tag:blogger.com,1999:blog-5687347459208158501.post7833156852463144112..comments2024-03-28T15:48:11.151-04:00Comments on The Philosopher's Stone: WELL IT'S ABOUT TIMERobert Paul Wolffhttp://www.blogger.com/profile/11970360952872431856noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5687347459208158501.post-31013116204402586712012-11-03T10:05:27.283-04:002012-11-03T10:05:27.283-04:00Maybe, then, the misunderstanding was mutual! :-)
...Maybe, then, the misunderstanding was mutual! :-)<br /><br />Somehow I got the wrong feeling, from reading Critique, that the idea was that classic economists emphasized microbehaviour as much as neoclassicals.<br /><br />Apologies.Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-5687347459208158501.post-8104730210942837912012-11-03T05:54:39.574-04:002012-11-03T05:54:39.574-04:00I agree with virtually everything you say, but I t...I agree with virtually everything you say, but I think I may have misunderstood your question. I thought you were asking me why Classical Political Economy is classified as Microeconomics rather than Macroeconomics, and that is what I was explaining. If you want to see a discussion of the complexities of such apparently simple and obvious asssumptions as completeness, transitivity, and reflexivity, see my book-length blog tutorial, The Use and Abuse of Formal Models in Political Philosophy, on box.net, where that and much more is discussed.Robert Paul Wolffhttps://www.blogger.com/profile/11970360952872431856noreply@blogger.comtag:blogger.com,1999:blog-5687347459208158501.post-62235502381507155162012-11-02T23:19:26.656-04:002012-11-02T23:19:26.656-04:00Thanks for the answer, Prof.
I have to agree with...Thanks for the answer, Prof.<br /><br />I have to agree with most of the facts you cite, but I am not so sure about the conclusions.<br /><br />I (and I am only an amateur, so I plead for everybody's leniency) agree with Prof. in that classical economists had to make some "microeconomic" assumptions: for instance, capitalists attempt to maximize profits. So, up to this point, I am in complete agreement.<br /><br />As Prof. said, the assumptions neoclassical economists make "differ in certain important aspects".<br /><br />I also agree with this, but I believe this is a bit of an understatement.<br /><br />Is not just that these assumptions differ, but that the neoclassical economists make an awful lot more assumptions and often, on top, add ad hoc assumptions to prove results in more specialized areas. And often enough these more specialized areas overlap with areas outside their original scope.<br /><br />An example is consumers' behaviour. To have weak preferences, following Varian's "Microeconomic Analysis", we need only completeness, transitivity and reflexivity (all of them sound quite natural, although not even these 3 are always empirically confirmed). <br /><br />With weak preference, we are told, we can get the bulk of consumer behaviour. Great then! 3 assumptions, simple enough. <br /><br />But once one relaxes, the book goes on: "We often wish to make other assumptions on consumers' preferences" and lists 6 additional assumptions. <br /><br />This means that in order to have these particular results holding true, 3 + up to 6 assumptions must hold true for the economy as a whole! And we were already having problems with the first 3! <br /><br />This, I'd say, makes these results a lot less robust.<br /><br />In comparison, the classics only assume that consumers spend their incomes.<br /><br />To make things worse, the above refers only to ordinal utility. To introduce cardinal utility functions, one needs at least 3 additional assumptions relating to lotteries.<br /><br />But cardinal utility functions are supposed to describe the behaviour of entities that sometimes can hardly be considered consumers: banks, investors, insurance companies.<br /><br />And that assuming all along that "consumers" can calculate the probabilities associated to each outcome!<br /><br />And, as the book is an intro, no dynamic models are used, where the same calculations apply over many periods of time.<br /><br />In this sense, I'd say that, in comparison to neoclassical economists, classical economists' models are almost "assumption free". Therefore, a priori they should be much more robust.Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.com