Friday, June 21, 2013

The idea of physics envy in economics is stupid

Here's a good example - Lee Smolin. Yes, if you ignore history, if you ignore multiple equilibria, if you refer only to the static case (i.e. - what a physicist trying to learn about economics is going to stumble on first) it all looks pretty silly. The only problem is... that's not economics. People know that the chief determinant of the "deep parameters" is history and path dependence.

This is like saying that astrophysics is nonsense when it purports to explain why the solar system operates the way it does, because the solar system could have formed in all sorts of ways (Mars and the Earth could have been flipped!) and could have been located in any number of locations in the galaxy and that what actually determines what we currently observe is the series of minute historical circumstances that made our solar system take on the unique characteristics that it has. On top of that, physical equilibrium is nonsense because the planets are moving! That's not equilibrium!



  1. 1. That guy needs to tie his hands down before he goes in long rants;

    2. I just think that he misunderstands what equilibrium models are meant to accomplish, and I think he only has a very superficial understanding of the theory behind those models.

  2. So...are Daniel Peter Kuehn and Jonathan Finegold Catalan finally taking the econophysicists seriously?

  3. What's galling is that merely b/c this guy is a physicist, the TED talk listening masses (who have quickly developed their own brand of vapidness) will slowly nod their heads with reverence and awe.

    "Ah, I always knew 'neoclassical economics' was bullshit. Hey, I heard it straight from a real scientist!"

  4. Daniel should read Mirowski's "More Heat Than Light", before making such categorical and uninformed statements. Neoclassical economists, as developed up to, say, WW II, is a misguided copy of 19th century mechanics, after the invention of the conservation of energy but without the development of thermodynamics.

    -- Robert

    1. Haven't read that particular book but I have read Mirowski and I don't find him to be a particularly convincing read.

      What do you find uninformed about my statements? They're pretty well informed, I think. What I think you mean is that you don't agree with them. That's fine but you're probably better off outlining why.

  5. Smoli is a sharp physicist, but I don't buy into his theory that blackholes are the universe giving birth to new universes. My guess is he was informed on what is important to economics by Roberto Unger. Unger is co-writing a book with Smoli on Physics and Philosophy, I believe going into the whole universes giving birth idea. Unger is fervently opposed to the marginalist revolution and neoclassical economics.

    While it is important to understand the limitations of mathematical models, there is still value there.

    DK, I agree that history and path dependence are important.

  6. Here is a link to a Roberto Unger video discussing different economic equilibria possibilities.


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