Comment by vezzy-fnord | Hacker News Reader

Comment by vezzy-fnord | Hacker News Reader

Parent Full thread

I was simply listing them as non-present basics that even freshman Walras-Cassel equilibrium models might have. I can't just add a homogeneous blob of capital called K because that's subject to capital-theoretic criticisms and isn't how reality works (see Cambridge capital controversies, Ludwig Lachmann and GLS Shackle). I also can't bolt on transaction costs because those are variable and dependent on social institutions or fixed factors, such as property rights and geography.

There's no way I can encode a dynamic disequilibrating market process in this, and it'd be a fool's errand to treat models like this as having to say anything about real-world policy. Capital accumulation is far too dynamic a process to lead to rich-get-richer outcomes, anyway. See Capital and Its Structure (1956).

> it'd be a fool's errand to treat models like this as having to say anything about real-world policy

Then what kind of models should have something to say about policy? Simulations tend to emulate the observed phenomena of economies much better than traditional systems-of-equations models.

> There's no way I can encode a dynamic disequilibrating market process in this

Have you tried? There are plenty of easy examples in complex systems literature. We could probably find a simple non-linear mechanism to add to Norvig's model to make the equilibrium unstable. He's already got a bit of randomness, so the two combined would create dynamic disequilibrium. One of my favorite additions would be the possibility of catastrophic loss. Check out what happens to the dynamics when a transaction periodically results in the loss of all assets involved.

> Capital accumulation is far too dynamic a process to lead to rich-get-richer outcomes

That's a strange sort of statement. Are you saying this rich-get-richer phenomenon is an illusion or that because we can observe some counter examples one shouldn't make the rich-get-richer claim despite the general tendency? If the latter, that's like saying the stock market doesn't exhibit momentum because it sometimes changes direction.

A non-falsifiable situation is true of almost everything macro-economic, so you're sunk from the beginning. Might as well bow out of arguing that any of this is more than simple faith.

Reply on news.ycombinator.com