Re: CAMREC: Interesting site: econophysics

From: the Campaign for Real Economics (
Date: Tue Nov 09 1999 - 16:51:00 GMT

Date: Tue, 9 Nov 1999 17:51:00 +0100
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To: bogus
From: (the Campaign for Real Economics)
Subject: Re: CAMREC: Interesting site: econophysics
In-Reply-To: <CAMREC: Interesting site: econophysics>

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To: CAMREC list members <>
From: the Campaign for Real Economics <>
Date: Tue, 9 Nov 1999 17:51:00 +0100
Subject: Re: CAMREC: Interesting site: econophysics

I have looked at Edmonds' econophysics guest column. While I normally agree=
 with his identification of the problem of economic theory and the attempt=
 of the social simulation community to overcome it, I think that his warning=
 to the econophysicists might miss an important point.

I suspect that the instruments of physics might make possible the relaxation=
 of the "disembodied axiomatic" behind the rational actor of economics. In=
 my view, this disembodied axiomatic is necessary in order to maintain the=
 independence of individual preference function which thus can be aggregated=
 to market and macro-models. If you accept psychological and sociological=
 evidence of many kinds you find, that - in one representation =AD an=
 individual's preference function includes the imagined or explicitly=
 expressed preference of others. (Included here is the fact that many goods=
 are preferable only because they are valued by others too.)

If one accepts interdependence of preference functions one has to give up=
 the concept of smooth and continuous preference functions that maintain=
 these properties even through the aggregation process. Aggregating such=
 preference functions produces collective preference functions of a highly=
 complex manner, which earlier (before the time of chaos theory) we=
 described in terms of multi-level concepts but which actually seem to be=
 similar to what chaos theory tries to deal with and explain.

Therefore I am somewhat more optimistic than Edmonds when evaluating the=
 fruitfulness of the instruments of physics when applied to economics. In my=
 view it might just be that the instrument allows relaxation of one of the=
 most pernicious "disembodied assumption". However I agree with Edmonds that=
 there is a danger that physicists might fail to see that the "socio-world"=
 is basically different from the "physical" world in that human actors have=
 an embodied self-representation of themselves, of others and of the system=
 itself and that this leads to interaction effects and a dynamics that is=
 fundamentally different from what I think the physical world is all about.

The last time that I have encountered an attempt by physicists and engineers=
 to "save" the social sciences was when the cyberneticians attempted to use=
 their machine concepts to solve the planning problem of social systems=
 through what was then called "sociocybernetics". I am sure that in the view=
 of the cyberneticians "sociocybernetics" has failed because the social=
 scientists joining in that attempt managed to keep the "socio" stronger=
 than the "cyber" as demonstrated by the anchoring of sociocybernetics=
 within the International Sociological Association. Needless to say that=
 sociocybernetics has not delivered the tools to plan society, possibly=
 lucky for us as citizens as well as social scientists. The problem with=
 "econophysics" might therefore be the dominance by physicists, the belief=
 of mainstream economics that it after all tries to do something like the=
 physics of the social world and the failure of a strong participation of=
 social and human scientists that know something about the richness,=
 variety, complexity and tremendous dynamics of human actors.

Thomas Baumgartner

>Due to some e-mail discussion I was invited to submit a short opinion
>piece to this site. It is basically a bunch of people using types of
>models from physics but shifting the focus towards (rather abstract)
>economic problems.
> See it at:
>It also has:
> More Heat Than Light :Economics As Social Physics
> : Physics As Nature's Economics (Historical
> Perspectives on Modern Economics) by Philip J.
> Mirowski Alexander Adamchuk=20
> "Is Econometrics Science ?", Joe McCauley=20
> Nobel prizes have been given for the pure mathematics
> of General Equilibrium Theory (GET), but is there any
> scientific content to that modelling? It's more interesting
> to go further and also ask if there's any scientific content
>Bruce Edmonds,=20
>Centre for Policy Modelling,=20
>Manchester Metropolitan University, Aytoun Bldg.,=20
>Aytoun St., Manchester, M1 3GH. UK.
>Tel: +44 161 247 6479 Fax: +44 161 247 6802

Thomas Baumgartner, Ph.D.; Senior Research Associate

Natural & Social Science Interface (UNS)
Department of Environmental Sciences =09
Swiss Federal Institute of Technology Zurich (ETHZ)=09

Tel +41-1-632 52 60
Tel.mob +41-79-463 27 53
 Fax +41-1-632 10 29

Dr. Thomas Baumgartner
ETH Center
CH-8092 Z=FCrich, Switzerland

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