Sunday, February 20, 2011

Quick note on sim.eq's and econ method

I realised this morning that, unless I expressly say otherwise, someone is going to think I am setting up a lead-in to Walrasian equations for solving economic problems. So let me now expressly say that I intend no such thing, and that I would view an attempt of that nature as inane (and that's being charitable).

The application of the analogy of simultaneous equations to economics lies in the issues of concepts and principles. That is, complex phenomena can only be understood by first understanding the individual elements and lesser principles, which is conceptually akin to using the solutions found to simpler equations as means to solving the more complex equations. This is as far as it goes, albeit good enough to begin hammering stakes into the hearts of both empiricism and rationalism.

By the way, I reject the complaint about a lack of experimental ability in the humanities, leading to an alleged justification of pure rationalism in these fields, just the same way as we can reject the same approach is rejectable in astrophysics. It is not as though since we can't experiment by making up new planets and putting them in a variety of orbits that we can't be sure of the laws of planetary motion, or that this justifies some sort of attempt at arriving them through pure mathematical deduction divorced almost entirely from direct observation, is it? I do not have any respect for the Austrians' special-pleading for pure rationalism in economic theory. I am quite sure that Newton, Kepler, Galileo, Copernicus, and a host of other figures who, through observation and inference from those observations, began to piece together the picture of how the solar system worked, would have some stern words to say to Austrians if they (the astronomers) heard the Austrians go on and on about the lack of experimental ability.


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