Category Archives: Science&Crisis

Science and the Economic Crisis: a seminar in Paris

logo_insp_newScience and the Economic Crisis – Francesco Sylos Labini – Jeudi 20 avril 2017 à 16 h 30

INSP – UPMC – 4 place Jussieu – 75005 Paris – Barre 22-23, 4e étage, salle 317

Francesco Sylos Labini, chercheur au centre Enrico Fermi (Rome) et chercheur associe a l’Institut de Recherche des Systèmes Complexes (CNR)

Abstract

The economic crisis is changing the structure of our society, introducing insurmountable inequalities, marginalizing younger energies, stifling scientific research and so inhibiting the possibility to develop the new ideas and innovations that could help to guide us out of the crisis. Science can provide crucial tools that could be instrumental both in comprehending the problems of our time and in outlining perspectives that might constitute a solid and viable alternative to the rampant jungle law—a misconstrued Social Darwinism—that is currently very widespread. The present work ponders the interface between science dissemination and scientific policy and it aims to show how the ideas developed over the past century in natural sciences actually play a major role in understanding the seemingly diverse and unrelated problems lying at the heart of the current crisis and thus suggesting plausible and original solutions.

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Neoclassical economics and the failure of predictions

 

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In my book “Science and the Economic Crisis”  I dedicate a chapter to discuss the roots of neoclassical economics and the comparison of its predictions against reality. In summary my thesis is the following :

1. Predictions in science are used to test theories, that is, the hypotheses and the assumptions underlying these theories;
2. There has been a failure in the prediction of all recessions that occurred from 1989 to 2012 (see here and  here). But the most spectacular failure occurred for the 2008 crisis (which was instead predicted by some economists belonging to different schools than the neoclassical).
3. Models used to make predictions are based on the neoclassical theory;
4. Neoclassical economics rests therefore on hypotheses and assumptions that are not consistent with reality and for this reason it is a pseudo-science;
5. Indeed neoclassical economics has given support to the idea that free markets should naturally finds an equilibrium state and by deregulating and liberalizing the markets would increase the efficiency of the economic system. On the contrary, by doing so one has created the conditions for the unstable regime that gave rise to the crisis. Continue reading Neoclassical economics and the failure of predictions

EU Austerity And The Brain Drain From The South

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From Social Europe 10.5.2016

 

The debate on the sustainability of the European single currency seems to have focused exclusively on the requirement that EU member states comply with the macro-economic financial parameters established by the dictates of austerity policies. The absence of any collective reflection on how to boost structural economic development is astonishing at a time when many European countries – particularly around the Mediterranean – are dismantling the physical and human infrastructure of basic research and academia. It instead reflects the belief, grounded in neoclassical economic theory, whereby markets alone should govern economic development. Continue reading EU Austerity And The Brain Drain From The South

Politics

Science and the Economic Crisis

We discuss the role of basic research in economic development, and how it is intertwined with technological innovation. While fundamental research investigates issues that common sense believes to be distant from any possible practical application, throughout history it has repeatedly ushered in revolutionary breakthroughs that we use in our everyday lives and which have been triggers of economic development. The crucial factor for this development is diversification in both innovation technologies and scientific disciplines: greater diversity in science increases the likelihood of discovery and innovation, just as greater genetic diversity preserves the variety of different types of life. This is why scientific excellence should be interpreted as a natural side effect of a complex, heterogeneous, diversified, and therefore healthy research system. Scientific research must therefore be guided and supported by State intervention, as it is lies at the heart of the forces driving economic development. Unfortunately, it appears that they still prevail even in this day and age, casting dire shadows on Europe’s future.

The debate on the sustainability of the European single currency seems to have focused exclusively on the requirement that EU member states comply with the macro-economic financial parameters established by the dictates of austerity policies. The absence of a collective reflection on how to boost structural economic development is astonishing at a time in which many European countries—particularly around the Mediterranean—are dismantling the physical and human infrastructure of basic research and academia. On the other hand, it reflects the belief, grounded in neoclassical economic theory, whereby markets should govern economic development.#ScienceEconomicCrisis 

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Research

Chapter 3 of Science and the Economic Crisis 

Neo-liberal policies have the same general effect in the universities as they do in society as a whole. In society, their tendency has been to form large inequalities in the distribution of income and wealth. Similarly, in the case of higher education and scientific research, more and more funding is going to a few privileged universities and their researchers at the expense of the others. This is justified on the grounds that these universities and researchers are better than the others, so that it more efficient to concentrate funding on them. To find out how to distribute funding regular research assessments are conducted. But how accurate are these research assessments in picking out the researchers who are better from those who are not so good? It is argued that research evaluation as well as the pressure to reward the top-excellence is enhancing conformism and thus it is stifling the diversification of research, the essential element to develop innovations and new technologies. Is competition increasing researchers productivity and differentiation of research projects? How to test that a method of organization and evaluation of science is more efficient than another? Historical examples of discoveries in physics and mathematics in the past thirty years, as the super-high-temperature conductivity, the scanning tunneling microscope, graphene, and others, allow us to clarify how scientific research proceeds and how the findings of basic research are transformed into technological innovations. #ScienceEconomicCrisis

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Physics and economics

From the blog of Lars P. Syll

“From the times of Galileo and Newton, physicists have learned not to confuse what is happening in the model with what instead is happening in reality. Physical models are compared with observations to prove if they are able to provide precise explanations … Can one argue that the use of mathematics in neoclassical economics serves similar purposes? … Gillies‘s conclusion is that, while in physics mathematics was used to obtain precise explanations and successful predictions, one cannot draw the same conclusion about the use of mathematics in neoclassical economics in the last half century. This analysis reinforces the conclusion about the pseudo-scientific nature of neoclassical economics … given the systematic failure of predictions of neoclassical economics.”

Francesco Sylos Labini is a researcher in physics. His book is to be highly recommended reading to anyone with an interest in understanding the pseudo-scientific character of modern mainstream economics. Turning economics into a ‘pseudo-natural-science’ is — as Keynes made very clear in a letter to Roy Harrod already back in 1938 — something that has to be firmly ‘repelled.’

 

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Crisis

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Chapter 2 of Science and the Economic Crisis 

Why most economists did not foresee the economic crisis? Do liberalized and deregulated markets tend to equilibrium? What is markets equilibrium? After having reviewed the discussion about the value of predictions in economics we focus on the neoclassical theory. This describes the economic system as a mechanical one that spontaneously finds an equilibrium state. The underlying concepts are those of the nineteenth century physics: the balance between opposing forces and the thermodynamical equilibrium. These ideas are reconsidered through the perspective of modern physics, in which the systems composed of many parts interacting with each other hardly finds a situation of simple stable equilibrium. Rather they develop surprising collective, complex and emerging global behaviours that are not simply deduced from the knowledge of the microscopic dynamics.   However, since the outbreak of the crisis the leading economic ideas have not changed and continue to be inspired by the same economic theory that has spectacularly failed in its prediction of the crisis and that has created the conditions for its systemic occurrence. The origin of this resistance to a change is played by research assessment: only economists considered “excellent” in the academy play a public and political role. However, is it really that easy to determine who is excellent in a field that avoids the confrontation with reality?  #ScienceEconomicCrisis 

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Forecast

cover_frontChapter 1 of Science and the Economic Crisis 

 

We introduce the concept of prediction in natural sciences to illustrate the foundation of the scientific method. The way to understand a scientific prediction has changed over time, as more complex systems composed of a growing number of bodies have been considered. While predicting the positions of heavenly bodies represented the most popular verification of nature fundamental law, that of gravity, for the weather forecast the situation is somewhat different. We will thus see how the concept of chaos has introduced one of the most important changes in the modern view of nature, surpassing the dream of the nineteenth century deterministic physics together with the introduction of a probabilistic approach for understanding of the physical systems consisting of many elements. The difference between open and closed systems, illustrated by considering examples from meteorology, climatology, epidemiology and in particular seismology will allow us to explain the different role of forecasts in science and those aimed at guiding decisions in social and political level. #ScienceEconomicCrisis 

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Science and the Economic Crisis

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The economic crisis is changing the structure of our society, introducing insurmountable inequalities, marginalizing younger energies, stifling scientific research and so inhibiting the possibility to develop the new ideas and innovations that could help to guide us out of the crisis. Science can provide crucial tools that could be instrumental both in comprehending the problems of our time and in outlining perspectives that might constitute a solid and viable alternative to the rampant jungle law—a misconstrued Social Darwinism—that is currently very widespread. The present work ponders the interface between science dissemination and scientific policy and it aims to show how the ideas developed over the past century in natural sciences actually play a major role in understanding the seemingly diverse and unrelated problems lying at the heart of the current crisis and thus suggesting plausible and original solutions.

Springer website