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Friends: I have been lurking on the fringe of this discussion for
some weeks, being a relatively new boy. Forgive me if I come in with
a personal insight into what Patrick Gunning said:
........ I would feel better about following your reading suggestions if
> I was confident that you understood the deeper implications of accepting
> the point that the phenomena of praxeology and economics are
> fundamentally different from those of the natural sciences and that, as
> a result, they require fundamentally different methods of study......
This gives me the chance to throw a small pebble into the water, being
from the 'natural sciences' stable originally. I served my time in
physics in the 50s in the high-energy elementary particle scene. We
modelled complex system, over some of which we had little or no
control. We were pleased if the model corresponded to the observed
reality, delighted if it enabled us to make a prediction; some of us
were in on finding things which had been predicted, for which we were
awarded Nobel Prizes. If a finding came up which was in conflict with
the model, we threw the model away and build another one, or
sometimes we got away with tweaking it. The point I am making is that
the real world out there is the boss, and the model has no validity
in itself, without the real world.
In the 60s I moved out of this esoteric world and got into a
situation where mainframe computers were beginning to be used for
planning and decision support. Techno-economic modelling of business
systems became feasible, and we did it. The same rules held. If the
model, with its inputs, representations of processes, and outputs,
did not reflect the real world of the organisation in its
environment, the model simply would not be bought. If on the other
hand it could be shown to represent the reality credibly, it was
bought, and by tweaking it we could predict the outcomes of
decisions. Thus techno-economic modelling of business decisions is as
valid and obeys the same rules as scientific modelling of physical or
chemical systems.
The same alas cannot be said of the macro-economic modellers. Too
much is assumed and the assumptions are too fuzzy. Some sort of a new
angle is needed. May I suggest one, by analogy.
Consider statistical mechanics, the approach whereby physicists like
Maxwell and Bolzmann were able to predict the gas laws by analysing
the statistics of the motions of molecules. This is a crude and
over-simplified starting-point, but if you take the firm as being the
molecule analogue, and the techno-economic model of the firm as being
the analogue of the Newtonian dynamics of the gas molecule, then it
should be feasible to generate a valid macro-economic model by
considering the statistical interactions of an ensemble of firms, and
this model ought to generate recognisable 'gas laws', like, maybe,
Pareto distributions of firm size.
There ought to emerge an entropy analogue (generalised measure of
disorder) and a temperature-analogue (generalised measure of
management knowhow, in its role as pump to keep down the rising tide
of entropy).
What I would like to know from you assorted gurus is this: is there
anyone in the economic fraternity interested in taking up this
approach to macro-economic modelling, which I think is innovative,
and if so, please feel free to get in touch, and perhaps we can
exchange papers.
I can however issue a warning that I am not working in academic mode;
I am working in 'time is money' mode, so expect insights and comments
from me, but not in-depth scholarly research.
I cast my bread upon the waters, and await the heavy silence.
RoyJ
Dr Roy Johnston
IMS Clara House Glenageary Park
Co. Dun-Laoire-Rathdown Ireland
Phone +353-1-284-0555
Fax ...0829
Web-site: http://www.imsgrp.com/imm
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