Received: by alpheratz.cpm.aca.mmu.ac.uk id QAA04783 (8.6.9/5.3[ref firstname.lastname@example.org] for cpm.aca.mmu.ac.uk from email@example.com); Thu, 30 Nov 2000 16:13:17 GMT Message-Id: <200011301613.QAA04783@alpheratz.cpm.aca.mmu.ac.uk> Errors-To: firstname.lastname@example.org Precedence: bulk Reply-To: email@example.com Sender: firstname.lastname@example.org To: CAMREC list members <email@example.com> From: the Campaign for Real Economics <firstname.lastname@example.org> Date: Thu, 30 Nov 2000 10:07:27 -0600 Subject: CAMREC: Egalitarianism in a world of power-law distributions
I've been trying to find a connection between econophysics and neoclassical
economics. Econophysics has been bouncing ideas off the economic Ivory
Tower for several years now with very little impact. I've wondered why.
One possible answer is the focus of econophysics on 'risk' analysis. The
econophysicists are big on gathering huge amounts of trading data and
pouring it into their statistical routines designed for quantum
mechanics. Pulling the results from their mathematical machinery, they
announce the discovery that 'neoclassical theory is wrong since it didn't
predict fat tails!' They then set up shop as 'risk experts', as if all
economics was devoted to protecting assets.
It seems they miss the rather utopian foundations of economics. The point
of economic theory is building utopia, an equitable society for everyone
(perhaps every living thing) in the world. UN councils on economics are
supposed to assist our political organizations into a tranquil era of peace
and prosperity. It seems fair to claim that unless econophysics can
address these simple utopian aims, it offers no economic insight.
For example, consider the role of egalitarianism in
econophysics. Egalitarianism is a simple, almost universal, credo. Who is
willing to advocate inequality! Adam Smith and the neoclassical tradition
seems to assume that 'left alone,' economic egalitarianism is natural. Man
has corrupted the balance of nature. Economics will straighten out the mess.
Unfortunately for the econophysicist, the data they study provides a vast
collection of power-law distributions, a host of lessons in
inequality. Equality is simply unnatural. Nature distributes wealth via
power-laws! Equilibrium stability is unnatural.
My guess is that we are waiting for someone to find an attractive political
use for the knowledge that wealth is 'naturally' non-egalitarian and we are
all somehow better off for this. Until someone comes up with this
synthesis, econophysics and 'real economics' will little impact on the
public at large.
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