall, equilibrium-with-optimality about, i.e.:
individual firms, pursuing maximal profits, will themselves tend to perform at the point where their marginal revenues equal marginal costs; and
individual households, seeking to equate marginal utilities of their leisure and their labor, will also operate where marginal revenues equal marginal costs.
This explanation of overall all economic order and stability, though correct, cannot be given an objective demonstration because there are so many individual firms and households that there is no practical way to estimate all their separate utility functions.
Baloney feathers. Individual firms do not operate where marginal revenues equal marginal costs (and it is, in any case, unreasonable to have ever supposed that they would). And (as you quite properly point out) people have yet to show any evidence of operating on the basis of any sort of utility function. (Overwhelming citations available on request.)
Moreover (and of supreme importance to my thinking) the explanation of economic order in terms of a tendency to the general economic optimum has been properly demonstrated without ANY references to how individual firms or households behave. This is because the proper unit of macroeconomic analysis is not the firm, but the various economic sectors composed of many firms producing the same product:
However the individual firms within a sector might compete (usually an amalgam of product differentiation, service, etc. – seldom purely prices,) we can be sure that placements of capital among sectors will be based solely on maximal returns because this is how capitalists balance their investment portfolios.
What this means to the individual firms or households within sectors is therefore irrelevant to understanding overall economic order.
Having solved the polynomial factoring problem, SFEcon can abstract the production and utility functions of economic sectors from their gross behavior, without reference to the individual firms or households making up the sectors.
So your objection to computing people’s utility functions might or might not bear on the point I am trying to make. If your prohibition is on behalf of describing individual persons in terms utility tradeoffs, then I agree. I believe all the empirical data supports us; and the causal reasons you give as to why this is so are as good as anyone’s.
But if you are extending this generalization to assert that household sectors, representing whole social classes, cannot be identified in terms of their utility tradeoffs, then I am prepared for battle with both data and logic. The choice of weapons is yours.
Any takers?
Hi Dan,
Sorry about being cryptic – will try to do better.
I agree that the wisest science is aware of its inherent limits; and that such limits are always and necessarily part of this science game. My brief with economics is that it acknowledges limits that aren’t there, and can get pretty unpleasant in asserting that they are there.
As for what makes a science, I rely on Galileo: “Demonstration is the essence of science.”
The demonstration of economic science that I would find satisfying would begin like this:
I will provide a snapshot of a hypothetical economy that is out of equilibrium, and therefore unstable. Our hypothetical economic universe will consist of just three sectors: two profit-making generic industrial sectors, and one household sector that receives the profits, while working for wages in order to provide for all of its consumption.
I will supply a 3x3 input-output array giving you the physical rates at which each sector is currently consuming each of the 3 commodities produced by the 3 sectors.
I will supply the price of all 3 commodities, the current rate of interest, the household’s level of savings, and the amount of these savings currently invested with each of the two generic sectors.
Finally, I will supply a production function for each generic sector, and a utility function for the household. These functions will describe continuously decreasing marginal utility at every point; so each will present 3 degrees of curvature. You may consider these functions to be fixed throughout the demonstration.
I then challenge you to present to me with the continuous succession of disequilibrium states by which this system comes to organize itself around the general economic optimum implicit in its production and utility tradeoffs.
This would entail the time-series of each price, each element of the input-output array, and each component of saving and investment.
I would like you to constrain your demonstration so as to honor both conservation of mass and of money.
A sector’s output rate must be specified by its intake of commodities and the shape of its production function; commodities cannot be consumed until they are produced; and excesses of supply over demand must be carried-over from period to period.
Savings and investment can only adjust in response to actual financial flows arising from the prices and physical commodity flows of the moment.
The final state I would like to see would have 1) supply and demand equal for each commodity, with clear markets, 2) general equilibrium prices, and 3) values of marginal product equal to marginal costs of production at each cell in the input-output array.
I submit that, with a handful of embattled and beaten-down exceptions, everyone calling himself an economist believes that such demonstrations are categorically impossible. If I am wrong, give me some names.
At anyone’s request I will supply such a demonstration. I can also present the same demonstration for an input-output structure of theoretically any dimensions, and for a world described by the interaction of any number of such structures. If you know economists who will even examine such claims, give me some names.
Now that you know what I mean by a description of economic equilibrium (i.e. stable because optimal) I challenge you to revisit your assertion that the expression of general equilibrium for one moment in time is trivial.
Consider an optimal momnet, and give me ANY numerically specific expression for the general economic optimum for the 3x3 structure described above.
Start with any non-zero elements you want in your 3x3 input-output array, and any interest rate. Compute general equilibrium prices.
Then use this information to determine the shapes of production and utility tradeoffs for which this state is optimal, i.e.: marginal revenues equal costs at each cell of your matrix.
This problem is, in principle, solvable because it involves simultaneous solution to three polynomials of the third degree, and such polynomials can always be factored. But I have never had an econ professor step up to this challenge – even after I showed him numerical examples of the challenge having been met by non-economists.
When you see what is involved in this elementary demonstration, then consider the difficulties of solving the same problem for input-output matrices of order greater than three. This is where polynomial factoring is asserted as an outright prohibition of quantitative expression. Again, I can supply as many numerically specific counter-examples as it would take to win the argument – if economics were a science.
Finally, on your question about the socialist computational problem: I believe von Mises said the operative difference between socialism and capitalism is whether or not you have a stock market. So I submit that the critical question is whether or not a regime of economic command can ever have the knowledge required to effectively co-opt the capital markets’ function of allocating capital among economic sectors.
If you credit my earlier assertions about what is mathematically possible in the way of describing economic sectors through the lens of general optimality, then I think it is clear that the critical knowledge is available. Regimes of state capitalism or market socialism can consolidate ownership of their nation’s asset portfolio, and optimally distribute capital among their assets without the experimentation of free financial markets.
The data I describe have already been calculated for several nations – capitalist and communist – and have been exploited for private profit. There are already scholars in Russia and China who are actively developing the socialist possibilities I have outlined.
I earnestly suggest we formulate a response that is more respectable than “math is hard” or “SFEcon is anti-Semitic”.
Best,
Mabel, can your models predict which new product will be brought to the market and be profitable (and how profitable) next, thereby upsetting the economy's march towards equilibrium? I could use that information for "private profit."
I am not sure it is correct to say that Hayek and Mises "failed" to perform economic calculations, as much as they did not try to perform them at all. For Mises, economics was a branch of praxeology, and praxeology is rather unsuited for economic calculations. It is simply the wrong tool for the job, and would be like trying to use classical physics in the field of biology. Mises does not renounce all uses of calculating equilibrium in Human Action (p. 245), but rather stresses the limitations of that approach. Mises regards even models based off a (make-believe) economy in complete equilibrium to be useful in a limited sense. So I would agree with you that the calculations you speak of could be very useful to economics, but I do not believe the work by Mises and Hayek contradicts this in any way. Newer Austrians may have said what you claim, but I've not read them.
I'll PM you with my email address, but I'm afraid I won't be much help. I have no clout with the LvMI, nor any other economist. And I really don't have much time to try to understand a subject which is very foreign to me. I am not even familiar with the structure of equilibrium models, or what levels of abstraction they operate at.
I don't even know if there are any economists from LvMI who read these forums (although hopefully there will be). I think you may be barking up the wrong tree if you are trying to sell equilibrium models to Austrians, though.
dchernik,
I'm sure a great many people could use better economic prediction. As I'm sure you know, there is enormous amounts of work being put into just that. The fluctuations of markets provide profits to those who can predict them, and as Mises and Hayek pointed out, profit motives serve as the motivator for entrepreneurial activity for those with the knowledge to act on it. I hope SFEcon is not trying to suggest their system, if its as robust as you suggest it might be, justifies involuntary socialism, when the very mechanisms and motives for the creation of predictive models comes from and benefits the market itself.
However, I don't think its currently possible to gather the data needed for exhaustive economic prediction.
Mabel:Finally, on your question about the socialist computational problem: I believe von Mises said the operative difference between socialism and capitalism is whether or not you have a stock market. So I submit that the critical question is whether or not a regime of economic command can ever have the knowledge required to effectively co-opt the capital markets’ function of allocating capital among economic sectors.
If a regime was able to predict market outcomes better than the actors involved in the markets, it could do so through voluntary trade, and it would profit from it. Co-opting would be unnecessary. Those prediction models would then of course face competition from competing models, so of course a regime's use of physical force could be more profitable than having to deal with competitors. But it does not follow that because a firm can demonstrate superior performance in a market that it should be able to co-opt that market. We do not nationalize Walmart and give it a state-protected monopoly because it happens to be doing a good job of providing low-cost goods at the moment.
Arguments can be made for paternalistic intervention by governments, but not in the case where the interventionists' methods could produce the same effects via voluntary exchange.
How complex is your economics calculations model?! If I'm recalling it correctly Mises didn't say that a planned economy wasn't able to provide for some basic needs, but that it would struggle to deal with some more complex problems of human need and resource availability.
Perhaps we should recapitulate the basic arguments of the socialist calculation debate first.
Perhaps you should submit your model to a peer reviewed economics journal instead of posting it on a forum where most of the responses come from admittedly non-economic professors...
How does your model deal with consumer preference? Sure you can 'optimally distribute capital', my OS's kernel does that thousands of times per second but it doesn't help me at all if it decides the optimal solution is having me wait before I see the text I'm typing on the keyboard appear on the screen.
If the optimal solution says I get ham for dinner but my preference is for steak since the optimal solution is *always* ham then how does this accurately model the economy as it exists today? This may be a strawman argument since you seem to claim consumer level detail is unimportant for accurately modeling the optimal solution for resource distribution but then again maybe not.
I earnestly suggest we formulate a response that is more respectable than “math is hard” or “SFEcon is anti-Semitic”
I earnestly suggest we formulate an argument in defense of your position which is understandable to non-post graduate arithmeticians and completely devoid of strawman arguments. I counted a few in your posts which were obviously complete misrepresentations of the basic principals proposed by the Austrians which were also unnecessary to advance your agenda.
It is very obvious you have an ax to grind and a somewhat hidden agenda of trying to win a bet by getting a certain number of 'Austrian economists' to not argue against your model. You also seem to think people admitting they are unable to comprehend the descriptions you post of complex math in defense of your argument is an admittance that there are no flaws in your theory.
So, dumb down your description and use logic as the basis of your argument if you *really* want critical analysis of your new socialist paradise.
----edit----
SFEcon is a conversation, however trite, about economics' most fundamental generalities. This discussion is obviously not undertaken for the sake of the generalities themselves, which, insofar as we know, are entirely sound and adequately supported. We are, rather, presuming to exhibit a superior vocabulary, and a more subtle grammar, with which to state the essence of economic science.
Um, yeah, I think I found the root cause of the 'language barrier' that is seen here...
Hi all,
I seem to have received a number of challenges on a single point; so let me try to address them together.
First, I hold that the economic order’s general stability and balance cannot be accounted-for in a tendency for individual firms and families to operate where marginal equal marginal costs. I do not think that economic science has a defensible model of what goes on at this level of analysis. I am, therefore, ready to defend the heterodox position on this point if challenged.
Second, I hold that the economic order’s general stability and balance can be accounted-for in a tendency for capitalists to move financial assets among economic sectors in order to optimize the global investment portfolio. If one accepts that the polynomial factoring problem is solved, then the premise of general economic optimality can describe sectors in terms of their production and utility tradeoffs. I invite your attention to the finding that these descriptions are temporally solid.
Given such premises, I certainly would not presume that a regime of economic command could possibility optimize its realm to a degree of analysis finer than one or two hundred sectors. Since I do not, in the first instance, accept that the idea of economic optimality has any application at levels of abstraction beneath that of the sector, naturally I would not expect that a model based on optimization could have any application there either.
I believe the most detailed SFEcon to date model has 30-40 sectors. The data for these models come out of national input/output tables. Leontief’s I/O tables are very different from SFEcon’s; so the data conversion is challenging. This will only be resolved by having national statistical offices compute the SFEcon tables instead of Leontief’s. The reasons this should happen are 1) the SFEcon parameters engage economic causality, while Leontief’s do not; and 2) the SFEcon parameters are consistent in time, while Leontief’s are not.
No model can anticipate new products or consumer preferences. SFEcon’s boundary conditions are technical and utility tradeoffs; and the model’s behaviors are only determinant within that boundary. But the SFEcon model, like a proper scientific system, can be used to quantify its boundary. This gives us a high-level abstraction of technology that can be traced in time, which can be exploited for policy discussions and/or private profit.
A socialist regime could theoretically use this changing picture of technology to optimize its capital allocations among sectors in order to maximize its performance in the global economy. It is not clear if this might work as well or even better than the competitive exploitation of personal capital for profit. But, if you are part of the regime, you do not want to share returns to capital, or the power that entails, with entrepreneur’s or their heirs.
Such a regime would of course lack many incentives for innovation. But we observe in our own culture that much innovation is traced to people working for wages whose only incentive is career advancement. Socialist nations are presently able to profit by simply stealing Western innovations. And the leftist ideologues here are frankly agitating for a halt to economic growth.
While I personally do not want to live under any such regime, I can no longer argue against such a regime on the ground of economic theory. Capitalists competing for superior returns is a proven means to arrive at overall economic efficiency and order. It might well be the only practical means to such ends.
But capitalism is ultimately an abstraction – the criterion for a singular, efficient, and orderly state of affairs that is only approximated in reality. I wish to argue that approaches to such states can now be described in the manner of familiar scientific systems. I put the argument here because I have found it unwelcome in Austrian circles, and would like that to change.
Libertarian economics begins with a commitment to reason and evidence, and proceeds to von Mises’ “miracle of the market” as the only possible explication of economic causation. And, when confronted with a perfectly sound, mathematically determined rendering of that “miracle”, our side’s response has been to hound the mathematician out of academic life with our pro forma accusations of Nazism and sexual deviancy.
"Our" side huh? I assume the Nazi reference is to Hayek's The Road to Serfdom and his analysis of pre-WWII Germany as a model for the inevitable result of socialism leading to fascism. No clue about the 'sexual deviancy' charge. Evidence?
How does this take into account different industries bidding on the same commodity and increasing the price over the marginal cost of production. True the price will tend to fall towards the marginal cost of production as competition enters the market but entrepreneurs also tend to seek arbitrage opportunities so the economy will never reach a steady-state.
How is this helpful? People do this all the time without vector polynomial math formulas. Any new computer gadget comes out and people take it apart and determine its production cost based on the prices on the components it contains. Without accounting for marginal utility you can't possibly formulate the price it can be sold.
Then the entrepreneurs go off and find the next Big Thing and disturb the 'equilibrium'. That's why we aren't still in the trees with the rest of the monkeys -- a troop of howler monkeys have 'no reason to change' so would fit your model quite well.
Is that really the big discovery hidden behind all the fancy math and barely understandable 'superior vocabulary' that prices tend to fall towards production costs?
Nice scarecrow argument you have there. So the Austrians are the Intelligent Designers I assume and are pushing their views on the rest of the economists by coercion and fiat...well both the same really. What conclusion are you referring to, that a socialist planned economy is impossible?
As to whether or not I consider economics to be a science, I accept Nelson’s estimate in his Economics as Religion: at present ‘economics’ is mere pseudo-scientific imagery in the service of a self-sufficient system of values, whether the Libertarianism of Chicago or the Progressivism of the two Cambridges (one in England, one in Massachusetts).Economics as we have it is the Scholasticism of our materialistic age – a baffling circuit of unexamined assumptions and pre-ordained conclusions. I find economics’ subject matter interesting for the potential it holds for doing better.
Ah, yes, that would fully support your claim to being an Austrian economist...as I understand it Mises considered it a social science.
A socialist regime could theoretically use this changing picture of technology to optimize its capital allocations among sectors in order to maximize its performance in the global economy.
How would this solve the problem of socialists not being able to determine commodity values without outside influences? Or tell if they are applying their resources in the most efficient manner to serve the people? You know, the folks governments are supposed to work for and not the other way around.
Aren't you in effect arguing against a socialist regime by saying '[capitalism] might well be the only practical means to such ends'. I don't think *anyone* would argue that socialist regimes are able to operate inefficient economies. That's a given. What is at issue is if they can operate better than free markets.
I really hope I'm helping you win your bet by not using fancy formulas and voodoo economic theories to argue against your theory. I try to help out when I can but I'm not really and economist so don't think I qualify...
Mabel:No model can anticipate new products or consumer preferences. SFEcon’s boundary conditions are technical and utility tradeoffs; and the model’s behaviors are only determinant within that boundary. But the SFEcon model, like a proper scientific system, can be used to quantify its boundary. This gives us a high-level abstraction of technology that can be traced in time, which can be exploited for policy discussions and/or private profit.
If your computer program cannot predict which new or old products will be profitable and how much, then of what use is it in helping socialist central planners? Suppose a planner wishes to introduce a new version of iPod. How will he know, without prices, which combination of inputs will be best at producing the output, that is, which combination will not cause the more urgent desires of the consumers to be unrealized? After all, the factors of production can always be used elsewhere or to a different extent than in the particular combination under consideration.
It won't do to say that the planner will use current prices, for of what use are current prices 50 years from now?
There are always technologies available which cannot be used in production, because such use would be uneconomic. How will your central planner know whether a given technology should or should not be employed in the production of any good or service?
Firstly, I am not an economist either, but a historian.
The impetus for the SFEcon project seems to be indicated by the following (admittedly long-winded, selective and highly stylized) quasi-historical account of the 'progress of modern civilization' (or some such thing):
http://www.sfecon.com/Capitalism.htm
I suggest you read it to give yourselves an idea about the motivation behind this project. If, Mabel, you are in any way affiliated with the project, I see no way that you can call yourself an "Austrian." (This is admittedly a minor point however, and one that really has little bearing on the issues at hand, as it in no way addresses any of your critiques).
The (implicit or explicit) desire to manipulate, plan and control economic processes by means of a centralized state structure is certainly at the heart of the SFEcon project, according to their website. Wealth is to be socialized. Succinctly:
" . .every citizen would be an equal shareholder in the comprehensive national mutual fund."
Although the site is quite derrogatory toward the 'progress' of civilizations, and the mistakes made along the way, it apparently considers it best to continue along in this general tradition.There is really very little argument on the site as to why their program is necessary, but there is a lot of speculation (the word "might" crops up often). In fact, the concluding paragraph simply cites that, as an apparent alternative to capitalism, humanity has somehow shown (via Statistics? or some other criteria...) its preference for "civil decency." This apparently is directly in opposition to free markets.
If one chooses not to read the treatise linked above, I will leave you with this final quote, taken from the website:
". . .If the population opts for a more general expression of value, it might consider the possibility of outright surrender to the elected officials' personality type: make them the board of directors over our national portfolio of investments, allow them to dispose of all the nation's profits, and deprive them of income in any other form. This might finally perfect the Federalist program insofar as society's most avaricious personalities would perceive their only advantage in a general maximizing of economic efficiency." (italics mine)
hmmmmm...
TBH, I don't see what the point of this whole thread is. I am only studying Economics now, and my knowledge of Austrian econ is still paltry, but none of what I have read of it excludes the possibility of the use of mathematics - Mises warned that mathematical economics promised more than it could possibly deliver, but I see no reason why mathematical econ should be fundamentally incompatible with Austrian economics. Quite a few (neo-)Austrians use quantitative methods.
However, SFEcon seems to have a political agenda attached to it, and I am extremely dubious of any so-called solutions to the calculation problem.
I know one Austrian who argues that even on mathematical grounds a mathematical solution to the socialist calculation is impossible : Robert Murphy - Cantor's Diagonal Argument : An Extension to the Socialist Calculation Debate (PDF).
O.K. Guys this is how it is going to have to be: if anyone wants my response to the points being made here, they are going to accommodate my agenda first. Too many things (some of them worthwhile) are being said, too quickly, for there to be any practical means for me to address them.
Once again, I have offered a few mathematical developments and objective demonstrations that I believe are counter-indicated by current economic thinking. Adequate responses need go no further than …
This is factually wrong in some particular.
This is already available elsewhere in economic science.
This does not pertain to economic activity.
If, having considered the evidence, someone wants to go further, I will accommodate them with a thoughtful reply. But there is no sense in lengthy commentary on facts until they are admitted into evidence.
My contact with LvMI has put me in touch with several people who are interested in the evidence I have offered, and this is all I need to accomplish here. If any of THESE people wish to go on to a more general discussion, I will accommodate them. If any of THEM are intrigued by other’s commentaries on SFEcon, I will address the issues they identify. In other words, those who have volunteered to consider some portion of the evidence are going to be my filter.
If you think what you have to say is worthy of my response, you are probably going to have to signify your self-estimation by first exerting yourself to report your assessment of the evidence offered. If you know in advance that the evidence is not going to be meaningful, then why comment at all?
I understand my tacit presumption that certain demonstrations should upset the thinking of the Austrian school can be upsetting in itself. But lengthy, opportunistic manifestoes as to WHY YOU ARE NOT GOING TO BE UPSET do no indicate a supple assurance in what you believe. So please: one issue at a time; and give us a chance sort it out before changing the subject.
Cheers,
Dear Mabel;
Taking up your first challenge, I must say that I was surprised by your little paper on the connection between formal descriptions of the economic optimum and hyperbolic functions. It must call into question everything economists have deduced from the polynomial factoring issue. Seeing that this connection has always been there for economics to discover, I was also surprised to have found only one reference in the literature; and that could not have been more obscure. A few years ago, a member of the Ukrainian Ministry of Economics cited the “hyperbola of Roemer” in the Ukrainian Economist. Apparently this is the Kurt Roemer mentioned at SFEcon’s site.
That said, I would like to press you on a matter raised by Anonymous Coward. The SFEcon site reproduces a petition from the faculty at San Francisco State University for the removal of a Professor Roemer based on some finding that this fellow is a Nazi and a racist. The petition itself is obviously the product of a disordered mind. It is hard to believe any such person is on a faculty anywhere; that a college dean would have acted on their demand; or that such an action, taken against an instructor of any competence, might have been sustained. But SFSU is famously weird, so I suppose it is possible. However, I found your assertion that “our side” has run Roemer out of higher education to be a complete drive-by. So I must also ask: are you placing SFSU in the vast right-wing conspiracy?
And, on the matter SFEcon’s non-Marxist critique of capitalism: I found the comments of CDS to be way out of context. Clearly, the point of this article is that a civilization is at peril when its societal and political decisions come to be overly reliant on mere economic calculation. I find this a welcome reply to Chicago economist Gary Becker who states that, when economists have done their job, all human activity will attributable to objective economic factors such as “differences in prices and incomes”. Becker also found “differences in taste” as a “convenient crutch” for “analytical failures” in explaining temporally variant observations of behavior. I do not know how highly Becker’s generation of Chicagoans might be regarded by the Austrians; but it seems to me that they are as convinced in their economic determinism as Marx.
The lengthy quote about how a command economy might preserve the efficiencies of capitalism is clearly based on the premise that society has already surrendered its property rights. I do not see any advocating for the surrender. As I am beginning to understand SFEcon, their point is that economic theories should be determinant in the engineering sense before they deserve to be taken seriously in any sense. They claim to offer such a theory; and are clearly cautioning against the comprehensive application of anyone’s notions about material determinism.
Regards,
The Dean
The context of the article (not a NON-, but a POST- Marxian critique of Capitalism) seems to actually be summed up by the introductory paragraph, which concludes thusly:
". . .it would be well to consider if (and, if so, how) politics might now restrain economics. . ." As I said, the impetus is avowedly the desire to justify the utility (and preferability) of a command economy: an economy subsumed to and dictated by the political structure.
If this is considered to again be an innacurate context - although I have established this context by using quotes fromt the site itself - please delineate what you see as the actual context. I see nothing other than a very explicit call for socialism. It may be dressed up with other conceptual baggage, but this is essentially its motivating sentiment.
However, I agree that this is all irrelevant because, as has been pointed out repeatedly in this blog, the debate never really has been over the ability to calculate a theoretical equilibrium (which is of course possible), but the fact that this equilibrium is necessarily hypothetical and impossible to establish in a real world setting.
Dear CDS:
It is well said that ‘disagreement is hard to find;’ and I sincerely appreciate your isolation of items upon which differences are clear. Clearly the phrase “… how politics might now restrain economics …” is causus belli to Austrian sensibilities. Though an economist, I am of the opinion that economic calculation should not comprise the whole of social thinking; and fear for the society content to define itself around rational materialism. I am willing to elaborate on this point; but I agree that the discussion is better served by advancing to the second and third points that you make.
“the debate never really has been over the ability to calculate a theoretical equilibrium (which is of course possible),”
Unless old Ludwig has bequeathed his followers exclusive rights in the phrases “of course” and “trivial” then I think the Austrian side of this debate owes the rest of us a formal statement of what you mean by an economic state (however hypothetical) having no impetus to change. I was attracted to this discussion by Mabel’s rather able description of economic stasis, and her assertion that this definition has been given quantitative expression. If anyone out there has an instance of the problem she describes having been solved, show me the numbers. I fear I am going to learn that the Austrian notion of equilibrium has been trivialized beyond anything recognizable to, say, Hayek; and that this triviality is now being taught to innocent young people.
I appreciate that you are a historian and not an economist; but if what you say is defensible, there should be an economist hereabouts to take up the challenge for you. I am very sincere in this challenge, and will take the time in either public and private exchanges to thrash the matter out with any interested party.
Your third assertion…
“the fact that this equilibrium is necessarily hypothetical and impossible to establish in a real world setting”
Is also worthy of debate (as opposed to being taught as a fact), but I suggest we hold that topic back until we have agreed on a definition of equilibrium. By then I should have acquainted myself with Mabel’s empirical case for the general optimum as an explanation for material conditions in the real world.
To The Dean,
Thank you for examining my materials on the hyperbola.
And no, I do not think there is a vast rightwing conspiracy (though I hear SFSU’s econ department actually lists a bit to starboard). I do however think there is a vast rightwing culture that responds in sympathetic ways to certain stimuli.
I would like to take this culture seriously because its ideas are critical to the continuity of a civilization of which I would want to be a part. I observe this culture to be divided against itself in certain matters, and assume there is nothing traitorous about coming down on one side or the other in these divides.
Many on “our side” defend liberty’s ‘private property component’ on the ground that this is necessary to the most favored economic state. I object to this practice in two ways.
First, ‘liberty’ is whole, not a collection of components. If a society will not defend all aspects of liberty for their own sake, then other defenses are irrelevant.
I believe the self-interested disposition of private property is a proven practical means to an orderly process of economic adjustment toward an ever-improving general economic optimum. But I do not think economists who are good at explicating this process should be helping themselves to any sort of status as priests of liberty and righteousness. For one thing, economics’ accounts of how and why the economic order adjusts are tissue-thin. And then there is the small fact that our side is slowly losing the social debate, even though the economics should commend our agenda.
Second, private property is not necessarily the only means for keeping the economic state near its optimum. SFEcon’s robust portrait of economic adjustment demonstrates that the process can be modeled quantitatively and in the abstract. The very fact that such a model exists means that a clever enough collectivist elite could theoretically achieve the efficiencies of capitalism.
I am told (this is second hand) that our side, represented by Milton Friedman himself, once declared SFEcon to be “a fraud” even as a “mathematical possibility”. And anti-Semitism is well established among the motives for opposition to the premises of neoclassical economics. Coleman’s “Economics and its Enemies” has a whole chapter on this subject.
SFSU’s accusations against Roemer personally were (again, this is second hand) sustained and augmented by local neo-icon Quentin Kopp – San Francisco’s “conservative lion”, according to the SF Chronicle. Kopp has been a city councilman, state senator, radio shock jock, and superior court judge, i.e.: a small-bore Bill O’Reilly with police powers.
I am also told that an SF Examiner reporter identified the professor who made SFSU’s accusations, and found them credible. The Chronicle is our liberal paper; the Examiner is conservative. Kopp was Roemer’s state senator, entertained his appeal, and found for the faculty. Then some unidentified party summoned enough political power to have the FBI launch an investigation into Roemer’s alleged Nazi connections.
Though the FBI found nothing, later Judge Kopp seems to have remained on the case. He recently conducted a trial for no apparent reason other than to harass Roemer as a witness. Though the police and district attorney allowed that Roemer had been misidentified as a witness, and they never attempted to even contact the actual witness, Roemer was repeatedly summoned by police to testify without prior notice. Police were once dispatched to arrest him at home on a day from which the trial was continued.
The accusations of sexual misconduct originated at the (Catholic) University of San Francisco, where Roemer (a Catholic) attempted to rebuild an academic career. These accusations were reviewed by then Archbishop William Levada, who found for USF. Our former archbishop is now William Cardinal Levada, Prefect of the Congregation for the Doctrine of the Faith – formerly known as the Office of the Holy Inquisition.
Naturally, I would expect the greatest number of our side would not tolerate such tactics for the sake of ideas that we value. But I cannot help but see all this as a local instance of what was done to Ward Churchill and Sami al Arian before a national audience by Horowitz, O’Reilly, et al.
I am grateful to this forum for its willingness to actually consider the science. That focus having been established, and the drive-by hopefully accounted for, let’s get back to the numbers and what they mean.
Many on “our side” defend liberty’s ‘private property component’ on the ground that this is necessary to the most favored economic state. I object to this practice in two ways. First, ‘liberty’ is whole, not a collection of components. If a society will not defend all aspects of liberty for their own sake, then other defenses are irrelevant. I believe the self-interested disposition of private property is a proven practical means to an orderly process of economic adjustment toward an ever-improving general economic optimum. But I do not think economists who are good at explicating this process should be helping themselves to any sort of status as priests of liberty and righteousness. For one thing, economics’ accounts of how and why the economic order adjusts are tissue-thin. And then there is the small fact that our side is slowly losing the social debate, even though the economics should commend our agenda.
Is that the same as 'freedom is slavery'? Without private property how does one define their liberty, they aren't free to do anything without the permission of the real property owners who they must interact with to achieve even basic human needs. You need some food or a new suit then you must go to the local office of the Central Planning Board and see if your 'needs' fit within the quota of goods and services they dole out.
It is interesting how you ignore *all* the arguments against this and then change the rules of the 'bet' so you will only respond to the people who specifically comment on the science contained in your paper. A paper which isn't publicly available but only through a vetting process by the way.
I'm not a great historian of economics but none of the names you mentioned have any relation to the Austrian School. It is a horrible rhetorical device to lump 'us' and 'them' together and subscribe the behavior of a few select individuals to the grand 'Us'.
I'm actually having a hard time defining 'we' and 'our' in the context of your argument. I would say, just randomly making up a number, that 99.999% of the people who associate themselves with the Austrian School would have exactly the opposite views of private property and planned economies that you ascribe to 'our side'. In fact, I would say if you believe in the collectivist theories you put forth here you are diametrically opposed to the very basic principals which define a 'free market' in Austrian economics.
Nope, sorry, you can't dismiss the 'drive-by' that easily. Your limited model doesn't even come close to demonstrating how the problem could be solved since it it presently limited to 40 or so industries and doesn't solve the problems caused by the lack of a market in the means of production. Not even mentioning the essential role of the entrepreneur which would be replaced by the Central Planning Board which makes the mathematic models irrelevant since you fail to remove subjective decision making from the process.
I look forward to further dismissal of the points brought up so we can 'get back to the numbers and what they mean'.
Cheers
Good points Anonymous Coward.