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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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