Tuesday, April 24, 2007

Binmore and Mirowski Going at It Hammer and Tongs

In 2004, the Journal of Economic Methodology sponsored a symposium on Philip Mirowski's Machine Dreams: Economics Becomes a Cyborg Science. The exchange between Kenneth Binmore and Mirowski is amusing for those who prefer lots of heat, whether or not there is any light. (I read them as not having any personal dislike.) Mirowski is particularly critical of this passage from Binmore:
"...Mirowski thinks that only computable mathematics should be used in economic modeling. He is particularly scathing about the fact that the Walrasian correspondence is non-computable, and rejects out of hand the response that Scarf has provided a computable algorithm for finding approximate Walrasian equilibria. If I understand him correctly, the reason is that an approximate Walrasian equilibrium may not be an approximation to an exact Walrasian equilibrium. But this is to misunderstand how mathematical modeling works - not only in economics, but in physics as well.

The equilibria of physics are no more computable than those of economics. It is not just that Scarf cannot think of an algorithm that computes them, but that there is nothing whatever the universe as a whole can do to instantiate them. So how come the non-computable models of physics work? The reason is that they provide mathematically tractable approximations to the way the universe really is. Similarly, in economics, it is wrong-headed to reject Scarf's algorithm because it does not adequately approximate the Arrow-Debreu model. On the contrary, we need to elaborate the Arrow-Debreu model so it approximates better whatever the real-world analogue of Scarf's algorithm happens to be in any particular context. Whether the elaboration turns out to be computable or not matters not in the least. If you think it does, consistency also demands that you advocate abandoning the use of calculus and most other mathematical tools in physics."

References
  • Kenneth Binmore (2004). "A Review of Philip Mirowski's Machine Dreams", Journal of Economic Methodology, V. 11, N. 4 (Dec.): 477-483
  • John B. Davis (2004). "Economists' Dreams: Machine Dreams", Journal of Economic Methodology, V. 11, N. 4 (Dec.): 483-488
  • Matthias Klaes (2004). "Algorithmic Economics: A Plea for Natural Economic History", Journal of Economic Methodology, V. 11, N. 4 (Dec.): 489-498
  • Philip Mirowski (2004). "Philosophizing with a Hammer: Reply to Binmore, Davis and Klaes", Journal of Economic Methodology, V. 11, N. 4 (Dec.): 499-513

2 comments:

richard.clayton said...

Mirowski's response is available online here: http://www.nd.edu/~pmirowsk/pdf/Philosophizing_with_Hammer.pdf

Robert Vienneau said...

Thanks for the pointer, Richard. I updated the post accordingly.