From: markh@csd4.csd.uwm.edu (Mark)
Newsgroups: sci.econ
Subject: Fundamental problems with the whole field (was: Re: Problems with Neo-Classical Economics)
Date: 9 Oct 92 02:41:12 GMT
Article-I.D.: uwm.1b2rg8INN6g5
Organization: Computing Services Division, University of Wisconsin - Milwaukee
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In article <1992Sep27.211354.24005@eng.ufl.edu> garry@monarch.zoo.ufl.edu (Garry Peterson) writes:
(Three ways in which economies deviate from the Ideal model and resolutions)
>(1) & (2) are being dealt with by people applying ideas from chaos, 
>game, and adaptation theory to conventional economics.  (For 
>example 'The Economy as an Evolving Complex System, ed. by 
>Kenneth Arrow).
>
>(3) Ecological economics and to a lesser degree environmental and 
>resource economics. (Eg. Ecological Economics ed. by Robert Costanza).

I think the fundamental problem is the modelling approach itself.  Instead,
we should be modelling economic systems as they actually are: systems of
interacting agents.

The best insights and tools for this approach exist in two fields that already
adopt this approach:

          (1) Statistical mechanics,
              which derives details of the behaviors of macroscopic systems
              essentially just from little more than the assumption that they
              consist of a large number of interacting agents.
          (2) Computer architecture.
              the design of advanced modern-day parallel processors and
              multiprocessor networks

These two field, themselves, due to the fundamental unity of their basis have
deep and significant interactions in the literature.

There are issues of relevance that alreyady have a substantial body of
literature built up around them in the second field, Computer Architecture,
concerning design.  They're really nothing more than issues of how to design
a system whose components interact efficiently AS a system, and the various
system pathologies that affect designs.

Centralized vs Decentralized
   A centralized system operates essentially in a top-down manner.  Their
particular advantages over decentralized systems is that they are easier to
control.  However, they suffer from 2 major types of deficiencies, which
should bring to mind some of the features of the Soviet system:

         Performance Bottleneck.  Everything has to go through the top
         level (just like any managerial hierarchy).  So the system cannot
         function in an environment of rapid change.

         Unreliability.  If only a few of the more critical components in the
         system fail, the whole system breaks down.

   A decentralized system consists of a large number of autonomous units.  Its
particular advantages are that it is more reliable.  If one unit breaks down,
others can come in and take its place.  Its major disadvantage is:

         Overhead.  If improperly designed, the system will degenerate as most
         of its operation will be devoted to handling communications between
         the individual units and in arbitrating conflicts between them, and
         scheduling their functions.  Essentially: deadlock.

   Our government is essentially a centralized system, with the same type of
top-down hierarchical structure that the traditional business had, except we
have a decentraled backup built into the system (3 branches of government,
50 independent governments in a Federation, etc).

   Right now it, and every other political system in this Earth, are facing
enormous pressures from both above (at the international level) and below
that are pushing them into heavy decentralization -- basically manifesting
themselves as the Performance Bottleneck.  The world's going by too fast for
systems designed IN the Industrial Era (the USSR) or systems designed FOR the
Industrial Era with foreknowledge and historical insight (the USA).


Synchronous vs Asynchronous.
   A synchronous system is one that runs on a single clock.  Everyone goes
in lock step.  The advantage of this type of system is that it is easier to
control and operate, but it's slower.

   Synchronism is the perfect characterization of any system typical of the
Industrial Age.

   In an asychronous system, every units runs on its own time.  These systems
can be a lot faster, but are harder to control.  They require a well-designed
communications protocol in order to effectively operate.

   Our society, our political system, our economy USED TO be highly
synchronous.  But that's changed.  In fact this IS one of the features that
define just what's going on today.

   Our government will not operate effectively as part of an asychronous
system.  The very premises of its organization: groups of people all meet here
or there at specific times, engage in the same activities at the same time
(making laws), meet at regular intervals, get reelected mostly at the same time
on regular intervals, the fiscal cycle, and so on, are in conflict.

Static vs Dynamic Topology
   In a static system, the components stand in essentially fixed relations to
one another, and communications proceeds in essentially along a fixed set of
pathways.
   In a dynamic system, the components can change in number and configuration.
The communications paths can change too.

   I'm not exactly sure where to draw the analogy with this last feature, but
I think the issues of data flow, communications routing all have relevance
for political and economic systems as well.  You could be talking about
materials flow, routing and distribution, or information flow for instance.
Newsgroups: sci.econ,talk.politics.theory