Metaphysics of Economics

Metaphysics of Economics

Ideas adopted from:

• Nate Silver• The Signal and the

Noise

Is the World…

Predictable? Unpredictable?

Go way back…

Chaco Canyon Stonehenge

People realized they could predict:

Shortest and Longest Days Movements of the Moon

The idea of Predicating evokes an age-old debate between two lines of thought:

Predestination Free Will

Predestination• Saint Augustine• Calvinism• Under this philosophy,

humans might have the ability to predict the course they would follow. But there was nothing they could do to alter it. Everything is carried out in accordance with a divine plan.

Free Will

• Saint Thomas Aquinas• Jesuits• We have free will• If you want to predict

the future, create it.

Age of Enlightenment

• Knowledge is Power• Isaac Newton’s laws of

motion and mechanics • The universe was highly

predictable and orderly, abiding by simple physical laws

• F=ma

Scientific Determinism

• Pierre-Simon Laplace• Laplace’s Demon:– Given perfect knowledge

of present conditions, – And perfect knowledge

of the laws that govern the universe

– We ought to be able to make perfect predictions

Industrial Revolution

• Scientific,• Technological,• Economic• Progress

Adam Smith

• Wealth of Nations• 1776• Division of Labor• Market Economies• The Invisible Hand of

the marketplace guides self-interest into promoting general economic well-being.

Invisible Hand

Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them.. . Give me that which I what, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.

Invisible Hand

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens.

Wealth of NationsInvisible Hand

Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing this own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

Profound Insights