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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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