On Sat, 14 Oct 2000, Sampo A Syreeni wrote:
On Fri, 13 Oct 2000, Jim Choate wrote:
No stupid, there are lot's of persons called the 'market'. There is no 'market' without those individuals. When the market goes out of equilibrium then free market mechanisms are not enough to correct.
On a similar vein, just about every somehow understandable version of free market theory is based on the assumption of a steady state market.
Is there a distinction between 'equilibrium' and 'steady state' in this context?
The theory does not include a temporal element.
I'd say with respect to individual exchanges you are correct. This means the results of some exchange i doesn't effect exchange t, even if they involve the same participants. This lack of information transfer, economic amnesia, is my primary dislike for this theory. However, the concept of equilibrium does have a time variable. The flow of time is actualy required for any 'measurement' of that 'equilibrium' (I'll continue to assume parity per my question above) to be meaningful. There is of course no requirement that time be linear or smooth.
If you want to study those, you're bound for such a quagmire of stochastic nonlinear differential equations that you would not believe. Hence, the global stability of any reasonably realistic model of markets is practically impossible to guarantee with current mathematical tools. It is quite possible for such systems to behave badly enough to kill most of the participants in the market, for instance. Besides, the basic continuity assumptions behind mathematical economics practically guarantee that the theory does not take such possibilities seriously - I know of no models which take into account the discrete, limited number of people participating in the market.
Many of the folks I deal with have turned to cellular models. They seem to behave in a reasonable manner and they're reasonably easy to manage. My personal interest is in the application of modelling the near term politico-military situation with the two China's. There is psychohistory@egroups.com, there are several interesting participants and several of us are working on a CROWDS model. I also have a history list at SSZ, cliology@ssz.com. For more info, http://einstein.ssz.com/sci-tech/index.html#cliology Right now I'm working on a CROWDS project that models behaviour in aircraft. It's pretty simple, an ASCII map and some behaviour rules to animate the passengers written in Perl. Pretty standard cellular automaton theory. I hope to start on my China simulator some time next year. Right now I'm collecting data on the American Civil War, WWII (German perspective), and the current China participants. The goal is to include 'political', 'social', and 'economic' factors into a CA and their effect on military force growth and use. Speaking of CA's. I've heard that Wolfrom's new book is supposed to be out sometime in the next year or so. He claims to have a fundamentaly new modelling science if I understand the marketing slicks (and they're not too inaccurate). I've been saying for several years that an unrecognized threat is the amount of data available to the larger governments is enough to setup and run a economic simulator using real world data sets. It's the reason I am so certain that there must be increased individual involvement and that control of that data must be mediated by the person generating it - in all cases. There is no justification for any access to that record being exempt from monitoring - law enforcement arguments considered.
Free market theory, though interesting, useful and absolutely much better than most available alternatives simply does not cover it all. It is an abstraction which probably should not be attained any more than the socialist one.
Which raises the real question of "Ok, where to now?"... ____________________________________________________________________ He is able who thinks he is able. Buddha The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------