Tuesday, November 2, 2010

Occam's Hand?

I sincerely appreciate the progression of readings this semester. This literature seems to expand on concepts we have considered in the last couple of weeks, but the novelty of Ullman-Margalit's analysis gives plenty to discuss. What is the invisible hand (and what is not), how would one determine the genesis of such a phenomenon, and how can we explain the rational of the invisible hand theories to our potential senators?

I like theories. I enjoy learning about concepts that have taken centuries to develop in order to consider them for a few minutes. I appreciate the patterns and connections. My involvement in SWEET is precisely out of interest in economic theories, so one may imagine my interest in a theory on developing theories! Ullman-Margalit begins with a description of his invisible hand, with some examples to clarify what he considers as the defining characteristics of the theory.

One could postulate a series of self-interested acts without central design, compounded across a society and generally meeting the conditions required of an invisible hand theory. If our assumptions hold true we would have a valid theory to explain the particular subject of interest. This is the Invisible Hand. The pursuit of interests by a group, with no premeditated central plan, resulting in an approximate pattern that might be mistaken for a central plan.

Camilla is observant to catch the author's rejection of accidents as relevant to the theory. I see the point that enough accidents and negative actions will impact the market, but I interpreted Ullmann-Margalit as describing a system driven by the self-interested pursuits of individuals. I see that flat tires happen frequently enough to create a market demand, but it doesn't self-perpetuate in the same way as individual motivation does. I wouldn't presume to have an answer, but the question is noteworthy.

Of course, bad assumptions beget flawed theories. One bad assumption is too many assumptions. We should be careful to acknowledge our limitations. Occam's Razor could not amputate the Invisible Hand as a theory of developing theories, but it is valuable to look for the least complex adequate explanation. If we were so motivated we could correlate any two economic activities, but we would probably be correct in most cases to say the complexity of a large enough system overwhelm most such connections. It would seem that the Invisible Hand theory with a healthy respect for uncertainty would be most helpful for developing theories.

As an aside, I found that much of Ullman-Margalit's ideas remain valid if "intelligent design" is replaced with "interior design".

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