I use the term “crank” affectionately. The figure below is a valiant effort by Arthur O. Dahlberg to depict the “socio-economic process” as a network of troughs, pipes and valves. Even this elaborate contraption is confined to “the movement of the major social variables.”
Dahlberg believed that his chart technique communicated his analysis more effectively than words could. What the chart communicates to me, besides Dahlberg’s intense commitment is “it’s complicated” and “everything is connected to everything else.” That’s not nothing.
Is there a readable copy?
Didn’t Leontief get a Nobel prize for doing just this, except he used a matrix as opposed to drawing a mess of lines.That’s a trick I learned when they made me get a circuit analysis course for my computer degree.
It’s also a trick we should be using when tying to figure out how economic growth could work in a zero or negative population growth world. Right now, economists assume that increasing overall output benefits everyone, but we’ve seen that this isn’t true. This suggests it is possible to have rising living standards and even economic growth by restructuring an economy rather than relying on magic. This would require understanding the input-output model which gets us back to Leontief.
Are their updated input-output models, for example? How do they handle finance? Just because we aren’t on a war footing doesn’t mean we can’t use them for insight. Has anyone used more advanced matrix analysis, e.g. SVD with input output models? It looks like a wide open area of research.
Kaleberg:
Still have your template of shapes? I used to template systems and then in LSS, we were charting the system within the system. Such fun, convincing people to change habits.
Kaleberg,
I honestly don’t see how an input-output model helps. The problem is not physical (at least not in the western world). The problem is the design of the financial system and the amount of outstanding debt. And also the optimisation model that is used to see if things are getting or worse or not.
We need to start by doing lots of straightforward things that move us the right direction, instead of us going in the wrong direction – don’t make it more complicated that it needs to be. Tax resource use and pollution, tax the rich, distribute money widely, reduce debt growth, invest in infrastructure. These should all be no-brainers if we agree that the target is less resource use, more equality and maintaining basic living standards. That they are not, is a sign of how distorted and falsely complicated the discussion is.
From an economic theory point of view the following are necessary but not sufficient
1. Throw out pareto efficiency (non-starter)
2. Throw out the Washington consensus (low interest rates and low budget deficits are NOT a panacea – they just substitute private debt for public debt and exacerbate inequality)
3. Take notice that marginal utility falls as income rises.
oops – left out a NOT
… The problem is NOT physical …
fixed