Perhaps we should take Corbynomics seriously?


Given the polling numbers perhaps we should at least think about taking Corbynomics seriously? So, to the fountainhead of all things Corbynomics, Richard Murphy:

This process requires three things. First, high quality economic data on what is really happening in the economy, and far too few economists have any experience with that.

That is rather funny for as we've repeatedly pointed out Murphy has only the shakiest grasp of economic data. However, there's more here. For what he's really saying is that if only the policy makers had more information then they really would be able to plan that economy. Which rather runs foul of the point made in Hayek's Nobel lecture, that we simply cannot get that sort of information out of an economy in anything like useful time:

This brings me to the crucial issue. Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable. And while in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.

It can hardly be denied that such a demand quite arbitrarily limits the facts which are to be admitted as possible causes of the events which occur in the real world. This view, which is often quite naively accepted as required by scientific procedure, has some rather paradoxical consequences. We know: of course, with regard to the market and similar social structures, a great many facts which we cannot measure and on which indeed we have only some very imprecise and general information. And because the effects of these facts in any particular instance cannot be confirmed by quantitative evidence, they are simply disregarded by those sworn to admit only what they regard as scientific evidence: they thereupon happily proceed on the fiction that the factors which they can measure are the only ones that are relevant.

And we also have a certain empirical problem as Cosma Shalizi has pointed out at great length. we do not in fact have a utility function that we can attempt to optimise. And even if we did we'd need another 100 iterations of Moore's Law to be able to run a computer to optimise that function that we don't have.

Both theory and empirics tell us that Corbynism won't work. Simply because an economy is too complex a thing to plan. Therefore, let us not take Corbynomics seriously.