Thursday, 25 September 2008

Unless the Lord build the house....

Often economics mimics the science of the day. It has been well documented that capitalism and the "free market" wouldn't have taken hold so convincingly in the 19th century if parallels hadn't been favourably drawn to the rising science of evolution, and in particular "the survival of the fittest".

Less well documented is the fact that Adam Smith's "invisible hand", the self regulatory mechanism that keeps the market ticking simply mirrors the science of "equilibrium chemistry". Those who say there should be no intervention in the markets, that they should be left pure to function properly are really just modeling the markets as a simple system in equilibrium chemistry. This stuff is 200 yrs old and showing its age. Those who are following Dr Ron Paul on this are wrong, the model is obselete. Those who don't want George Bush to intervene on the markets are reactionary idealists.

I'd argue that the markets are far more complex than equilibrium chemistry allows. In the 20th century Ilya Prigogine radically developed the science of complex systems far from any equilibrium. These systems are chaotic but develop periodic order and patterns of behaviour, this is far more like the system inherent in the world markets.

Patterns develop, prosperity and poverty grow and become polarised, greed and the state intervene and the patterns repeat. It is not pretty, but it is the deeply flawed system of market economics. There is no good in the system. It is unfair, it always will be. However putting your faith in an unfettered free market, free from state intervention is like putting your faith in caloric or flogiston, a bit silly!

The Belousov-Zhaobtinski reaction; complex, non equilibrium, chaotic, yet a pretty system (unlike the free market which isn't pretty).

Psalm 126
Unless the Lord build the house, they labour in vain that build it.
Unless the Lord keep the city, he watcheth in vain that keepeth it.


Irene said...

Wow! Rita, I had no idea you had this side to you! Marvelous post!

I have only one little reservation. While I agree it is a mess and intervention has been needed sorely for several years (everyone should have seen that deficit financing would lead to this), I really don't want Bush's hand on the steering wheel.

Rita said...

Irene, can you think of a good person to be driving this truck?

Irene said...

Let's see... a runaway truck going downhill with no brakes... well, certainly no politician. And I've never seen an economist (except possibly Bernard Baruch) who could anticipate what is going to happen. Scientists are notoriously poor at economics. Who does that leave?

Ideally it would have to be a person of impeccable morals... which sounds like no human. With all the respect I have for Benedict XVI, I don't think this is in his ballpark either. It seems God alone is the answer.

I think the problem has to do with distributed properties -- that is, the problem is within each individual person in the system. You know, like the old problem of constructing a reliable system from unreliable components. So long as we each remain sinful humans, so long will the economic system continue to behave immorally.

The only tools I know of to deal with this issue are prayer and evangelism. Historically, no coercive economic system ever has worked (capitalism is just as coercive as any others -- ask the next homeless person you meet). At the other extreme, Bolshevism didn't work either. How about the Swiss system??? Somehow, Swiss citizens often chaff under its strictures.

Gee, that's a long and wordy way of saying I don't know of such a person. Certainly I doubt that Obama and McCain are to be considered at all.

Here's another Catholic blog that I think addresses this issue rather well: Consider first the entry for 23 September, then for 26 September. I haven't always agreed with the writer, but this time he seems exactly on target.

SuzyQ said...

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