SENSE AND SENSIBILITY no 1

1

Dara Barker posts (6 September) on biz edge (New Zealand) HERE

Secrets Behind Crowd funding”

... “In economics theory they talk about the power of the invisible hand that moves resources to places where they’re most sought after. On a crowdfunding platform, that invisible hand isn’t so invisible – it’s the hand of each member of the crowd as he or she moves his or her mouse to click on the ‘OK’ button to send money," he says.”

Comment

Those economists who talk about the “power of the invisible hand” are mistaken. It does not move resources anywhere. Only visible prices move anything, or leave it where it is.

2

John Robson posts (5 September) HERE 

….”Maybe it’s time to rediscover Adam Smith, whose economics was not a branch of applied mathematics or, arguably, non-applied mathematics. Nor was it about large abstractions. It was about how individual humans respond to incentives.

…So why not economic modellers? Their failure should have us reconsidering the whole Enlightenment notion that mathematics is the language in which truth is written. When Galileo said it, he laid down an amazingly ambitious research and development program for Western civilization that has yielded remarkable results in “hard” sciences like physics and chemistry. But in the social sciences, it has yielded much counterproductive nonsense

So let me throw down the gauntlet. Mathematical technique has severe limits, including that you cannot model the economy. There are too many variables, whose interactions are too uncertain and whose feedback loops are too complex. In short, it is transcomputable.

COMMENT

Dara Barker is on the right track.