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Source link: http://archive.mises.org/8059/the-dangers-of-samuelsons-economic-method/

The Dangers of Samuelson’s Economic Method

April 29, 2008 by

A memorably painful part of my graduate education consisted of my attempts to read and understand Samuelson’s landmark book Foundations of Economic Analysis (1947), a treatise in mathematical economic theory, patterned after classical thermodynamics, that set the tone for much of what the cleverest mainstream economists would do for decades to come. The protocol became: build a mathematical model of abstract actors engaged in constrained maximization or minimization of an objective function; prove that the model has a stable equilibrium; show how the model’s equilibrium conditions change when its parameters are changed (the so-called method of comparative statics). FULL ARTICLE

{ 55 comments }

Eric April 30, 2008 at 1:32 pm

Modeling economics as one models the laws of physics is a bit like trying to model computer science by using differential equations that are derived from the actions of the electrons flowing through cpu chips. Let’s see….

d(b)/dt = f(e)+C

The rate of change of computer bugs per time is equal to some continuous function of electrons per unit time plus a constant (C is the bugivity constant that all programmers exhibit by natural law – found by physical experiment). And this only concerns single isolated computers operating in an equilibrium, not networked together.

Just as computers are layers and layers of complexity on top of physical laws, so too are humans in society many layers above the physical elements. If we can’t describe computers with an “equation of computation” then how is an equation of exchange and it’s derivative functions going to model the complexity of humans, in a marketplace.

But then at least electrons don’t change their buying patterns because they hate the sellers.

If we can’t even model a subset of economics, e.g. the stock market with any accuracy, then how do we model the entire show, and with one equation no less.

Anna April 30, 2008 at 4:43 pm

Well, it’s obvious that the author is still upset because several decades ago he did not get the job at MIT and someone told him Samuelson made some comment about him. Wow…

The author thinks that Samuelson fell into a contradiction for requesting both empirical support and logical rigor for economic theories. I think both tests must be passed by any theory. Otherwise theories that can be proven false empirically and logically would survive, like those of Marx and Mises.

Some of you have mention that everything Marx said was wrong. That’s just hate. I doubt any of you ever bothered to learn about him. Even if his economic theories were wrong his views on religion were not.

fundamentalist April 30, 2008 at 5:04 pm

Anna: “Otherwise theories that can be proven false empirically and logically would survive, like those of Marx and Mises.”

Mises’s theories have not been proven wrong empirically or logically; they have been ignored. On the other hand, everything Marx ever wrote has been proven wrong both logically and empirically, but that doesn’t bother his followers.

Anna: “Some of you have mention that everything Marx said was wrong. That’s just hate. I doubt any of you ever bothered to learn about him. Even if his economic theories were wrong his views on religion were not.”

I have read Marx and his supporters for two decades and not found anything that he wrote that was correct, whether economics or religion or anything else. I wouldn’t trust Marx to describe a cup of coffee. But there’s always a chance that I’m wrong, so I welcome the opportunity for you to show me where I’m wrong. Please post any statement or prediction of Marx that you think particularly shows his brilliance.

Vedran April 30, 2008 at 9:33 pm

Anna,

Empirical evidence has shown that minimum wage increases and decreases unemployment. So tell me based on empirical evidence which view is right?

The empirical evidence is not as clear cut as you would think. If every time you did an empirical test the results came out the same I would agree with you. However, it doesn’t work that way with social sciences.

rich May 6, 2008 at 10:36 pm

Alls I knows…is that sam ul son caused me to leave the university

Good work, sam

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