Lee Smolin on general equilibrium theory

He has written on inflation (ha-ha), so why not Arrow-Hahn-Debreu?  The most interesting part of the paper starts here (p.29):

We can now turn finally to the role of gauge invariance in economics. The proposal that gauge theory is essential for making progress in economics was made by Malaney and Weinstein[8]. I would now like to argue that there are deep and compelling reasons why the extension of economic theory to incorporate out of equilibrium behavior should centrally involve the kinds of gauge invariances they proposed.

Here is a short essay on gauge invariance.  He also endorses agent-based modeling.  I didn’t “get” where this paper is headed (OK, you put in gauge invariance but comparative statics are still hard to predict a priori), but I’m always interested to see how top minds approach the foibles of the economic method.

I thank Michael F. Martin for the pointer.


Comments for this post are closed