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From:
[log in to unmask] (Bill Williams)
Date:
Fri Mar 31 17:18:42 2006
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----------------- HES POSTING ----------------- 
Since Gani's message was at least in part a reaction to my earlier posting, 
I think perhaps I should attempt to clarify 
my argument. Although I am critical of the way choice and valuation are 
treated in orthodoxy's neo-classical theory, my  primary concern is a 
neglected aspect of two arguments.   
 
One is Alfred Marshall's introduction of the Giffen paradox into 
neo-classical economics. The other argument is Veblen's very poorly 
understood conception of economic behavior. Veblen, of course, was a critic 
of orthodoxy, but it has often been argued that he did not provide an 
alternative, or at least an operational alternative, to the tradition he 
criticized.  However, when  read from a contemporary standpoint, a 
standpoint that is  informed by recent work in theoretical biology, 
Veblen's treatment of human behavior can be, I think, very plausibly read 
in a way that is congruent with control theory.  
 
Compare Mayr's description of the structural/functionalist integration that 
he locates in the mid-195O's to Veblen's anticipation of this achievement. 
At the conclusion of the sequence of lectures "The Preconceptions of 
Economic Science" given at Harvard during the academic year 1899-1900 in 
which he reviewed the development of the economists conception of economic 
man and economic theory, Veblen (19OO) states, 
 
      "All this, of course, is intended to convey no 
       dispraise of the work done, nor in any way to 
       disparage the theories which the passing generation 
       of economists have elaborated, or the really great 
       and admirable body of Knowledge that they have 
       brought under the hand of the science; but only to 
       indicate the direction in which the inquiry in its 
       later phases -- not always with full consciousness -- 
       is shifting as regards its categories and its point 
       of view. The discipline of life in a modern community, 
       particularly the industrial life, strongly reinforced 
       by the modern sciences, has divested our knowledge of 
       non-human phenomena of that fullness of self-directing 
       life that was once imputed to them, and has reduced 
       this knowledge to terms of opaque causal sequence. It 
       has thereby narrowed the range of discretionary, 
       teleological action to the human agent alone; and 
       so it is compelling our knowledge of human conduct, in 
       so far as it is distinguished from the non-human, to 
       fall into teleological terms. Foot-pounds, calories, 
       geometrically progressive procreation, and doses of 
       capital, have not been supplanted by the equally 
       uncouth denominations of habits, propensities, 
       aptitudes, and conventions, nor does there seem to be 
       any probability that they will be; but the discussion 
       which continues to run in terms of the former class 
       of concepts is in an increasing degree seeking support 
       in concepts of the latter class."  (p. 176.) 
 
 
 
To my knowledge Veblen's many interpreters have not made the connection 
between Veblen's conception of human behavior and control theory. This has 
been the result I would argue of a two ( or more cultures ) sort of problem 
in that the heterodox economists have only very rarely been familiar with 
work going on in the sciences.  But, the argument that I would make also 
includes Alfred Marshall's treatment of the Giffen Paradox, a phenomena 
which can be explained by a non-standard analysis using control theory. In 
my view at least, a simple minded "bashing" of neo-classical theory would 
tend to exclude the fascinating history of orthdooxy's attempt to cope with 
the anomaly of the Giffen paradox. The Giffen paradox is one of the 
principle anomolies in the orthodox system.  Frank Knight 
urged the adoption of a compensated demand function to eliminate the 
paradox. However, a little inspection ought to have disclosed that even the 
compensated function is subject to Giffen type difficulties. However, these 
difficulties can be explained if human economic behavior is treated in 
control theory terms.  
 
 
Veblen it appears to me, was close to being in a position to develop such 
an analysis.  But, control theory requires accesss to lots of computational 
cycles to run simulations based on a control theory analysis.   
 
Veblen's work has often been described as being nearly, if not completely, 
a matter of destructive criticism. With the benefit of hindsight, it seems 
to me that Veblen's work contains a constructive aspect. This constructive 
aspect, however, did not develop because control theory was not at the turn 
of the century available to implement Veblen's program.  
 
Seeing the implications of this situation is only likely if one approaches 
the questions involved from a standpoint that is informed by the problems 
of economic analysis as seen by both Marshall and Veblen combined with a 
sufficient understanding of how human behavior might be seen from the 
standpoint of a control theory analysis.  
 
 
Bill Williams 
 
 
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