homo economicus

[bigbadwolf]

A well-argued criticism of the theoretical underpinnings of free-market ideology by Ernest Partridge is to be found here.

 

[Bastian Gross]

Moral values, which refer to the worth of persons, are systematically excluded from neo-classical economic theory.

“The theory is beautiful, but reality is baffling.”

Man does various noneconomic things like cooperating or punishing for gross injustice at one's own charge. Human mind is more complex as artificial intelligence or arithmetic processing units, human spirit and consciousness is unpredictable and so man's behaviour.

 

[Stefan Zota]

These "supervised or controlled market" opinions are nothing new. They just come more to the surface now in the middle of the crisis. Any journalist or economist has the satisfaction to say: "I told you so!"
Few said this from 2003 to 2007 when securization was blooming.

Personally I tend to always be a contrarian and take all ideas with a grain of salt. Since I am not an economist, I do not have full background to understand such statements so I refrain from comments.

However, if we come to quant world, then same approach is taken. Erase everything and start from scratch. Ok.

Do we have any ideas to start from 0? (there are some ideas)
Can they work? (of course they can)
Can they lead us in 5 years to same problems (of course)

To sum up, the market is becoming more complex, number of derivatives is growing, volume is increasing, I don't have the black swan feeling about this environment ...

 

[IlyaKEightSix]

Here's the thing--these theories may or may not work in a free market.

However, let there be no illusion that we operate in a free market. There are tons of laws and regulations that prevent exactly that. Antitrust laws, too big/interconnected to fail, welfare, etc. etc. etc...

All of the safety nets put into place have the unintended consequence of making the market less free, and thus, moving us further and further away from economic theory.