Re: zero average profit

From: Michael Eldred (artefact@T-ONLINE.DE)
Date: Thu Jun 12 2003 - 12:03:53 EDT

Cologne 12-Jun-2003

Ian Wright schrieb  Fri, 6 Jun 2003 23:24:00 +0000:

> Hello Rakesh,
> >While Kalecki establishes some interesting accounting identities and shows
> >that investment determines savings rather than vice versa, the analysis
> >leaves open too many questions.
> An analysis solely at the level of money quantities certainly does leave a
> lot out.
> But I wonder whether more can be deduced from "pure money" models than
> might first seem apparent. This was the interest behind my original
> question.
> For example, I like very much the paper "Statistical Mechanics of Money"
> by two physicists working in the field of econophysics:
> Their model is extremely simple: N agents, M money, random encounters of
> pairs of agents who randomly transfer an amount of money between them.
> That's it.

The question is what violence is done to the phenomena in transferring a model
from statistical mechanics to social phenomena of exchange (apart from the
question of what violence is done to the physical phenomena by modelling them
with statistical mechanics).

The empirical correctness of a model has nothing to do with truth.

_-_-_-_-_-_-_-  artefact text and translation _-_-_-_-_-_-_-_-_-_
_-_-_-_-_-_-_-_-_-_-_-_- made by art  _-_-_-_-_-_-_-_-_-_-_-_-_-_ _-_
_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_ Dr Michael Eldred -_-_-

> It turns out that the statistical equilibrium of the system
> generates
> an exponential income distribution (lots of agents with not much money,
> and a decreasing number of agents with a great deal). This distribution is
> in empirical agreement with a large section of the income distribution in
> the
> US, as measured from tax returns (the model breaks down for capitalist
> incomes, which are better fitted by a power law, not an exponential law,
> which is interesting in itself). Their model is exactly analoguous to a
> perfect
> gas, in which elastic collisions between molecules transfer energy between
> them. So this work is very much in the tradition of Farjoun and Machover,
> who also apply statistical mechanics to political economy. I wonder
> why the physicists' very simple model is able to capture something essential
> about the economy, and whether this kind of modelling approach can be
> extended. Maybe Kalecki's "accounting identities" are deterministic versions
> of the same approach of rigorously applying the principle of conservation of
> money. There's a lot of sense in applying this principle because it is a
> real
> behavioural invariant, unlike preferences which in aggregate are random.
> Only the insane destroy money. (Actually, two UK avant-garde artists once
> burnt a million pounds in front of the gathered press to protest the
> commodification of art, but these events have very low probability!)
> -Ian.

This archive was generated by hypermail 2.1.5 : Fri Jun 13 2003 - 00:00:00 EDT