The content of Veblen's Theory of Business Enterprise is that "captains of industry" (i.e., robber barons) direct the economy for their own monetary gain, and that economic development is incidental to their activities: their actions are as likely to lead to improvement or deterioration of the general welfare.
And Minsky claims in Stabilizing an Unstable Economy that
[Neoclassical Economics' General Equilibrium Theory] means that, for those subsystems of the economy where conditions are apt, the market can be relied upon, particularly if the market is not relied upon for the overall stability of the economy the determination of the pace and even the direction of investment income distribution; and the determination of prices and outputs in those sectors that use large amounts of capital assets per unit of input or per worker
But the big picture, the boundary conditions, the rules of the game, the regulation, needs to be set up with a view to the likely consequences.
This is a problem of dynamic control of a complex system. Micromanagement is not indicated. "Planning" is. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Any chance you could unpack this into a diary? The march of civilizations is a series of defenses that man has put up against the dread of pure existence.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Political implications [of delayed feedback] ... Provided [that] some degree of correlation is observed between model and reality, the model may prove very valuable. Rarely will it serve to make firm predictions such as physicists (alone among natural scientists) make with confidence. On the other hand, the model may open our eyes to possibilities of behaviour which otherwise would have been quite overlooked. The disastrous effects of delay on negative feedback is a case in point, and I propose to examine briefly the possible application of our calculations in government. One of the functions of benign government (that is, one that considers the interests of the ruled above those of the rulers) is to ensure, as far as possible, that the life of the country remains reasonably well balanced. To take a particular example, an industrial country depends on its educational system to produce not only educated, responsible citizens, but as well such a supply of trained specialists as are needed to run, improve and make competitive the wealth-producing industries. If there are too few, as has happened in Britain at times, government may choose to offer incentives to cause more talented youth to embark on a career in technology. This is an application of negative feedback, to observe an imbalance and act so as to eliminate it. In this case, however, there is an inevitable delay of many years between the act, which initiates novices into the training process, and the useful outcome in the form of trained engineers. Our model leads us to believe that too decisive government action might be counter-productive - too many students starting would have no effect for some years, and then would saturate the market. Not only that, but for years to come the students already in the pipeline would pour out into a jobless arena. At which point, a government that had not yet learned the lesson would discourage any more students from entering on engineering courses, and in due time a famine of trained young people would once again paralyse industry and lead to demands for corrective action. Now in fact this has not happened, not (I think) because governments were alert to, and swayed by, this view of the problem, but because the issue has never been a vote-catcher such as would lead to unthinking and damaging over-reaction. There are, however, public issues of far greater sensitivity where politicians are under the strongest pressure to provide instant cures for perceived ills, and of these the state of a country's economy is the most serious, especially as measures to adjust the economy cannot take effect immediately. We have here an ideal situation for delayed negative feedback, and it is not unreasonable to ascribe some of the fluctuations in the economic state of Britain to a too-vigorous application of feedback. It is a curious, and rather disheartening, paradox that matters of limited interest are likely to run on an even keel while the most important matters are caused to pursue a bucketing course through excess of zeal
... Provided [that] some degree of correlation is observed between model and reality, the model may prove very valuable. Rarely will it serve to make firm predictions such as physicists (alone among natural scientists) make with confidence. On the other hand, the model may open our eyes to possibilities of behaviour which otherwise would have been quite overlooked. The disastrous effects of delay on negative feedback is a case in point, and I propose to examine briefly the possible application of our calculations in government.
One of the functions of benign government (that is, one that considers the interests of the ruled above those of the rulers) is to ensure, as far as possible, that the life of the country remains reasonably well balanced. To take a particular example, an industrial country depends on its educational system to produce not only educated, responsible citizens, but as well such a supply of trained specialists as are needed to run, improve and make competitive the wealth-producing industries. If there are too few, as has happened in Britain at times, government may choose to offer incentives to cause more talented youth to embark on a career in technology. This is an application of negative feedback, to observe an imbalance and act so as to eliminate it. In this case, however, there is an inevitable delay of many years between the act, which initiates novices into the training process, and the useful outcome in the form of trained engineers. Our model leads us to believe that too decisive government action might be counter-productive - too many students starting would have no effect for some years, and then would saturate the market. Not only that, but for years to come the students already in the pipeline would pour out into a jobless arena. At which point, a government that had not yet learned the lesson would discourage any more students from entering on engineering courses, and in due time a famine of trained young people would once again paralyse industry and lead to demands for corrective action. Now in fact this has not happened, not (I think) because governments were alert to, and swayed by, this view of the problem, but because the issue has never been a vote-catcher such as would lead to unthinking and damaging over-reaction.
There are, however, public issues of far greater sensitivity where politicians are under the strongest pressure to provide instant cures for perceived ills, and of these the state of a country's economy is the most serious, especially as measures to adjust the economy cannot take effect immediately. We have here an ideal situation for delayed negative feedback, and it is not unreasonable to ascribe some of the fluctuations in the economic state of Britain to a too-vigorous application of feedback. It is a curious, and rather disheartening, paradox that matters of limited interest are likely to run on an even keel while the most important matters are caused to pursue a bucketing course through excess of zeal
It is tempting to see the life of an extended society as a species of chaos - normally it is restricted chaos in that the observed actions constitute only a small fraction of the possibilities. The analogy becomes especially persuasive when one recalls that ancient commonplace that no action, however small, but has consequences that spread through the community : 'for want of a nail the shoe was lost, for want of a shoe...'.(34) The implication is that one must not accept the theories of social science to be predictive except for short times ahead, or for certain processes that can develop only slowly, like the fundamental principles of a political party. It may be, for instance, that grand overall economic theories can be devised, but that the limited economic theories that governments long for will never have predictive validity for far enough ahead to be any use. Be that as it may, it is desirable that those social scientists who seem to strive to make their discipline conform as closely as possible to the perceived ideal of physics, should recognize that they may be imitating physical procedures at the very point where they are least reliable. And for their part physicists should not allow themselves to be gratified overmuch when philosophers of science select physics as the typical science. The phenomenon of chaos is a salutory reminder of the frailty of human endeavour, and it may be that the recognition of the limitations of mathematical prediction will prove the most typically scientific aspect of physics. -- Alfred Brian Pippard, Response and stability: an introduction to the physical theory (p. 128)
-- Alfred Brian Pippard, Response and stability: an introduction to the physical theory (p. 128)
I'll note the presence of a steady increase in one environmental variable within a Complex dynamic system tends to drive that system into a self-generated reorganization: bifurcation, Catastrophe, Emergent Phenomena ... it can take many forms.
So, one has to question whether the word "Equilibrium" in "General Equilibrium Theory" has meaning outside its mathematical definition.
