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This isn’t a debate. Historians and anthropologists actually have some idea of how the past works. I guess if you want some weird 19th century idea of the past
by FranzFerdiNaN 8y ago
This isn’t a debate. Historians and anthropologists actually have some idea of how the past works. I guess if you want some weird 19th century idea of the past you might want to talk to an economist.
- MikeSchurman 8y agoIf anyone is interested in this, Debt: The First 5, 000 Years by David Graeber is fascinating.
- JumpCrisscross 8y ago> guess if you want some weird 19th century idea of the past you might want to talk to an economist The myth appears to be that economists believe in the barter hypothesis. It was prompted by Adam Smith and subsequently disproven. Using the barter hypothesis as an argument against economics is like using Haeckel's embryos as an argument against evolution.
- mpax 8y agoI believe the barter hypothesis is already in Aristotle, so it’s perhaps several millenia old. Anyway, the issue does run deeper, since the barter theory is implicit in for instance theories of banking, inflation and the money supply. See “veil over barter”. It’s pretty important economists get it right.
- JumpCrisscross 8y ago> the barter theory is implicit in for instance theories of banking, inflation and the money supply No it isn't. (There isn't a single theory for any of banking, inflation or monetary theory.) If anything, modern economics starts with the fiction of a perfectly liquid medium of exchange that can be infinitesimally divided, borrowed and loaned. Low-liquidity economics (e.g. bartering) is an edge case to modern theories.
- 21 8y agoAnother fiction in modern economics is the rational man that always maximizes utility.
- JumpCrisscross 8y ago> Another fiction in modern economics is the rational man that always maximizes utility Nope, this is another fictional fiction. Homo economicus is a pedagogical tool and toy model. Utilitarian economics feature pretty much nowhere because defining a single utility function for real people is impossible. When modelling agents, it can be useful to start with a rationality assumption and then add complications. Or not. Depends on what you’re studying. The entire exercise of valuation, for example, asks “what would a rational person pay for this asset” and then looks to see if someone will sell it to you for less. The toy model is useful even if it doesn’t repreeent the present reality in the same way models of thermodynamic systems at equilibrium are useful.
- mpax 8y ago> Homo economicus is a pedagogical tool and toy model. Utilitarian economics feature pretty much nowhere because defining a single utility function for real people is impossible. Then what is the point? I mean, seriously, what is the point of teaching it? Why not simply use a different model that doesn't result in all kinds of awkward edge cases?
- JumpCrisscross 8y agoSame reason we start with frictionless surfaces in physics. It’s simple to grasp and extends gracefully. I provided an example of valuation exercises as a practical application. Nobody thinks price = value. But by asking “what would a rational me pay for this bond” and then observing the price, we gain useful insight. If the word rational bothers you, replace it with equilibrium. As to why we don’t use other models, these models predict realty better than purely behavioural and other exotic models. They’re Newtonian mechanics to the economics discipline.