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How Economics Morphed into a Science

Posted: 09-30-2011 06:44 PM
by cybrwurm
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True knowledge derives from existing things -- Epicurus
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One of the stranger tasks that can fall only to Philosophy is the division and organization and classification of all human knowledge. This is, of course, a thankless and on-going labor made necessary by philosophy's current servitude to the great and expansive scientific-paradigm (which more or less forces philosophy to be much more "scientific" in all its aspects and functions). Thus we have the chief division of human knowledge into the two main groups of the hard and soft sciences. Philosophy and Economics both fall under the latter category; and so it should come as no surprise that both studies have some shared points of contact where ideas converge and intersect, thereby making economics, at least in part, a matter of significant philosophical interest.
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Economics began its career as an identifiable field of inquiry just as scientific knowledge was taking great strides forward in the western world. Science was the fuel powering the industrial revolution and the cultural upheavals that went with it. Scholars of all sorts were looking for new facts, new areas of study, new fields for scientific inquiry, and new books to be written that would shake the world. And so the borders between the various soft-sciences were still flexible enough to allow intelligent and exceptional scholars to work through several related areas.
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Thus a philosopher (like Adam Smith say) could be interested in history, psychology, sociology, political-theory, anthropology, and other similar sciences, absorb and incorporate all this knowledge with his own thinking, and then find a blank spot overlooked by other investigators: a new topic for scientific discussion; namely, how various peoples and societies actually behave, and why. Smith looked at the 18C (edited by fan) English society around him closely, through the eyes of a philosopher, presented a snapshot of that society, and analyzed and explained how and why it all works, and where its all going. Thus did 'Wealth of Nations' become the first great textbook in economics!
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But perhaps you disagree? ... How, you may ask, can Philosophy and Economics be bound together in any significant or meaning way? Philosophy is just nonsense dressed up as science, while economic-theory is a rigorous, statistical, and methodological scientific-discipline utterly lacking in the "hot air" that comprises the bulk of philosophy! Hey, I know exactly what you mean. Perhaps its best to just keep these two soft-sciences as far apart as possible. Perhaps. But this attitude does not, in and of itself, nullify the plain and obvious facts available to all the sciences.
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Thus there is one area of thought where all the soft-sciences gather and meet, and that is the not-so-small matter of their working conception of human nature, and the qualities that define humanity so as to be of service to the varying needs and objectives of this or that science. Sociologists and anthropologists, for example, will not share the same definition or conception of humanity. So of course, different economists see people in different ways according to their often unstated assumptions and varying visions of the goal and nature of economic-theory.
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What, for example, are 'sheeple' if not a functional philosophical concept of considerable utility to many economists. If you go walking through the streets of any major city, you will not see any 'sheeple' as such, but rather only many individuals going about their daily business. And yet the concept of 'sheeple' is a very flexible one. For some economists it can be the bourgeois/proletariat hybrid, while at the same time (for other economists) it indicates the material substance of things like 'the invisible-hand'. And so on.
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Anyway, back in Victorian England economic-theory was all the rage among intellectuals and academics, and much ink was spilled in the production of many pages falling under the rather general category of "economic-literature". So the new study of economics soon became a popular pursuit that anyone could participate in; with or without gusto and enthusiasm, with or without passion, with or without scientific rigor, and even with or without insight into the workings of humanity as a functioning collective. Amidst all the uproar one shy and quiet scholar released the results of his labors in 1881 in the form of a little-book entitled 'Mathematical Psychics'.
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In this document one professor F.Y. Edgeworth forwards the observation that the science of economics deals with known quantities. Moreover, any study that deals with quantities can be translated into mathematics! And these numbers can then be used to construct a more or less accurate mathematical-mirror of the world. It is 'more or less' because a *useful* economic-model obviously must simplify and ignore much of the complexity and variety inherent within reality as it is lived by actual individual persons. But for economic-theory it is the collective that has primary importance, and the individual is simply meaningless when 'out-of-context'. Meanwhile, existentialism might have something to teach economic-theorists about this little over-sight and logical-contradiction.
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But what is this "reality" that economists constantly refer to anyway, if not that small slice of the cosmos that actually impinges upon the human mind? And if that is so, then reality is, at least in part, created by the human mind (individually and collectively), such that reality is largely a social-construction built up over many generations of collective and individual efforts (which is manifested physically in the form of books, art, architecture, etc, that the various cultures and civilizations leave behind them as the planet travels through space/time). History then is a primary element of whatever it is that is meant by the term 'reality'.
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Moreover, the fact that reality is partially created both collectively and individually means that it is necessarily flexible in *some* respects, such that some few individuals can (if they will it with considerable determination) define *some* aspects of reality in their own terms in order to better suit themselves (see Alexander the Great for a classic example of this). The point is that ideas do indeed shape reality (to some extent), and while this may sound odd to most pragmatic-minded people, the importance of this detail is that applies on both the individual and collective levels of human-reality. So you see then how *important* certain individuals are to the larger historical process (being the ongoing development and rationalization of civilizations). Moreover, certain individuals are very important; even to economists (see the pioneers of economic theory for many examples).
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After all, a man is what he thinks about all day long (Emerson). But even so, most people remain a lot like machines anyway; some folks have even taken to calling them 'sheeple' (see wiki for more details). W. James once observed that only philosophy makes men, everything else makes machines. Thus we have Aristotle's 'rational-man' appearing in various forms under different categories. There is man the social-animal, man the political-animal, man the war-making-animal, the slave-man and his master-man, the aristocratic-man and the criminal-man, man the sexy naked ape, and so on and so forth, etc etc. And now something new: man the economic-animal; the machine-man that doesn't even know he's a machine! :(
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And thus does the mighty rational-man fall to his knees in abject defeat ... only to arise anew as something completely unexpected, the new-fangled and high-tech economic-man; whereby all people everywhere are pleasure-calculators (of varying quality and effectiveness), and most of whom are chiefly machines of one sort or another, bearing different skill-sets and resources, etc (ie. mere cogs in the wheels of the great market-machinery driving onward, ever (blindly) onward, towards ... what? towards progress and a better world? ... I think maybe NOT the best of all possible worlds. Yet this is the world that Aristotle's Bastards have managed to build for us all. The 21st century is what ... the Age of Uncertainty? ... Thanks a lot there Mr Aristotle!
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And so the 'Age of Uncertainty' is certainly a very good description of 21st century society; our ever-shrinking and hi-tech global-village made up of countless cities grouped into competing nations now forced to cooperate and work together for the greater good, in spite of overwhelming local concerns. But in the general climate of uncertainty, it is exceedingly difficult for all these sovereign (ie. supreme and autonomous) nations to get their act together enough to even get on the same page. Page one is now being written in Europe, regarding the Greek debt/default crisis. Whether or not there will be a page two is anyone's guess. But uncertainty is also a problem outside the markets and the general economy.
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As in Philosophy, for example; see Russell and Wittgenstein for more details. Indeed, some even go so far as to suggest that if philosophy cannot achieve even a modicum of success in its efforts to gain some certainty about something, then it is utterly and completely useless; and therefore worthless. There is really no answer to such extreme skepticism and cynicism; other than to point out that science and philosophy both have a very long way to go before they're finished their jobs, and that they are really just getting started. The last twenty-five centuries have seen enormous strides taken by philosophy, but for every step forward the world demands that philosophy take two steps back.
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The result is that more time and effort are spent on reviewing and criticizing previous mistakes (and almost-good ideas) than anything else. Thus philosophy is really in no position to conjure up massive doses of certainty 'on demand', as it were. And in any case, uncertainty is not the absolute-destroyer of philosophy (and maybe everything else too) that it is made out to be by some. Rather, uncertainty is simply a part of human life, and must therefore be given its due: "The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next" (U.K.LeGuin ).
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Anyway, the mathematical-mirror of the living and dynamic world of collective human activity and behavior is simply a conceptual tool-set for economic study and analysis. And as such, the process of translation from world to mirror clearly requires abandoning the grand and melodramatic visions of the world (and its ultimate goals) that most previous economists (eg. see Smith and Marx) described and analyzed:
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Heilbroner say: To build up such a mathematical mirror of reality, the world obviously had to be simplified. Edgeworth's simplification was this assumption: every man is a pleasure machine. Jeremy Bentham had originated the conception in the early nineteenth century under the beguiling title of the Felicific Calculus, a philosophical view of humanity as so many living profit-and-loss calculators, each busily arranging his life to maximize the pleasure of his psychic adding machine. ... in a world of perfect competition each pleasure machine would achieve the highest amount of pleasure that could be meted out by society. -- page 173-4
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Of course, the idea of 'men as machines' goes back even further, but Edgeworth pushed this idea to its logical limits and came up with his "algebraic insight" into the deep springs of human activity (and its motivations), thus carrying it to almost mathematical precision. And yet the model (or conceptual mirror) also contains a built-in adaptability which allows the model to be modified and corrected by events and activities in the real-world. This necessary flexibility stems from the observation that all men are not created equal, and are not endowed with glorious rights and talents. Men are simply pleasure-calculators ...
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BUT some are much better pleasure-calculators than others, and some even have an innate knack for it, while others do not. So this tremendous variety in the all-important skill of being a successful pleasure-calculator explains the wide variety in societies and their economic systems. For example, inequalities in the distribution of wealth vary from culture to culture, and economy to economy, because they result from the basic inequalities (in intelligence, skills, knowledge, authority, temperament, etc) among the teeming hoards of pleasure-calculators that make up ALL of humanity.
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Now you might think that such bizarre thinking is surely a modern invention, and in large part this is true, but things are rarely so simple in the vast timeless world of philosophy. So even these mathematically inspired notions of modern economic theory can be traced back through history (and philosophy) to the great nation of Greece in its glory-days (where science, philosophy, art, history, literature, etc, were birthed out of the "collective mind" of the ancient bronze-age peoples).
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goto part two - up next -->

Posted: 09-30-2011 06:46 PM
by cybrwurm
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Epicurus say: A firm understanding of these things enables us to refer every choice and avoidance to the health of the body or the calm of the soul, since this is the goal of a happy life. everything we do is for the sake of this, namely, to avoid pain and fear.
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The world's various stock-markets are certainly driven in large measure not only by pain and fear, but even the mere perception of possible pain and fear is enough to send investors into a tizzy. Obviously, these sheeple have no idea who Epicurus was, nor even why they ought to know everything about him.
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Epicurus: Once this is achieved, all the soul's trouble is dispelled, as the living being does not have to go in search of something missing or to seek something else, by which the good of the soul and of the body will be fulfilled. <snip>
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Actually, I do believe that friend Epicurus is wrong on this particular detail. Or rather not quite right enough, for while this restriction may have applied to almost everyone in ancient and classical times, they cannot hold today. For just as knowledge and culture have developed and expanded, so have people grown in reason and complexity. True, the body can still be cared for as always, but the human soul now retains a hunger even after all the "trouble" is dispelled. In the Age of Uncertainty all peoples are seeking something else, as if for something missing. And that something we seek is certainty, security, and stability in an uncertain, insecure, and destabilized world. Isn't it just like these dumb human creatures to always want what they can't have! :D
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Epicurus: ... Therefore, we declare that pleasure is the beginning and the goal of a happy life. For we recognize pleasure as the first good, and as inborn; it is from this that we begin every choice and every avoidance. It is to pleasure that we have recourse, using the feeling as our standard for judging every good.
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As a general economic-concept of universal motivation I do believe that the word 'satisfaction' is better applied than either 'pleasure' or 'happiness', in that it is more closely tied to real-world circumstances and conditions (in all their flexibility and complexity), and also that it is more easily applied to the various levels of the hierarchy of being and values (see A.Maslow) that many (if not most) 21st century peoples manifest. After all, things were much simpler in the Iron-Age to be sure, and people too; so allowances should be made to the ancient Greek philosophers for the various limitations and misjudgments that flow out of a less complex, and less hectic, time.
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So if the universal goal of all human being and behavior can be said to be "happiness" (or rather, 'relative satisfaction'), then it still remains to determine what this proposed happiness consists of. For some an absence of pain and fear is sufficient, for others peace of mind and bodily health are sufficient; but beyond these basic necessities, I would suggest that liberty is the single most essential ingredient necessary to a lasting and meaningful "happy-life". Freedom from pain and fear and superstition are all important, as Epicurus wisely teaches us, but things like financial-freedom, freedom from all forms of oppression and injustice, and even freedom of expression are also very important.
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Now some will naturally stress the importance and primacy of this or that aspect of liberty. So, for example, the wonderful-dragon, Mr Kevin O'Leary, will say things like 'money is the currency of freedom', thus emphasizing the necessity and primacy of the cash/liberty interface. But this perspective can easily lead us to the view that 'freedom' is a type of commodity that can be purchased, more or less, like any other. And while I do not wish to deny the value of the cash/liberty interface, I would also point out that it is not liberty that money brings (other than financial freedom, of course), but rather power. And one should never confuse power with liberty, for they are not at all similar creatures.
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Of course, this variation on the mathematical-mirror of 'economic-man' by this odd 'Merchant of Truth' is somewhat extreme, but then extreme ideas, or ideas carried to extremes, are not at all unusual for all manner of economic-theorists. Indeed, economists in general tend to push certain ideas to the extreme limits of logical consistency and coherence just to see where they will lead. And so this is another area where philosophy can be of service to economics, for philosophy recognizes these extremes for what they are, and in identifying them (and also criticizing them) can nudge economic-thinkers back to a more sensible path whereby the mathematical-mirrors that economists endlessly construct can possibly present a more realistic and rational portrait of collective human-behavior in action.
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- this article brought to you by the good people over at Sages-R-Us and - cybrwurm ;>
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P.S. Fragment of a forgotten conversation; the speaker is Bohunk Bob of northern Canada:
"It's a mammalian thing, you see. A slimy reptile like you couldn't possibly understand it."
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Sources: 'Letter to Menoeceus' by Epicurus.
'The Worldly Philosophers' by R.L.Heilbroner.
'The Age of Uncertainty' by J.K.Galbraith.

Posted: 10-03-2011 09:43 PM
by cybrwurm
So it may seem that the above article is rather on the longish side ... ???
But actually it's less than five printed pages ...
Not that long for a philosophy essay really. :D

spawn? Isn't caviar too salty?

Posted: 11-11-2011 07:11 AM
by bobbo
Do you have a link to the original material?

I hate quibblers, and don't know why it rankles me so, but Wealth of Nations was published in the late 17-- or the 18th Century. Rather a slap in the face to say it came in the 19th? Probably just me.

Whats the import of the digression into sheeple? That economics is about the summing up of individual choices? Rather an extenuated leap you pose for your reader, if that is the chasm you intended.

Nice potential segue back existentialism when you say that some exercise great will to define with determination. I think most defining goes by way of unthinking assumption? So, I don't know if you really mean to address the outliers like Alexander, or have some other meaning in mind.

Emerson: HAH. Romantic Poet. Exactly so. We are what we think. I think few of us think all day long though and maybe that indeed is part of it too?

You lose me after his fine quote. Lots of words, no clear idea? Kinda like economics? What was the equation? useless = worthless? I agree.

I think a new piece of paper and a start over is indicated here. I do spy there is no link but rather the referenced "article" is actually your own review of the cited sources?

Its a good way to write: get anything down, then edit, edit, edit. I can't write at all. I only try to edit. Totally different process. Much easier.

Edit--it occurs to me the "article" you refer to is the first two entries of this thread? That makes more sense. Wrong. But more sense. ....... but again, all definitional.
No doubt, I have it all tragically wrong.

Posted: 11-11-2011 12:14 PM
by Dale O Sea
bobbo wrote: Do you have a link to the original material?...


I found a link to a google books page for the book, The worldly philosophers:
the lives, times, and ideas of the great economic thinkers
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Link to cited tract:

http://bit.ly/rELcsb

Posted: 11-14-2011 11:53 PM
by cybrwurm
That's the one I've been reading, yup. I'm also enjoying 'The Age of Uncertainty', which has lots of cool pictures and stuff, so it's easy reading for a book on economics. Even a dummy like me can see that these pioneers of economic-theory were amazing men, as well as interesting philosophers. Thorstein Veblen is both weird and especially interesting. We need more economists like him, I think. :)
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btw, bobbo, I haven't forgotten your post, and I am slowly working out a reply. Please forgive my tardiness. It's just that when I get started on some special project I also tend to lose track of everything else, including time. So this current special-project is shaping up to be, alas, another long and tedious affair with a lot of beating around the bush type of behavior. Something to do with the Keystone XL pipeline project, maybe? Say, what does XL stand for anyways? ... eXtra-Long perhaps?

Re: How Economics Morphed into a Science

Posted: 11-16-2011 07:00 PM
by cybrwurm
] bobbo say: spawn? Isn't caviar too salty?
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wurm: I like salty.
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] b: Do you have a link to the original material?
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Not really, no.
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] b: I hate quibblers, and don't know why it rankles me so, but Wealth
] of Nations was published in the late 17-- or the 18th Century.
] Rather a slap in the face to say it came in the 19th?
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wurm say: Roger that. 1776 is the year it first appeared. My
mistake; will try to fix. Uhmm, would you believe that it was
just a missed typo? Hey, it could happen.
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] b: Probably just me.
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Not at all. The truth, if it is to be found anywhere, must lie within the details.
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] b: Whats the import of the digression into sheeple?
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I just think it's an amusing word.
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] b: That economics is about the summing up of individual choices?
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A sociologist might call it a good example of an ongoing socio-psychological phenomenon.
Human behavior in all of its collective impact and consequences. That's where all of the
action is, fer sure. So what's your favorite definition of economics, b?
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] b: Rather an extenuated leap you pose for your reader, if that is the chasm you intended.
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What chasm am I asking the reader to leap? Funny I don't recall intending any chasms.
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] b: Nice potential segue back existentialism when you say that some exercise great will to
] define with determination. I think most defining goes by way of unthinking assumption?
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Oh absolutely, that's why it's always good for philosophers to double-check all the
important words and ideas, and any changes to them. The development of languages
is also a good example of an ongoing socio-psychological phenomenon arising from our
collective interaction with the world.
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] b: So, I don't know if you really mean to address the outliers like Alexander,
] or have some other meaning in mind.
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Which section of the article is this refering to?
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] b: Emerson; HAH. Romantic Poet. Exactly so. We are what we think.
] I think few of us think all day long though, and maybe that indeed is part of it too?
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There are plenty of reasons not to over-think things, and plenty more distractions
designed to prevent us from thinking in the first place. For example, the best
professional basketball-players make millions for throwing a ball into a little
metal hoop! ... This is not rational by any stretch of the imagination.
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] b: You lose me after his fine quote. Lots of words, no clear idea?
] Kinda like economics? What was the equation? useless = worthless? I agree.
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right
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] b: I think a new piece of paper and a start over is indicated here.
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If by that you simply mean that 'a writer writes' then I am in complete agreement! :D
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] b: I do spy there is no link but rather the referenced "article" is actually
] your own review of the cited sources?
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10-4, good buddy.
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] b: Its a good way to write: get anything down, then edit, edit, edit.
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It's more like get EVERYTHING down first, and then edit, edit, edit.
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] b: I can't write at all. I only try to edit. Totally different process. Much easier.
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Yes, it certainly is that.
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] b: Edit--it occurs to me the "article" you refer to is the first two entries of this thread?
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The posts numbered one and two, yes. Surely you did not miss the last line of
post one: "goto part two - up next -->". I had to do this because five pages worth
of text won't fit the boundry-limits of one post. It's always been a terrible problem
for me, but no one else in cyber-space, apparently. Most of my stuff just won't fit
inside those tiny little e-boxes! :(
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] b: That makes more sense. Wrong. But more sense ... but again, all definitional.
] No doubt, I have it all tragically wrong.
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It would appear so ...

Always the student

Posted: 11-16-2011 07:55 PM
by bobbo
wurm--let's see if we can move this along. Specifically you ask:

1- So what's your favorite definition of economics, /// I don't have one. I admit/know right up front I can't follow its workings. My only comfort: neither can those who profess to expound it. I am happy to take any standard dictionary definition of the term and remain confused from there. I take comfort in knowing that no one knows economics beyond itty little bitty pieces not relevant for most issues, or so general to as likewise be useless. My best example of that: Should the stimulus have been done at all or 2-3 times larger? The experts disagree. Partisans allow this lack of knowledge to permit their imposition of their own preferred theories parroting economics but it is only the economics of the too general: they are greedy bastards out for what they can get. Everyone knows that.

2. What chasm am I asking the reader to leap? /// I could try to describe the chasm but it only refers to my own inability to connect the dots you lay out for the reader. Simply--I can't follow it. There is a chasm between what you write, and what I understand. More words needed to cross it.

3- Which section of the article is this refering to? /// You have to read backwards in your post to get my reference/question. It goes to your characterization of reality as being "partially created both collectively and individually means that it is necessarily flexible in *some* respects, such that some few individuals can (if they will it with considerable determination) define *some* aspects of reality in their own terms in order to better suit themselves (see Alexander the Great for a classic example of this). ((Post #1 Para 11)) I don't know what that means. My gut tells me such ideas are for politics and not for economics. Alexander may issue an edict by use of his great will that one sheep equals 5 bushels of wheat, or that one soldier is worth 5 sheep but what does that have to do with reality in any helpful sense? So--individuals may impose cost/price/wage controls but doesn't the reality of "economics" go on its merry way? Its what the Iron Fist is all about. Defeats Even men like Alexander.

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Economics can be quite precise and rigorous in certain aspects. We have 2.000000000 Canoes and 4.00000000 Coconuts on the island. It will be rare that economics will be able to tell us though whether the island would be better off to invest in a further canoe, or a another coconut. Science is all about being able to predict the future with precision. Economics doesn't offer that no matter how well it measures the details along the way.