----------------- 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 ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]