Jay,
What is really interesting is not only that Thurow is right, but the fact
that maverick economists have been pointing out that the neo-classical
economic emperor has no clothes for quite some time - looking at my
bookshelves I see Capitalism, Socialisma ndDemocracy by Joseph Schumpeter
(1950), The Entropy Law and the Economic Process by Nicolas Georgescu
Roegen (1956), Economic Heresies by Joan Robinson (1971), Essays Towards a
Steady State Economy by Herman Daly (1971), What's Wrong with Economics by
Benjamin Ward (1972), Staelmate in Technology by Gerhard Mensch (1975), The
Making of Economics by Ray Canterbury (1976), and The Idea of Economic
Complexity by David Warsh (1984). Joan Robinson, like Lester Thurow today,
was one of the heavyweights of the profession, a student of Keynes at
Cambridge. Mensch had the temerity to throw data at them. None of it has
made the slightest impression on the profession - they simply repeat the
mantra.
I can remember discussing in a graduate seminar the ideas of an obscure
economist named Clark who I had read as an undergraduate, in which he tried
to tie what psychologists know about human behaviour into consumer demand
theory. The reaction was of bemusement. It didn't matter a darn that
consumers could be driven by non-economic factors and be economically
illogical, because in the long run the market would assert itself. (Clark
was on the right track, but didn't get far because he was using behavourist
theory, which is about as obscurantist and edifying as neo-classical
economics).
I remember reading a graduate text on general equilibrium theory which
stated at the beginning that if in fact the assumption of equilibrium in
markets was wrong, everything which followed was void. There then followed
a hundred or so pages of densely reasoned mathematical economics and the
caveat was never mentioned again. Markets are, of course, seldom in
equilibrium and then only by accident. Everyone but neo-classical
economists knows that.
When I was at the Department of Economics at the University of Alberta in
the late 1960s and early 1970s I taught micro-economic theory to engineers,
agronomists and business students. That is long gone. Those faculties
teach their own economics courses now. The department has shrunk and I am
told by one of the faculty that few students complete a degree in the
discipline at either the undergraduate or graduate levels. It would seem
that while professional economists don't get it, students and members of
other faculties do.
What is even more interesting is to look at the work on economics being
done at the Santa Fe institute by people like Brian Arthur and Kenneth
Arrow of Stanford. In the Theory of Complexity they have a powerful new
investigatory tool but from what I can determine in Waldrop's book about
Santa Fe, they can't break free from the strait jacket of conventional
thinking and terminology and the "traditional" economic problems. What they
should be doing is leaping the conventional bounds and following wherever
complexity theory leads to see where they wind up, to create an entirely
new paradigm and a new language to accompany it. The person at Santa Fe who
did the most interesting work in economics was the biologist Stuart
Kauffman who built network models in which life (including economic life)
bootstrapped itself into existence. When Kauffman explained his model to
Arthur, all the latter could do was to talk about the fact that it led to
increasing returns, which is interesting and important but no news to
biologists, and immediately smothered the results in conventional economic
terminology and thinking.
Mike H
[EMAIL PROTECTED]
Facing the Future Inc.
15003 56 Avenue,
Edmonton AB T6H 5B2
(403) 438-7342
