BusinessPundit highlights an article skeptical of the "invisible hand" in economics. And by invisible, I mean numinous.
In the Mother Jones article "Smith v. Darwin" the chief complaint seems to be that there's too much God in economics and that economic theory is not enough like Darwinian evolution, which the author, James K. Galbraith, describes specifically: "Darwin didn't invent evolution. He invented Godless Evolution."
Because current economic theory has failed, he advocates the use Darwin's evolution to better understand economic processes:
More than a century later, economics has not escaped its pre-Darwinian rut. Economists still don't understand variation; instead they write maddeningly about "representative agents" and "rational economic man." They still teach the "marginal product theory of wages," which excuses every gross inequality faced by the laboring poor.
...Darwin cannot be erased; his material, randomized, godless view of change informs every aspect of the way real scientists investigate physical, biological, and social problems, from cosmology to the study of political or technological change. The new mathematics of chaos and complexity are evolutionary, for they study how simple determinate processes can give rise to lifelike diversity. These techniques yield many new insights into the origins of pattern and structure.
Setting aside the notion that complexity in nature is also ipso facto godless, there is no doubt a pattern and structure to be found there. But more importantly, Galbraith appears to believe that such laws can also be mapped, for example, to human economic activity at scale. It seems to me that this is far different from the relatively simple clean-sheet logistic equations (in the image above) used to mathematically describe how complexity arises from simple determinate processes and is far more difficult in practice than Galbraith suggests. Nailing down the variables is a bear.
In short, it's a mistake to confuse nascent descriptive powers in theory for predictive powers in actuality. Should he in fact convincingly make that case, it won't be published in Mother Jones.
Apart from this, there's one other outcome that gives me pause: I can think of other economic theories that purported to scientifically describe the sweep of human activity that didn't turn out so well. So I have to ask, are there any people in utopia? Because I'm not interested in lifelike diversity.
People make lousy rational actors, but economics is ultimately about those choices. What other real world "determinate processes" are there? I think people will continue to screw up theory that tries to minimize choice and free will. As irrational as we are, the alternatives are demonstrably worse.
Having criticized Galbraith's bias, you might as well know mine: I really get the heebie jeebies when systems thinking replaces people.
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